"Documents Destroyed - After SEC Request".

The Hindu

CHICAGO-A top Arthur Andersen partner organized a hurried destruction of Enron-related documents after hearing that the Securities and Exchange Commission had requested information, the accountancy firm said. The lead partner, David Duncan, was sacked yesterday.

"Although the firm is still working to collect all the facts, it has learned that at the direction of the lead partner an expedited effort to destroy documents in Houston was undertaken," Arthur Andersen said in a statement.

"The effort was initiated following an urgent meeting the lead partner called on October 23 to organize the expedited effort to dispose of Enron-related documents," it said.

The meeting occurred shortly after the lead partner learned that Enron had received a request for information from the SEC about its financial accounting and reporting, it said.

"This effort was undertaken without any consultation with others in the firm and at a time when the engagement team should have had serious questions about their actions," the company said.

A report from Washington adds: The accounting firm Arthur Andersen committed gross errors in its handling of Enron, experts said yesterday.

Experts called for deep accounting industry reforms as the scandal gathered pace with the revelation that an Enron insider warned of the "funny accounting" four months before its bankruptcy.

"Arthur Andersen is going to have a tough time defending the opaque disclosures that Enron managers made," said Edward Ketz, associate professor of accounting at Pennsylvania State University.

In particular, he said, Arthur Andersen had allowed $1.2 billion to be booked as an asset when the money was only a receivable and was in fact never handed over.

The company also would have a tough time explaining why it failed to consolidate limited partnerships into Enron's accounts instead of leaving the figures off the balance sheet.

"Someone at the top of the firm made the decision and just think it is indefensible," Mr. Ketz said. "They are going to get sued, probably (for) billions of dollars."

The SEC or Federal prosecutors would be examining the issue of fraud, he said.

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