Certified Public Scapegoat
The New York Times
Editorial
January 25, 2002
A ccountants are trained to
make complicated corporate
situations neat and easily
comprehensible, and that is just
what representatives of Arthur Andersen tried to do at
yesterday's Congressional hearings into the destruction of
Enron documents. A panel of employees of the accounting
giant testified that the fault for what now appears to be a
truly huge document-shredding project, spread out over
months and perhaps involving scores of workers, lay
entirely with a single man, David Duncan, who has been
fired as an Andersen auditor.
Dorsey Baskin, managing director of Andersen's
professional standards group, declared gravely that Mr.
Duncan, the "engagement partner" responsible for the
Enron account, had acted "without any consultation with
others in the firm or, so far as we are aware, with legal
counsel." C. E. Andrews, an Andersen global managing
partner, also funneled the blame to Mr. Duncan. "That is
not Andersen," he said of the document destruction. "That
is not what we encourage our employees to do."
Nancy Temple, who was in charge of Enron litigation for
Andersen, appeared crestfallen that Mr. Duncan had
embarked on his document-shredding spree without her
knowledge. "I only wish," she sighed, "that someone would
have raised the question." The only Andersen employee
who did not pick up the theme was, not surprisingly, Mr.
Duncan himself, whose version of events remains
unknown, since he pleaded the Fifth Amendment to all
the committee's questions.
While the Andersen team was testifying in the House, a
Senate committee heard Arthur Levitt, the former
chairman of the Securities and Exchange Commission,
repeat his calls for tougher conflict-of-interest rules for
the accounting industry, and take a swipe at reform
proposals put forth by his successor, Harvey Pitt. It was
the start of what promises to be a long season of Enron
hearings.
It would certainly make life easier for Arthur Andersen if
the world accepted its story, the accounting industry
version of the lone-gunman theory. But yesterday no one
on the House Energy and Commerce subcommittee
appeared convinced. As the lawyer on whose watch the
document destruction occurred, Ms. Temple had the most
explaining to do. She was the one who sent an e-mail to a
top Andersen executive in Houston on Oct. 12 telling him
to remind the Enron team of the firm's document
retention and disposal policy. Was that a reminder to
protect necessary papers? Or did it amount, one
Congressional inquisitor asked pointedly, to a "shredding
order"?
Just as troublesome was the timeline of events as
presented by the Andersen team. Ms. Temple eventually
got around to telling Mr. Duncan that all the Enron
documents had to be preserved, but not until Nov. 9, more
than two weeks after the S.E.C. began its inquiry into
Enron. Why, the committee wanted to know, did Ms.
Temple wait so long?
Andersen insists that it was solely Mr. Duncan's decision
whether or not to destroy documents up until November
— even though at that point the S.E.C.'s investigation of
Enron was well under way, and Andersen had retained a
large New York law firm to help it defend against possible
lawsuits. With all those red flags flapping around, would
Andersen still leave the decision about which documents
to save, and which to destroy, entirely to Mr. Duncan, an
accountant, without any input from the firm's lawyers?
The committee chairman, Billy Tauzin, for one, was
skeptical enough to warn any accounting firms that might
be watching the hearings not to try to make this
argument in the future.
Another Republican, Cliff Stearns, risked stating the
obvious when he asked, "Is Mr. Duncan being made a
scapegoat here this morning?" The ancient Greeks
believed that by beating a human outcast with rods and
shouting, "Out with hunger and in with health and
wealth," they could drive their troubles away. If Arthur
Andersen is trying to update the ritual, it has gotten off to
a bad start.
nytimes.com |
