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US Congress quizzes fired Andersen partner on Enron role

Congressional investigators said on Wednesday they quizzed a fired Andersen partner about the accounting firm's ties to collapsed energy trader Enron Corp., while also learning that Andersen was warned of trouble at Enron last summer by an internal whistle-blower.

David Duncan, the fired Andersen audit partner, met for four-and-a-half hours with lawyers and eight House Energy and Commerce Committee staff members, congressional aides said.

"He cooperated fully with us. He answered all our questions and provided us with valuable leads that we are now pursuing," said Ken Johnson, spokesman for the Republican majority side of the committee chaired by Louisiana Republican Rep. Billy Tauzin.

Duncan was fired on Tuesday by Big Five accounting firm Andersen for his alleged role in destroying e-mails and documents sought by federal agents probing Andersen's audits of Enron's books.

"He was quizzed about everything from his handling of the Enron account to the destruction of documents," Johnson said, adding that Duncan likely would be among witnesses called to appear before the committee when it convenes a full hearing.

Sullivan & Cromwell, the law firm representing Duncan, said in a statement: "Mr. Duncan is continuing to cooperate with all investigations of this matter, and he looks forward to full disclosure of the truth."

The firing of Duncan was the first public step by Andersen to assign individual blame for problems with its audits of Houston-based Enron. Three other partners responsible for the Enron work were placed on leave by Andersen. Johnson said the committee was obtaining interviews with those three, as well.

A spokesperson for the minority side of the committee had a different assessment of the Duncan interview, saying, "Our investigators were disappointed by the limited nature of Mr. Duncan's memory. We expect documents and other witnesses to fill in the blanks."

whistle-blower contacted Andersen

Andersen, whose reviews of Enron's finances have come under heavy fire, got a telephone call from Enron whistle-blower Sherron Watkins on Aug. 20 -- months before Enron fell apart, said Tauzin and Rep. James Greenwood of the House committee, one of six in Congress probing the Enron affair.

In a conversation with an Andersen partner, Watkins raised some of the same concerns she outlined in an August letter to Enron Chairman Kenneth Lay about Enron's accounting policies, said Tauzin and Greenwood in a statement.

The conversation was uncovered in an internal memo, one of thousands being reviewed by the committee. The Andersen partner, who was not identified, relayed Watkins' concerns to senior Andersen management on the Enron account and to the auditor's Houston office, the lawmakers said.

"This document raises additional concerns about Andersen's knowledge of potential accounting irregularities and the subsequent destruction of Enron-related documents," said Greenwood, a Pennsylvania Republican.

"We intend to request additional information from Andersen about this memorandum and the discussions that were held among its senior management team at that time," he said.

Andersen spokesman Charlie Leonard told Reuters: "When the audit team learned of her (Watkins) concerns, they immediately notified the general counsel and the CEO, Mr. Lay, at Enron. They were assured by Enron that Enron was dealing with the matter by bringing in (the law firm of) Vinson & Elkins to investigate her concerns."

Enron's downfall threw thousands out of work, hammered investors, including many employees stuck with company stock in their 401(k) retirement accounts, and stirred controversy from Wall Street to Washington.

Andersen employees deleted records

Andersen has admitted that employees destroyed a large number of e-mails and documents related to its audits of Enron, including some after a subpoena had been issued by the Securities and Exchange Commission as part of an Enron probe.

In addition to the SEC, the Justice Department is pursuing a criminal probe of Enron. The Labor Department, which regulates employee retirement funds, is also investigating.

Watkins, an Enron global finance vice president, wrote to Lay in August warning of accounting problems with certain partnerships that later contributed to the company's downfall. The House Energy committee said it was also seeking an interview with Watkins.

Calls to Enron for comment were not returned.

The collapse of Enron came after it posted its first quarterly loss in more than four years on Oct. 16, took $1 billion in charges against earnings and cut shareholders equity by $1.2 billion. Further financial reversals followed, sparking a crisis in investor confidence and credit-rating downgrades that led speedily to a bankruptcy filing.

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