Lead auditor in Enron case invokes constitutional right not to testify

WASHINGTON - Fired Enron outside auditor David Duncan refused to testify to Congress Thursday about the shredding of the energy company's documents, invoking his Fifth Amendment protection against self--incrimination. Several lawmakers said they're not sure whether he is a "rogue employee or scapegoat."\nHis silence came as his former colleagues, top officials of the Arthur Andersen accounting firm, sought to lay the blame squarely on him. Their denials of involvement in the shredding drew skeptical responses from members of a House panel investigating Enron's collapse.\nAfter five hours of testimony and quizzing by lawmakers of the Andersen executives, Rep. Jim Greenwood, R--Pa, the panels' chairman, told reporters that the committee's investigation is far from over and that the Andersen witnesses produced no evidence that Duncan acted independently when he ordered his Houston--based auditing team, as many as 80 people, to destroy Enron related papers and e--mail.\n"The burning question is why were these documents destroyed" and did Duncan's superiors know about it? said Rep. Billy Tauzin, R--La., chairman of the Energy and Commerce Committee, adding that Thursday's session did not answer these questions.\nWhile the Andersen executives sought to narrow the paper shredding to Duncan's Houston operation, Tauzin said documents may also have been destroyed by others at Andersen. "We're pursuing that," he said without elaboration.\nDuncan, who had been Andersen's lead auditor on the Enron account, was the first witness before the Energy and Commerce's investigations and oversight subcommittee.\n"Enron robbed the bank, Arthur Andersen provided the getaway car and they say you were at the wheel," Greenwood told Duncan.\nBut when Greenwood began to question Duncan, asking him if he had deliberately given an order to destroy documents to "subvert governmental investigations," Duncan cited his constitutional right to silence.\nDuncan invoked it twice, telling the panel, "Respectfully, that will be my response to all your questions." He was not questioned further and was excused.\nDorsey Baskin Jr., managing director of Andersen's professional standards group, told the panel that Duncan directed the destruction of a substantial number of documents just as an investigation was beginning.\n"We are not proud" of the destruction of the records, Baskin said.\nAndersen lawyer Nancy Temple denied repeatedly that an Oct. 12 e--mail she wrote helped trigger the wave of document destruction. "I was not aware of any shredding activities," she said.\nThe efforts by Baskin and other Andersen officials to deflect the full blame on Duncan for the shredding drew criticism from some subcommittee members.\nAs the meeting concluded five hours after it began, Greenwood told the Anderson officials, "We may have to have you back. At the end of the day here we still don't have evidence to suggest that Mr. Duncan, who did not testify, is a rogue employee of Anderson.\n"We have a lot of information we need to gather," Greenwood said.\n"Is Mr.Duncan being made a scapegoat here this morning?" asked. Rep. Cliff D Stearns, R--Fla.\nAnd Rep. Chris John, D--La., cited an "18 day problem" spanning parts of October and November when documents were being shredded before the accounting firm suggested they be preserved.\n"It is perplexing to me that no one in the highest management of Arthur Andersen had any indication...of what was going on," John said.\nAlso Thursday:\n--Arthur Levitt, former chairman of the Securities and Exchange Commission, told the Senate Governmental Affairs Committee "It's well past time to recognize that the accounting profession's independence has been compromised."\n--Rep. John Conyers, D--Mich., asked the Justice Department to appoint a special counsel to investigate ties between Enron, Andersen and the Bush administration in light of "massive campaign contributions."\n--White House spokesman Ari Fleischer said regardless of the administration's ties to the energy company, "nothing is going to stop the president and this administration from pursuing justice."\nDuncan sat stoically for more than an hour in a second--row seat of the crowded hearing room as one lawmaker after another denounced the paper shredding at Andersen and the business practices that led to Enron's collapse.\nGreenwood said Andersen's destruction of records clearly "compounded the catastrophic business failure" of the Texas--based company.\nIn a written statement, Baskin and another Andersen official, C.E. Andrews, said that Duncan "organized and expedited efforts to shred or otherwise dispose of Enron--related documents...without any consultation with others in the firm."\nThe statement said that Duncan "gave every appearance of destroying these materials in anticipation of a government request for documents."\nAndrews, under questioning, called the destruction of thousands of pages of Enron documents "totally inappropriate."\nLast week, Andersen fired Duncan over his alleged role in the document destruction in October and November, just as the SEC was beginning a formal investigation.\nOn Wednesday, Enron chairman Kenneth Lay, whose close ties to members of the Bush administration are also being investigated by Congress, resigned.\nGreenwood said Duncan's decision to take the Fifth Amendment, while a constitutional right, "will hamper the important work of this committee."\nThe SEC started looking into Enron's accounting after the company reported a third--quarter loss of more than $600 million. The agency's inquiry eventually included demands for financial documents from Enron and Andersen.\nEnron's slide into the biggest bankruptcy in U.S. history on Dec. 2 cost thousands of employees their jobs and retirement savings. Other investors and creditors also have lost hundreds of millions of dollars.\nWhile reports emerged this week of document shredding at Enron's Houston headquarters as well, the present focus of the House subcommittee is on the document destruction.\nDuncan has claimed to investigators that he was following company guidance on document destruction laid out in the October e--mail from Andersen corporate attorney Temple, based at the firm's Chicago headquarters.\nAsked about that e--mail on Thursday, Temple said she did not send the e--mail to Duncan but to others in Andersen's Houston office.\n"I never counseled any shredding or destruction of documents. I only wish someone had raised the question," she testified.\nThe company claims the Temple memo was routine and aimed only to combat the "pack--rat" mentality of many accountants.\nDuncan's interpretation of the Oct. 12 memo was supported by another Andersen manager, Michael C. Odom, who also has told investigators he viewed the memo as unusual.\nOdom told the panel Thursday he was not surprised that he was stripped of his management responsibilities in the dispute, only disappointed.\nA new Andersen document, obtained from committee sources Wednesday, also suggests the Temple directive was more than routine. In the Oct. 24 memo from a manager, employees were told the document shredding was so important that it should be pursued even "on an overtime basis, if necessary for the remainder of this week or for however long it takes"