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Andersen under heavy fire at Enron hearings

Auditing firm Andersen came under heavy fire on Thursday, as a sacked Andersen partner refused to testify in Congress on the shredding of documents related to the Enron collapse, and senior Andersen officials tried to lay blame on their former partner.

And, as a new round of congressional hearings got under way into the energy giant's collapse and Andersen's involvement as its auditor, a senior lawmaker said officials of the Big Five accounting firm were aware early on of Enron's problems.

Top Andersen executives said the destruction of documents being sought by investigators was wrong and largely the fault of David Duncan, a partner who managed the Enron account before he was fired.

Invoking his constitutional right not to incriminate himself, a stony-faced Duncan was quickly dismissed from one of two Capitol Hill hearings, prompting lawmakers to say he was frustrating their probe.

"Enron robbed the bank, Arthur Andersen provided the getaway car and they say you were at the wheel," said Rep Jim Greenwood, chairman of the House Energy and Commerce subcommittee on oversight and investigations.

Andersen fired Duncan earlier this month for what it said was his role in destroying documents related to the Enron audit. Duncan has said, through his lawyer, that he was following instructions from Andersen.

"We certainly have not found out today the answer to the burning question, which was why those documents were destroyed," said Rep Billy Tauzin, the Republican chairman of the full House Energy and Commerce Committee.

The hearings are the first of nine scheduled over the next six weeks into Enron's spectacular decline, going in a matter of weeks from energy trading colossus to the biggest US bankruptcy filing in history.

Ken Lay, who resigned as Enron chairman and chief executive officer late on Wednesday, was set to meet with civil rights activist Rev Jesse Jackson on Thursday night at Enron's Houston headquarters.

A spokesman for Jackson, Mike Levine, said the meeting was part of a two-day Jackson visit to Houston to drum up support for thousands of laid-off Enron employees who lost their savings in the energy trader's financial collapse.

Earlier on Thursday, Tauzin said evidence would emerge from the subcommittee hearing that would show the level of involvement of top Andersen officials.

"Senior officials and partners in Arthur Andersen were quite aware of the problems of Enron early off and began this process of invoking the so-called retention and destruction policy to clean out files and to alter and delete files from the records," Tauzin told ABC's "Good Morning America" show.

Tauzin said there were at least 80 people under Duncan who were working overtime in an attempt to clean out the files.

After the hearing, Tauzin said the committee had learned documents may have been destroyed outside the Houston office where Andersen housed its Enron audit team. "There were consultants working out of Chicago and others," he said.

In Houston on Thursday, a federal judge ordered six key Andersen employees to give early depositions about the shredding of Enron-related documents. US District Judge Melinda Harmon granted the motion in the massive shareholder lawsuit that requires the preservation of all Enron-related records held by Andersen.

Meanwhile, the Texas State Board of Public accountancy said on Thursday it was investigating Andersen's audit of Enron, in a move that could threaten the accounting firm's practice in the state. The accounting board, the only body with the power to revoke or suspend a firm's license in the state, said it began investigating Andersen in November.

In the Senate, where another committee was holding a simultaneous hearing, Connecticut Democratic Sen Joseph Lieberman said he would further investigate Enron's links to the Bush administration. He said Enron had been exposed as a "house of cards built on outrageous greed and deceit."

Separately, Army Secretary Thomas White, the highest-ranking former Enron employee in the Bush administration, said in a letter to California Democratic Rep Henry Waxman that no one had asked him to intervene on Enron's behalf.

WAS DUNCAN A SCAPEGOAT?

While Andersen squarely laid the blame on the Houston-based Duncan in prepared testimony for the House subcommittee, Florida Republican Rep Cliff Stearns said Duncan may have been following orders from higher up in Andersen, coded as reminders of document retention policies.

"Is Mr Duncan being made a scapegoat?" Stearns said in opening remarks.

After Greenwood asked Duncan if he ordered destruction of documents to subvert government investigations into Enron's collapse, and if he did so at the direction of others, Duncan invoked his constitutional right not to incriminate himself.

"I would like to answer the committee's questions, but on the advice of my counsel, I respectfully decline to answer the question based on the protection afforded me under the Constitution of the United States," said Duncan.

"Respectfully, that will be my response to all your questions," he told the committee. He was then excused from the witness table.

Andersen partner CE Andrews and Andersen managing director Dorsey Baskin, in written testimony to the subcommittee, said Duncan directed the purposeful destruction of a very substantial volume of documents.

"In doing so, he gave every appearance of destroying these materials in anticipation of a government request for documents," the two said.

"The case of Duncan was clear enough to allow us to draw conclusions about his responsibility at an early stage of the inquiry. That is not true of other Andersen personnel who were involved with the destruction of documents," the two Andersen executives told the House subcommittee.

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