Andersen Jury Watches Video Encouraging Document Destruction
Week three of the Andersen obstruction of justice trial in U.S. District Court in Houston began with the playing of a videotape for the jurors. The video showed Andersen partner and practice manager Michael Odom instructing audit team members on the benefits of destroying documents prior to litigation.
"If it's destroyed through the course of normal policy and litigation is filed the next day, that's great," Mr. Odom says in the videotape. "Whatever there was that might have been of interest to somebody is gone and is irretrievable." He goes on to recommend the destruction of extraneous memos that can increase the cost of document retrieval for lawsuits and can require extra explanation. "It's embarrassing and it's extra work for us to have those hang around."
Andersen has taken the position that the destruction of audit documents relating to Enron that occurred in the Houston office and other firm locations in the days prior to a Securities and Exchange Commission (SEC) subpoena last October was performed in the normal course of business, and that the documents destroyed were duplicates, drafts, and extraneous memos not required to be kept as support of the firm's audit.
Memos that have been introduced into evidence show concern on the part of Andersen in-house lawyer Nancy Temple. Last October 1 she wrote, "What documents should we keep? Historically keep everything." And on October 9, she wrote, "Highly probable" regarding the possibility of an SEC inquiry, and "possible" regarding the firm's potential violation of the firm's agreement in its Waste Management settlement to abstain from wrongdoing.
A third witness has taken the Fifth Amendment in the Andersen trial. Thomas Bauer, the partner in charge of the auditing Enron's North American trading unit has refused to testify. Mr. Bauer was placed on administrative leave by Andersen in January.