Andersen, the accounting firm accused of bungling Enron Corp's audit, on Tuesday said it would fire its lead partner in charge of reviewing the company's books, saying he ordered Enron documents be destroyed after learning federal regulators wanted to see them.
The dismissal of David B. Duncan is the first move by Andersen to pin blame on someone for mishandling Enron. It is also the latest in a series of blows to Andersen's reputation as one of the world's top accounting firms.
Andersen said "thousands" of e-mails and "large numbers" of paper documents relating to Enron were quickly destroyed shortly after Duncan learned on Oct. 23 of a request by the Securities and Exchange Commission for information on Enron's audit. Duncan was traveling and not immediately available for comment, a worker in his Houston office said.
"Although the firm is still working to collect all the facts, it has learned that at the direction of the lead partner an expedited effort to destroy documents in Houston was undertaken," Andersen said in a statement.
The No. 5 accounting firm faces ruin over lawsuits questioning its handling of Enron, with insurance unlikely to cover potential payouts, according to industry experts.
The latest disclosure may help staunch some of the bleeding after Andersen admitted last week that Enron-related documents were destroyed, some industry experts say.
"This actually makes things better for them because they're trying to localize the damage," said Shyam Sunder, a professor of accounting, finance and economics at the Yale School of Management. "They're trying to save the rest of the organization by providing claims or evidence that this was a local action."
In a story that parallels the stunning events surrounding Enron's collapse, Andersen said Duncan called an urgent meeting to organize the quick disposal of Enron-related documents.
Of particular importance, Andersen said Duncan called the meeting on Oct. 23 shortly after Enron had received a request from the SEC about its accounting and financial reporting.
The firm said most of the activity to delete e-mails and to discard desk files and other documents took place in the days following that meeting. The destruction apparently only stopped after Andersen was subpoenaed by the SEC in early November.
An assistant to Duncan sent an e-mail to other secretaries on Nov. 9, the day after the firm was subpoenaed, telling them to "stop the shredding."
Joseph Berardino, Andersen's managing partner and chief executive officer, said Duncan's dismissal was painful but the right thing to do.
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