More Andersen Partners Testify for the Prosecution

Thursday's proceedings in the Andersen obstruction of justice trial saw the prosecution introduce testimony from Andersen personnel in an attempt to establish that members of the Big Five firm knew of accounting irregularities at Enron long before last fall's massive document destruction began.

Andersen partner Ben Neuhausen testified that he destroyed 150 to 200 e-mail messages relating to Enron after the Houston office received a memo from Andersen lawyer Nancy Temple reminding them of the firm's document retention policies. Mr. Neuhausen claimed the deletion of the electronic documents was standard operating procedure. "In my mind, I was doing normal clean-up. I was not trying to hide the documents from anybody," said Mr. Neuhausen. "It didn't dawn on me that anybody would have an interest in them."

Andersen partner Carl Bass also testified on Thursday, describing his disagreement with accounting procedures used at Enron and how that disagreement resulted in him being removed from the Enron audit team. Mr. Bass said that Enron described him as being "too rule-oriented" and "caustic and cynical toward their transactions."

Both partners described Andersen's David Duncan, the partner in charge of the Enron audit, and his Enron audit team as being overly aggressive and willing to give in to Enron's desire to use unorthodox accounting maneuvers to hide transactions. "They would often push for an aggressive interpretation of the accounting standards," said Mr. Neuhausen.

Another witness, Kate Agnew, was called to the stand by the prosecution but refused to testify on Thursday, invoking her Fifth Amendment privilege against self-incrimination. Andersen's legal team had planned to call Ms. Agnew as one of their defense witnesses, and claims the prosecution intimidated Ms. Agnew into invoking the Fifth Amendment in order to deprive the defense of a witness. "And she would have been a dynamite witness," said Rusty Hardin, the lead attorney for Andersen.

Mr. Hardin said that Ms. Agnew is the third potential defense witness who has been intimidated into not testifying by the prosecution, and he plans to contact the head of the Justice Department's criminal division to request an investigation into witness tampering.

U.S. District Court Judge Melinda Harmon who is hearing the case was expected to rule Thursday as to whether the defense was entitled to view notes of conversations between the Department of Justice and David Duncan, the prosecution's key witness against Andersen. Andersen believes that Mr. Duncan may have been coerced into pleading guilty to a charge of obstruction of justice and hopes that information in the notes will clarify their position. Judge Harmon has yet to make a decision regarding the disposition of the Duncan notes.

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