Arthur Andersen goes on trial in Enron shredding case

HOUSTON -- The first criminal case to emerge from the Enron Corp. collapse began Monday as Arthur Andersen LLP went on trial for allegedly obstructing justice by shredding Enron-related documents.

Sixteen-jurors, including four alternates, were sworn in Monday and opening statements were expected to begin Tuesday. The trial is expected to last at least three weeks.

A conviction could be the final blow to Chicago-based Andersen, which has lost clients, partners and employees in the Enron fallout. But the case is also being closely watched because the government's likely star witness could reveal details on the complicated partnerships that led to Enron's downfall late last year.

That man, former Andersen partner David Duncan, pleaded guilty April 9 to obstruction of justice. Duncan, who was the senior auditor in charge of the Enron account, admitted he directed document shredding to thwart the Securities and Exchange Commission's investigation into Enron.

"Documents were in fact destroyed so that they would not be available to the SEC," he said when he entered his plea.

Duncan, who was fired in January, could provide details about Enron's most controversial deals that preceded its bankruptcy. His plea deal gave him immunity from other charges.

A grand jury indicted Arthur Andersen on March 7 on a single count of obstructing justice, accusing the firm of destroying "tons of paper" and deleting computer files related to Enron in Houston and elsewhere.

At times, the government said the destruction was so frenetic that employees worked overtime and shredding machines couldn't keep pace.

If convicted, Andersen could face up to a $500,000 fine and five years' probation. However, it could also be fined up to twice any gains or damages the court determines were caused by the firm's action.

Prosecutors said that if jurors determine one Andersen employee destroyed documents on the firm's behalf to thwart investigators, that's enough to secure a conviction.