Enron auditor faces charge

PETE YOST THE ASSOCIATED PRESS

WASHINGTON -- The Arthur Andersen accounting firm was charged with obstruction of justice stemming from shredding "tons of paper" and deleting computer files, the first indictment in collapse of Enron Corp.

The one-count indictment, announced Thursday, was returned last week by a federal grand jury in Houston, where Enron is based, Deputy Attorney General Larry Thompson said.

Andersen had been given a 9 a.m. EST Thursday deadline to agree to plead guilty. The firm has admitted that some of its employees in the Houston office destroyed Enron documents but contends that top management at headquarters in Chicago was unaware.

Thompson said Andersen also instructed employees in Portland, Chicago, and London to join in the shredding.

The indictment alleges that dozens of large trunks were brought in to haul documents from Andersen's office in the Enron building to the accounting firm's Houston office in order to destroy tons of documents.

The indictment provided a possible motive for the shredding, saying that "Andersen and Enron ... improperly categorized hundreds of millions of dollars" as an increase in shareholder value. Days before the destruction began, Enron corrected its books, reporting a $1.2 billion drop in the company's value.

Thompson held open the possibility that the two sides could work out a plea agreement and avoid trial.

"The action taken against Arthur Andersen ... is without precedent and an extraordinary abuse of prosecutorial discretion," Andersen said in a statement.

On the Web:

- Arthur Andersen: Enron statements

- U.S. Dept. of Justice

For more business stories go to the Business section.

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