U.S. Seeks More Andersen Testimony

Federal prosecutors asked a judge Thursday to let them continue questioning Andersen employees in front of a grand jury even after the accounting firm’s indictment on an obstruction-of- justice charge.

The move is a response to an Andersen claim that prosecutors are improperly using the grand jury to probe for evidence supporting a charge that already has been filed. Andersen, the former auditor of fallen energy giant Enron Corp., had asked U.S. District Judge Melinda Harmon to quash subpoenas sent to four of its executives.

Prosecutors said the request “is another in a series of efforts to manipulate the pace and timing of the government’s investigation into obstruction of justice and other crimes relating to Enron, Andersen and certain of their personnel.”

Courts have ruled that the law prohibits prosecutors from calling a grand jury to hear evidence adding to an existing indictment. But prosecutors said the law allows a grand jury to continue hearing testimony to determine whether unindicted individuals were involved in the same criminal activity or whether the indicted defendant committed other crimes.

The Justice Department said Andersen is trying to shut down the grand jury’s probe of “the conduct of Andersen employees who include persons the firm originally blamed in its public statements for the widespread obstructive acts alleged in the indictment.”

In January, Andersen fired David B. Duncan, the lead partner overseeing audits of Enron, and suspended three others, saying that “it should be perfectly clear that Andersen will not tolerate unethical behavior.” More recently, the firm has toned down its description of the executives’ conduct.

Andersen also has sought to persuade prosecutors to withdraw the indictment, saying it unfairly punishes the firm’s 28,000 U.S. employees for the actions of a few.

In their motion, prosecutors said the company’s public relations campaign attacking the government’s case “serves to signal Andersen’s desired factual position to current and former employees, some of whom may be targets, subjects or witnesses in the pending investigation.”

Rusty Hardin, an attorney for Andersen, told Reuters that he was “really saddened to see representatives of the government suggest that these employees ... should not have the right to freely express their disagreement without being accused of witness coaching.”

In a separate filing, prosecutors also offered a behind-the-scenes glimpse of the events leading to the indictment.

Leslie R. Caldwell, the prosecutor overseeing a task force probing Enron’s collapse, said in the filing that Andersen--after disclosing in January that employees had shredded Enron-related records--asked the government to conduct an “expedited investigation” into the destruction.

The Justice Department initially informed Andersen on March 1 that it intended to ask the grand jury to indict the firm for destruction of records, Caldwell said. On March 3, at Andersen’s request, prosecutors held a meeting with Andersen Chief Executive Joseph F. Berardino and other executives, in which the firm made a presentation and asked the department not to indict it, Caldwell’s declaration said. Prosecutors decided not to reverse their earlier decision.

Not until March 6, Caldwell said, did Andersen say it wished to present testimony to the grand jury.