Tags: FBI | Arrives | Enron

FBI Arrives at Enron

Tuesday, 22 January 2002 12:00 AM

The FBI would not comment. Enron officials said the agents were on hand to talk with workers and check into the claims.

Lawyers for shareholders and former Enron employees asked a federal judge to preserve documents needed in lawsuits.

Scores of lawyers and reporters crowded the courtroom where U.S. District Court Judge Melinda Harmon was urged to end document shredding that one former Enron employee said continued at Enron headquarters as recently as last week.

Attorney William Lerach, who represents shareholders suing 29 current and former Enron executives, asked the judge to approve a five-part "court-ordered evidence preservation process" that he said would protect documents needed in pending lawsuits and federal investigations. At least 20 attorneys attended the hearing and several of them had suggestions for the judge on how to handle the preservation of evidence. On behalf of former employees who lost 401(k) funds, attorney Justin Campbell said his firm did not represent "funds who lost a small percentage of their holdings; we represent the people who lost it all."

Campbell said a plan submitted by plaintiffs' groups that permits Arthur Andersen, the company's auditor during the bankruptcy, to manage the documents in question was inadequate and did not go far enough to safeguard the rights of 401(k) plan participants.

An Andersen attorney said the company reported the destruction of documents as soon as it became aware of the acts and suspended all internal policies that provided for the routine destruction of documents. He said the company regretted what happened to Enron shareholders and was extremely concerned about allegations of shredding.

An attorney for Enron said when claims of document shredding were made, the company sealed off the 19th floor offices where the acts allegedly occurred and posted guards to prevent unauthorized access.

Harmon asked the plaintiffs' attorneys to provide her with an agreed order for review Wednesday and said she would issue a ruling.

FBI spokesman Bob Dogium denied news reports that FBI agents had been sent to Enron headquarters to investigate the reports of continued shredding.

Maureen Castaneda, Enron's former director of foreign exchange, told ABC News on Monday that Houston employees shredded documents as recently as last week. She turned over boxes of shredded paper to one of the plaintiff lawyers.

Enron spokesman Mark Palmer said the company had instructed employees to retain and not destroy any documents after the Securities and Exchange Commission began its investigation in October. Since then, Congress and the Justice Department have begun investigations into Enron's collapse.

Palmer said four e-mail directives have been issued since Oct. 25 forbidding the destruction of company documents.

Congress is investigating the reports that Andersen destroyed documents related to Enron's financial downfall. A House investigation of shredding at Andersen is scheduled to open Thursday in Washington.

Enron filed for Chapter 11 bankruptcy Dec. 2 in the nation's largest bankruptcy. Thousands of workers lost their jobs and their 401(k) retirement funds invested in company stock.

President Bush on Tuesday expressed outrage that Enron stockholders did not know the facts about the company before its collapse. He vowed that the federal government would take action to protect shareholders - such as his mother-in-law.

"What I'm outraged about is that shareholders and employees didn't know all the facts about Enron. My own mother-in-law bought stock ... and it's not worth anything now," Bush said during a visit to West Virginia. "If she had known all the facts, I don't know what her decision would have been, but she didn't know all the facts. And a lot of shareholders didn't know all the facts. And that's wrong."

It was the first time that Bush had disclosed that Laura Bush's mother, Jenna Welch, had holdings in Enron. A White House official said later that Welch bought 200 shares at $40.90 a share - $8,180 - on Sept. 21, 1999.

She sold her holdings on Dec. 4 of last year for 42 cents a share - $84.

Enron, a Houston energy trading company, was the seventh-largest corporation in the United States. It was also one of Bush's largest political campaign contributors. The troubled corporation, which had 21,000 employees worldwide, filed for bankruptcy early last month.

As a result, thousands of Enron employees and investors saw their stock portfolios, pensions and retirement funds virtually wiped out.

The Bush administration maintains that it took no action to help Enron avoid collapse, and senior administration officials also asserted that Enron executives had no influence over Bush's emerging energy policy.

"If somebody has got an accusation about some wrongdoing, just let me know," Bush said. "It's like when I talked with [Commerce Secretary] Don Evans and [Treasury Secretary Paul] O'Neill, they told me they had spoken to Enron. I said, tell the people what you did. And if there's any accusations, if you've got anything on your mind - the energy report should speak for itself. We laid out the energy report, it's fully disclosed," Bush said.

Copyright 2002 by United Press International.

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The FBI would not comment. Enron officials said the agents were on hand to talk with workers and check into the claims. Lawyers for shareholders and former Enron employees asked a federal judge to preserve documents needed in lawsuits. Scores of lawyers and reporters...
Tuesday, 22 January 2002 12:00 AM
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