Ex-Andersen employees doubt Duncan acted alone
By MIKE TOLSON
Jan. 17, 2002, 10:12PM
Copyright 2002 Houston Chronicle
When the glare of publicity suddenly found him, David B. Duncan was cast as a rogue accountant, panicked into a shredding frenzy by the thought of investigators sifting through his auditing team's paperwork.
The image may yet prove true. But those familiar with Arthur Andersen, and to the high-stakes auditing of Big Five accounting firms, suggest it stretches credibility to think he operated as independently as the bosses who fired him two days ago claim.
Accountants are not gamblers and they don't get ahead in a conservative profession by being mavericks.
"I have a feeling that David Duncan would not go to the bathroom without talking to a partner," said a former Andersen accountant who left in the late 1980s. "The joke when I was there was that the people who made partner were the ones who could put up with the most crap. People who had individuality or creativity got out. It's a real team-oriented firm."
He recalled a large spiral notebook of company practices and procedures that was updated regularly. Employees who failed to add updates or follow the book got into trouble.
"It's as close to a McDonald's franchise as you can get," he said. "I would be amazed if this guy was involved in criminal conduct on his own."
Andersen fired the 42-year-old Duncan on Tuesday, following revelations that he had ordered the shredding of thousands of documents upon learning the Securities and Exchange Commission was investigating Enron's books.
Andersen was Enron's longtime outside auditor -- until being fired Thursday.
Saying the termination of Duncan "was absolutely the right thing to do," Joseph Berardino, Anderson's CEO, placed three other auditors on administrative leave and removed four partners from management duty.
Duncan was atop a large pyramid of personnel who reviewed Enron's books. A huge account, it brought in $1 million a week. Duncan oversaw it all and signed the final report.
As the "engagement partner," with primary responsibility for a big account, Duncan was handsomely paid -- somewhere between $500,000 and $1 million, according to estimates by former employees. He lives with his wife, Peggy, and three young daughters in a house in exclusive Hunter's Creek Village valued on the tax rolls at $776,000 and by neighbors at close to $1 million.
He sat on an important Andersen committee and represented the firm on the board of the American Council for Capital Formation, a Washington-based pro-business organization.
At his alma mater, Texas A&M, he was on the accounting department's professional advisory board and was in charge of recruiting new graduates from the university.
"He's always been very professional and dignified," said James Benjamin, head of the school's accounting department. "He's passionate about his firm, his profession and Texas A&M."
Benjamin, who taught Duncan as an undergraduate, saw him on more than two dozen occasions and never noticed anything particularly different about him. He wasn't overly personal, or overly anything -- except successful.
"There's nothing about him to distinguish him from any of the other fine graduates that would put him in this situation," Benjamin said. "I never would have anticipated anything negative about him or the Houston Andersen office."
Duncan worked for Andersen since graduating in '81. As Houston recovered from the oil and real estate bust of the 1980s, Andersen became the largest accounting firm in town, with many big clients in the energy industry.
Andersen's Houston office started to become a local and national powerhouse when Von Graham took over in the mid-1980s. Graham was part of the "Mississippi Mafia," eight graduates of the University of Mississippi in powerful positions at Andersen offices throughout the country.
Graham was known for persuading Andersen headquarters in Chicago to strengthen the Houston office as it pursued big energy accounts. Among those it landed were Pennzoil and the corporate predecessors of Enron.
When Graham retired in 1996, Andersen's Houston office was larger than the eight other accounting firms in town. In 2001, the local office had more than 1,700 employees, with more than 280 certified public accountants.
Duncan, who has headed the Enron team since 1997, was well-regarded by many, but certainly not all. Some found him demanding and unpleasant to work for, said a former Andersen manager.
"But he was chosen for that trait," he said, because Enron's reputation for being pushy required a like-minded account manager.
Duncan spent most of his time in his office in Enron's headquarters at 1400 Smith, causing some to feel that he related more with Enron than Andersen.
But of the former local Andersen employees who spoke to the Chronicle, none said Duncan would have been an independent operator.
"It's not like he was standing there running the show," one said. "No one is an island at Andersen."
But no one doubts Enron's importance to Duncan, which could have motivated him to do everything possible to protect his client.
"At Arthur Andersen, money speaks louder than anything," said a former Andersen accountant who asked not to be named. "Your future depends on how much you control."
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Chronicle reporter Tom Fowler contributed to this story. |
