BOOK: How Arthur Andersen began shredding Enron documents
As a former Arthur Andersen employee, I’ve always had an interest in the company’s involvement in the downfall of Enron (which ultimately led to AA’s demise). We’ve all heard about the fact that AA employees began to shred documents. But how did that really happen?
Kurt Eichenwald lays it out in his book about Enron:
It was the morning of October 10, and Odom was letting everyone know that they needed to be careful with their paperwork. Andersen had a policy, he said, requiring the destruction of records that weren’t needed for the finished audit files. it worked well, he said, and auditors in Houston needed to be sure they were in compliance.
“We’ve had several cases where we’ve produced documents in litigation recently where we found a lot of stuff that we shouldn’t have retained,” he said.
Of course, once the firm was sued, Odom said, nobody could destroy documents anymore. “But if it’s destroyed in the course of the normal policy and litigation is filed the next day, that’s great,” Odom said. “We’ve followed our policy, and whatever there was that might have been of interest to somebody, uh, is gone.”
So the executives began the shredding as part of their routine policy. Yet, by this time, the actions really weren’t routine, were they?
A few days later, the shredding was in full force:
Shannon Adlong stepped off the elevator onto the thirty-seventh floor of Three Allen Center, Andersen’s offices for its Enron team…
The place bustled, the trash cans overflowed. And around the office she periodically heard the whirring sound from the firm’s shredders. Obviously, people were getting rid of paperwork. She wandered by the break room and saw two large bags of shredded papers. Walking toward her office, Adlong noticed Kimberly Scardino, one of the auditors on the Enron account. She asked what was going on.
“Dave got an e-mail on Friday from the legal department in Chicago,” Scardino said. “They want us to be in compliance with the document retention policy.”
And that may very well have been the beginning of the end of Arthur Andersen in the United States.
Tags: Arthur Andersen, Enron, audit files, document retention policy
