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Defiant Andersen pleads not guilty

Published Sep. 2, 2005

Accounting firm Arthur Andersen pleaded innocent Wednesday to charges it shredded documents and deleted computer files related to Enron Corp., and was granted the quick trial it had been seeking.

"I plead not guilty," Gene Frauenheim, managing partner of the Houston office for the Chicago-based firm, told U.S. Magistrate Calvin Botley.

At the same magistrate's hearing, Hardin made clear that the firm would demand its right under the federal speedy trial act to go to trial within 70 days of entering a plea _ or by May 29, in this case.

The move was unusual. Most defendants waive their right to a speedy trial because they don't perceive a rapid resolution of the case to be in their favor, lawyers said.

But in a pretrial victory over prosecutors, Andersen persuaded U.S. District Judge Melinda Harmon to schedule the trial for May 6 _ less than two months after Andersen was indicted.

"We have a strong need and desire for a speedy trial," said Andersen lawyer Rusty Hardin, explaining that the company is losing clients and wants to clear its name as soon as possible. "This is a company whose very existence is in jeopardy. . . . It is so critical that this company be able to air these charges."

"An indictment is just as bad as a conviction in terms of the company's reputation unless we get a quick trial and vindication," he said.

Special prosecutor Samuel Buell replied that the government also favored a speedy trial but needed more time to prepare. But Hardin said the indictment ended negotiations with the Securities and Exchange Commission over a $500-million settlement to compensate investors who suffered big losses when Enron collapsed last year.

"You ought to be willing to belly up to the bar," he added.

Before the arraignment, hundreds of Andersen employees stood across from the federal courthouse chanting, "Save Andersen!" and "Drop the indictment!"

"I was not involved in Enron and I bet you couldn't find six people here who were," said Charlotte Williams, a 21-year Andersen employee who, like others, wore a black T-shirt that said "I Am Arthur Andersen" in orange letters. "We're going to stay until the lights go out if necessary."

Neither management nor lawyers organized the demonstration, Frauenheim said, but he welcomed it. "The reason they were out there today is because they feel so strongly about the firm," he said.

The company also took out full-page advertisements in leading newspapers Wednesday, headlined "Why we're fighting back." It called the government's action "a tragically wrong indictment of our whole firm."

The grand jury indictment unsealed last week accused the Big Five firm of obstruction of justice. The indictment against Andersen is the Justice Department's first related to the collapse of energy trader Enron, which declared bankruptcy in December amid questions about its accounting practices. Andersen had been Enron's auditor for 16 years.

The indictment said high-level Andersen management officials held a conference call to discuss an SEC 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. The indictment also alleged Enron documents were destroyed by Andersen personnel in Chicago, London and Portland, Ore.

Andersen acknowledged in January a "significant but undetermined" amount of Enron-related documents had been destroyed at its Houston office. Enron fired Andersen shortly thereafter. No individuals were indicted even though Andersen has sought to blame the accounting scandal on its lead Enron auditor, David Duncan, and others in its Houston office.

Duncan was fired shortly after that acknowledgment and is cooperating with investigators.

The maximum penalty Andersen could face if convicted is a $500,000 fine and 5 years probation. It could additionally be fined up to twice any gains or damages the court determines were caused by the firm's action.

_ Information from the Dallas Morning News was used in this report.