Andersen Jury Hears Forceful Arguments
The government and the defense in the Arthur Andersen obstruction-of-justice trial made their final arguments to the jury on Wednesday, battling to the bitter end about the firm’s intent when it shredded documents related to Enron Corp. last year.
U.S. District Judge Melinda Harmon ordered the jury to start deliberations in the case, in which Andersen is accused of destroying records with the aim of impeding an investigation by the Securities and Exchange Commission.
Asst. U.S. Atty. Samuel Buell began the summations Wednesday, telling jurors that Andersen shredded the files because it knew that the SEC would demand “the kitchen sink” in its quest for documents related to Enron’s finances. Andersen should have known that because it had previously received subpoenas for its audits of such troubled clients as Waste Management Inc. and Sunbeam Corp., Buell said.
All the Enron documents mattered, Buell told the panel, because the SEC, “is entitled to all the facts. Arthur Andersen doesn’t get to make that decision for them.”
But Andersen lead attorney Rusty Hardin made an impassioned plea to the jury to spare the firm of 28,000 U.S. employees, saying the Justice Department had made a “rush to judgment” in indicting the 89-year-old accounting giant.
Hardin said that no one at the firm intended to conceal information from the SEC and that prosecutors “corruptly persuaded” David B. Duncan, formerly the Andersen partner in charge of auditing Enron, to plead guilty to obstruction of justice even though he never violated the law.
Both the prosecution and the defense had scored important tactical victories during the course of the trial, making the closing arguments potentially pivotal in the outcome of the case.
Each side was granted four hours to persuade the jury, whose decision will have an enormous effect on the outcome of the Enron cases that are expected to follow.
To convict the firm, the jury must find an Andersen employee “corruptly persuaded” another to destroy evidence with the intent of concealing it from regulators.
Buell said Andersen had failed to explain why an in-house attorney sent e-mails last October that reminded partners to comply with the firm’s document policy, which calls for preserving audit papers needed to back up accounting judgments and the disposal of drafts or other papers deemed unnecessary. The policy, he told jurors, was never widely known in the firm and the Enron audit team had never been told of the policy before last fall, just as Enron’s public meltdown began.
“It had never been done before. This policy was about the lowest priority in the firm ... all of a sudden it rockets to the top of everybody’s to-do list ....What’s the rush?” Buell asked. “What answer does the defense have to that question?”
Buell said Andersen’s senior executives feared potentially tougher SEC enforcement under new chairman Harvey L. Pitt and invoked the policy to provide a cover for destroying as much material as possible before receiving a subpoena. “Why did it happen when it happened? They were girding for the Enron wars.”
During the trial Andersen contended that the shredded documents were “extraneous,” but Buell said that did not amount to a proper defense under the law.
“The issue isn’t whether they did a perfect job” of destroying all incriminating papers, he said. “They did it because their strategy was ... the less, the better. Who knows what kind of hideous documents might be buried in those worker bee files?”
But Hardin, in an often manic four-hour summation, said Andersen drifted into a “perfect storm” of circumstances that made the document destruction appear “suspicious.”
But he insisted the firm’s conduct did not amount to a crime. No one persuaded anyone else to shred documents with the intent of keeping them from the SEC.
Hardin argued that it is not illegal for a firm to follow its normal business policies while an SEC inquiry is underway.
He also discussed the conduct of the four key players fingered by the government as “corrupt persuaders” under the law--Duncan, Nancy Temple, Thomas Bauer and Michael Odom. Hardin said none of them possessed criminal intent or acted to persuade others to impede the SEC, based on their notes and e-mails.
In particular, Hardin said Temple, a junior lawyer at the firm, has been “wronged” by the prosecution. “We have 38-year-old junior lawyer who has not been charged with a crime and has been blasphemed by these people for three weeks when they decided they didn’t like what David Duncan said,” His voice rising, Harden said, “Nancy Temple has been legally and morally wronged in this trial, and I will not apologize for my tone of voice or my anger. We don’t do this in this country.”
Hardin also aimed to dismantle the allegation that Enron team members in Andersen’s Portland, Ore., and London offices also received instructions to destroy Enron-related documents.
Hardin noted that prosecutors didn’t call executives from those offices to appear at the trial. When Andersen did call them, they testified that they didn’t interpret the policy as a signal to shred incriminating papers. “This isn’t a conspiracy,” Hardin said. “They literally drifted into this.”
