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Disgraced Enron auditor got big bonus

Even as Enron Corp. was going down the tubes last fall, Andersen gave a big bonus to the man it now blames for Enron's collapse, according to a witness on Friday in the accounting firm's document shredding trial.

Andersen's lead Enron accountant David Duncan got an estimated $150,000 award for his work with the lucrative client at a global company meeting in New Orleans in early October 2001, said Andersen partner Amelia Ripepi.

Duncan, who Andersen fired just three months later, was featured in a video showed to the 2,000 partners attending the conference, she said.

"I don't know exactly why," a circumspect Ripepi testified in the fourth day of testimony in Andersen's trial for obstruction of justice. "To be featured in a video shown to the global partners is certainly an honor."

She said Duncan got a bonus of approximately 100 "units," which in Andersen-speak was the division of profits among partners. Their value depended on how much money the company made each year, but averaged about $1,500 per unit in recent years, Ripepi told the jury.

Duncan, 43, got the award while Andersen partners were in a heated debate about how to get Enron out of a bookkeeping mess the Big Five accounting firm now blames on him.

Andersen witnesses this week have said Duncan and his Enron team got too close to Enron managers and let them play fast and loose with the booking of murky off-balance sheet partnerships.

When those deal hits the financial rocks, Andersen brought in some of its most respected and senior accountants to figure out a way to soften the blow in accounting terms so Enron would not have to report a big loss.

But a little over a week after Duncan got his bonus, Enron took a $1.1 billion charge to earnings partly because of the controversial deals. That was followed in the next few weeks by a restatement of financial results for four years and a $1 billion write-down of shareholder equity.

The bad numbers combined with revelations that Enron used the partnerships to hide billions of dollars in debt and inflate profits drained the company of cash, shattered its credibility and forced it into bankruptcy on December 2.

In testimony this week, Andersen witnesses have said Duncan ignored their advice to rein in Enron and gave audit approval to deals that higher-ups told him were unacceptable.

Prosecutors charge that Andersen destroyed massive amounts of Enron documents starting in mid-October to keep them from investigators for the US Securities and Exchange Commission.

The company wanted to cover up its role in the Enron collapse because it feared severe, possibly fatal sanctions after its involvement in previous accounting scandals with Waste Management Inc. and Sunbeam Corp, prosecutors said.

Duncan, who Andersen fired on January 15, pleaded guilty on April 9 to obstruction of justice and agreed to testify against his former employer. He said the company orchestrated a massive campaign to get rid of possibly incriminating Enron documents.

Andersen attorney Rusty Hardin has said that what prosecutors portray as a plot to destroy Enron documents was nothing more than normal business procedure. In fact, he said on Friday, Andersen not only did not destroy documents, it kept all the important working papers.

"Surely I am entitled to suggest that these people accurately preserved the (Enron) dispute for the (US Securities and Exchange Commission) rather than destroy it," he told US District Judge Melinda Harmon.

So far, all Andersen witnesses -- all of whom have been called to testify by the prosecution -- have said they were not told to destroy Enron documents, but acknowledged receiving an e-mail from Andersen lawyer Nancy Temple that included a link to the company's document retention policy.

Duncan said Temple's message was interpreted as a signal to get rid of Enron audit records, but no witness so far has agreed.

On Friday, Harmon accepted a letter from Harmon saying she would not testify in the case, invoking Fifth Amendment protection against self-incrimination.

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