Andersen Defense May Start Presenting Case

Arthur Andersen, plagued with client losses, bolting partners and the possibility of losing its accounting license in Texas, probably will begin presenting its defense in its obstruction-of-justice trial today in federal court in Houston.

Prosecutors expect to rest their case with their last witness, FBI agent Paula Schanzle. Andersen’s lead lawyer, Rusty Hardin, then expects to start presenting the defense.

David Duncan, Andersen’s former top Enron Corp. auditor, who pleaded guilty to illegally shredding documents, testified for the prosecution that he decided months later he committed a crime. He said he initially believed he hadn’t broken any laws when he ordered the destruction of “extraneous” Enron documents last autumn.

Hardin said Andersen is basically dead as a business, even if jurors acquit the firm.

Andersen has lost more than 500 publicly traded clients, or nearly a quarter of the 2,300 companies whose books it audited last year. And last week, the Texas State Board of Public Accountancy said it has recommended revoking the company’s accounting license.

So the defense will focus on showing jurors the people behind the firm, he said.

Hardin said he expected Richard Corgel, Andersen’s U.S. audit practice director in Chicago and one of 62 potential witnesses, to be the first to testify for the defense.

U.S. District Judge Melinda Harmon told jurors last week that court would be in session today despite the federal Memorial Day holiday.