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Lawyer who wrote document memo quizzed

WASHINGTON (CNN) -- An Arthur Andersen attorney who wrote a memo to the Enron audit team outlining the firm's document destruction policy was interviewed by congressional investigators Monday afternoon on Capitol Hill.

The lawyer, Nancy Temple, appeared shaken and on the verge of tears as she left the building late in the afternoon without commenting to reporters.

Committee spokesman Ken Johnson would not detail what Temple told investigators, other than to say she told them nothing new.

Temple was asked to testify at a hearing Thursday of the House Energy and Commerce Committee, which is investigating the collapse of the Enron Corp. and the role Arthur Andersen, its accounting firm, might have played.

Johnson said the committee was prepared to subpoena her if necessary.

Her testimony might prove key in determining whether the destruction of Enron documents by its auditor was a simple case of routine housecleaning or whether it was part of an effort to hide evidence of the company's true fiscal condition from investigators.

Michael Odom, the risk management partner responsible for the Houston office, gave testimony Friday that bolstered the account given last week by lead partner David Duncan, sources said.

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Duncan told congressional investigators his team began shredding Enron documents last fall only after Temple issued an October 12 e-mail reminding employees of Andersen's document retention policy: "Save what is important, destroy everything else."

"It might be useful to consider reminding the engagement team of our documentation and retention policy. It would be helpful to make sure that we have complied with the policy. Let me know if have you any questions. Nancy," said the e-mail sent to Odom and then forwarded to Duncan.

Andersen fired Duncan last week and placed three other partners on leave.

Duncan told congressional interviewers the memo was unprecedented and that he believed it was a signal to destroy all but the most basic "work papers" relating to their auditing of Enron, a source said.

Duncan did not see anything wrong with destroying documents, because he was relying on advice from counsel, the source said.

Odom, the head of risk management in Andersen's Houston office, agreed with Duncan's contention that such a memo had never previously been issued to the team.

Odom, who did not report to Duncan, has been relieved of management responsibilities but not placed on leave, the firm said.

The accounting firm said Duncan called a meeting October 23, a day after he learned of a request from the Securities and Exchange Commission for information about Andersen's auditing of Enron, to organize the "expedited effort to dispose of Enron-related documents."

Enron disclosed October 31 that it was under formal investigation by the SEC.

Duncan and his staff's actions from October 12 -- the date of the e-mail -- to October 22 were unclear. But Duncan did work on Enron's third-quarter earnings statement of October 16, according to a person familiar with the investigation.

The shredding did not stop until November 9, when another e-mail -- sent from Andersen headquarters in Chicago -- directed staff to stop destroying documents, the accounting firm said.

Duncan told investigators that Temple participated in conference calls with him and senior executives at least three times a week in which they discussed what to do with Enron auditing documents, a person with knowledge of the situation said.

Andersen countered Monday that it does not believe Temple directed Duncan or anyone to shred documents, the Andersen spokesman said.

Activities at Andersen's Houston office during the period are the subject of a congressional investigation, firm spokesman Charlie Leonard told CNN/Money.

Duncan, a CPA and senior partner at Andersen, was in a position to know what his legal responsibilities were, the Andersen spokesman added.

"That is why [Duncan] was dismissed from this firm," Leonard said. "The activities he engaged in at a minimum display extraordinary bad judgment."

Temple never rescinded the October 12 e-mail, but there was no reason to rescind the memo since it was just a friendly reminder, Leonard said.

"This is a man who knows what his responsibilities are under the law," Leonard said. "He knew that there was a government investigation and he began shredding docs."

Joseph Berardino, Andersen's chief executive officer, said Sunday the memo was not part of an effort to cover up information.

"We were in the process of putting our files together to make sure that all of the third-quarter events were properly documented in our work papers," he told NBC's "Meet the Press."

"Nancy just told people to use their judgment. She did not instruct them to do anything, to my knowledge."

He said a reminder of the policy was necessary "because accountants are pack rats. ... We save lots of stuff that's not relevant."

He accused Duncan of displaying poor judgment. The Chicago-based accounting firm has portrayed the document destruction as an isolated case.

Neither Duncan nor Odom could be reached for comment.




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