Prosecutor: Andersen prepared for SEC

Closing arguments given in firm's trial

? Arthur Andersen LLP’s scramble to shred Enron Corp.-related documents was a calculated effort to prepare for lawsuits and criminal investigations resulting from the energy company’s collapse, a prosecutor said Wednesday.

“They were getting ready to deal with the (Securities and Exchange Commission) and the investors who would sue them,” Assistant U.S. Atty. Sam Buell told jurors in closing arguments during the auditing firm’s obstruction of justice trial.

“They were girding for the Enron wars,” he said.

Rusty Hardin, Andersen’s lead lawyer, countered that prosecutors “struck for quick gain” by indicting the firm two months after it reported the shredding to the government in January and picked through documents to find seemingly incriminating messages.

He said prosecutors had brought suspicion “to a new art level” based on timing and circumstances of adherence to policy.

“They had no evidence that anybody did this for this improper purpose,” Hardin said.

U.S. District Judge Melinda Harmon gave prosecutors and defense attorneys four hours each to make their last arguments before jurors begin deciding Andersen’s fate.

Buell pummeled Andersen’s document retention policy and in-house Andersen lawyer Nancy Temple’s sudden promotion of it last October as the SEC began investigating Enron’s accounting practices. Andersen says the shredding was routine compliance with a policy designed to protect client confidentiality.

Temple was one of three witnesses who invoked their Fifth Amendment right guarding against self incrimination and declined to testify in the trial.

Buell said Andersen had known Enron employed risky accounting methods but decided in February last year to stick with its client, which generated $52 million in revenue for Andersen in 2000.

If convicted, Andersen would face fines and would be barred from auditing public companies. More than 650 of its 2,300 clients already have fired the firm, most since the indictment was unsealed March 14.

Harmon had advised jurors to “pack a bag” and prepare to stay in downtown Houston overnight Wednesday.