A Houston-based manager for the Andersen accounting firm testified Tuesday that a superior told her he would use the catchphrase “document retention” when referring to the destruction of documents related to Enron Corp.
Prosecutors in Andersen’s obstruction-of-justice trial contend that those words are a veiled code at the heart of a conspiracy to destroy records in the face of a federal probe. But Andersen’s lawyers say the words “document retention,” as used by Andersen employees, refer to a very specific set of rules for retaining and disposing of documents as the firm conducts audits.
In describing a large amount of document shredding last fall, Andersen manager Patricia Sue Grutzmacher testified that senior auditor Tom Bauer told her that he would explain any destruction of records using Andersen’s accepted terminology.
“He told me that if he ever talked about getting rid of documents, it would be along the lines of being in compliance with the firm’s document-retention policy,” Grutzmacher said.
Bauer won’t be available to clarify the matter: He advised the court on Monday that he declined to testify on the basis of his 5th Amendment right not to incriminate himself.
Chicago-based Andersen is on trial for destroying Enron-related information in the face of a Securities and Exchange Commission probe.
Bauer is key to the government’s case because, prosecutors contend, he was the willing foot soldier of Andersen’s lead auditor on the Enron account, David Duncan, in destroying documents. Duncan, who has turned government witness, testified last week that Bauer carried out his instructions to purge files
The Andersen defense team, meanwhile, is trying to demonstrate that there was nothing sinister about Andersen’s document retention and destruction policy.
Neither testimony from Andersen partners in Chicago and Houston, nor e-mails and written notes from Andersen supervisors introduced into evidence this week, indicate any explicit orders from Andersen higher-ups to rip up files, defense lawyer Rusty Hardin noted.
In testimony Tuesday, Grutzmacher supported Duncan’s contention that he told his staff about SEC interest in Enron’s failing finances and that Andersen auditors were to do nothing “more or less” than to follow the firm’s policies.
“I’m not telling you to go shred a bunch of documents or anything, but you need to make sure you are in compliance with the policy,” Grutzmacher recalled Duncan telling his staff in a meeting on Oct. 23.
Grutzmacher, who worked on overseeing Enron’s wholesale division audits, said she took Duncan’s words to mean she was to get her paperwork in order and “discard everything” that was unimportant.
“I had a lot of documents and stuff that I would not consider part of the document-retention policy,” said Grutzmacher, the first of Duncan’s staff to testify.
Under questioning from Hardin, Grutzmacher testified that she was not shredding to evade a federal investigation. Rather, she said, it is the normal course of business to throw away non-essential paperwork.
“I didn’t have anything troubling or to hide,” she said.
Still, Grutzmacher said, she found it “unusual” that Bauer would emphasize to her that, if asked, he would not speak to the issue of document destruction.
Grutzmacher, 32, told jurors that she expects to lose her job this month in Andersen cutbacks.
The day in court also was taken up by Hardin’s questioning of an FBI agent about damaging revelations on Monday of Andersen notes, e-mails and videotape that showed Andersen partners knew of a possible SEC inquiry into Enron and discussed what documents should be discarded.
Hardin attempted to show the jury that the evidence could be interpreted in a positive light as Andersen attempting to help Enron in its dealings with the SEC.
Hardin dissected an Oct. 12 e-mail from Andersen lawyer Nancy Temple to senior Houston partner Michael Odom that prosecutors sought to present as an implicit shredding order.
Hardin peppered FBI agent Barbara Sullivan with questions as to whether she saw the words “order,” “destroy,” “get rid of” or “discard” in the e-mail.
“Do you see any word in there that tells people what to do with documents?” Hardin asked. Sullivan simply said, “No.”
