Andersen releases set of internal e-mails

January 15, 2002

NEW YORK – Arthur Andersen released a set of internal communications on Monday night as it sought to explain the role of one of its lawyers in the destruction of thousands of documents by the firm's auditors at Enron.

The internal communications were sent by e-mail four days before the energy trading company announced a huge reduction on its net worth in October.

Andersen said the exchanges within the firm did not clear it of misconduct, explaining that it was disclosing them in the interest of "getting the facts and taking appropriate actions in the Enron matter."

A spokesman for the House Energy and Commerce Committee, which on Sunday said that the lawyer had authorized Andersen employees to destroy Enron documents, said the panel was "unimpressed" by Andersen's disclosure.

Andersen said that on Oct. 12, one of its lawyers, Nancy Temple, sent an e-mail to Michael Odom, the risk management partner in the firm's Houston office, as work was drawing to a close on Enron's financial report for the third quarter, which ended Sept. 30.

"Mike – It might be useful to consider reminding the engagement team of our documentation and retention policy," Ms. Temple wrote. "It will be helpful to make sure that we have complied with the policy. Let me know if you have any questions."

Mr. Odom passed the e-mail on to a colleague working on the Enron financial report after adding the phrase "more help," the Andersen documents show.

Andersen, in a statement, said that Ms. Temple "never told the audit team that they should destroy documents for past audit work that was already completed." Rather, the firm said, her e-mail referred to "current uncompleted work" on the third quarter financial results and simply advised Mr. Odom to review Andersen policy.

Congressional investigators read the memo as giving auditors permission to destroy records at a time when people inside Enron knew it was in serious financial trouble.

"We are unimpressed by Andersen's statement," said Ken Johnson, a spokesman for Energy and Commerce Committee, whose chairman, Rep. Billy Tauzin, R-La., has been investigating Enron since the first week of December.

"The fact remains that these e-mails on document destruction were so significant that Enron's outside lawyer felt it necessary to bring them to our attention," Mr. Johnson said Monday night.

Andersen's document retention policies, adopted in 1999 and 2000, detail the handling and destruction of documents to protect confidential information and to help Andersen defend itself in both lawsuits and government investigations.

The firm also released the policies Monday night.

"Only final documents will be retained," they say at one point. "Drafts and preliminary versions of information will be destroyed currently."

The executive summary of one policy states that "in cases of threatened litigation, no related information will be destroyed." It then refers to the fine detail of the policy, which states "in the event" Andersen is "advised of litigation or subpoenas regarding a particular engagement, the related information should not be destroyed."

The policy statements prohibit destruction of documents only after a subpoena is served. No subpoenas had been issued at the time of the Oct. 12 e-mails.

The Andersen policies also emphasize several times that when documents are to be destroyed no paper or electronic trail should be left behind. "For electronic files, appropriate techniques (such as 'absolute delete') should be used to make sure the data cannot be reconstructed from the storage mechanism on which it resided," the February 2000 policy memo states.

Andersen said that "it is important to recognize that the release" of the e-mails by Ms. Temple and Mr. Odom "are not a representation that there were no inappropriate actions." The statement added, "We are moving as quickly as possible to determine all the facts."