Auditor Enters Not Guilty Plea to Obstruction of Justice Charges

The Andersen accounting firm pleaded innocent Wednesday to criminal charges that it obstructed justice by shredding tons of documents and deleting computer files related to Enron Corp.

The hearing was the auditing firm’s first since a federal grand jury indictment was unsealed last week.

“I plead not guilty,” Gene Frauenheim, managing partner of the accounting firm’s Houston office, told U.S. Magistrate Calvin Botley during the brief arraignment.

U.S. District Judge Melinda Harmon, who ultimately will hear the case, set a May 6 trial date and said she will see that it lasts just three weeks.

Botley told Andersen’s attorney, Rusty Hardin, that if the firm decided to change its plea it would need to notify the court.

“I can assure the court we will not change,” Hardin said.

Outside the courthouse, hundreds of chanting Andersen employees protested the indictment, saying they aren’t cowering from the charges.

“I was not involved in Enron and I bet you couldn’t find six people here who were,” said Charlotte Williams, who has worked at Andersen for 21 years. “We’re going to stay until the lights go out if necessary.”

Williams and other employees wearing “I am Arthur Andersen” T-shirts chanted: “Drop the indictment! Save Andersen!”

Hardin had said the company wants a jury trial to challenge what he called the government’s flimsy evidence.

“An indictment is just as bad as a conviction in terms of the company’s reputation unless we get a quick trial and vindication,” Hardin said.

The Justice Department’s first indictment related to Enron’s collapse was unsealed last week. In the indictment, Andersen is accused of obstructing justice by shredding tons of documents and deleting computer files related to Enron audits.

The indictment said high-level Andersen management officials held a conference call to discuss the onset of a Securities and Exchange Commission inquiry of Enron in October. Dozens of trunks then were obtained to haul paper from Andersen’s offices in the Enron building to the auditing firm’s Houston office for shredding, according to the indictment.

Andersen vehemently challenged the allegations, calling them “couched in broad, vague and conclusory terms. They offer no detail at all, and fail even to identify by name the higher-ups at Arthur Andersen LLP who the government believes masterminded the document destruction.”