WASHINGTON (KRT) — A former Enron Corp. executive said Monday that company documents were destroyed at its Houston headquarters even after the federal government began investigating the firm’s spectacular collapse last fall.
The startling accusation of document shredding prompted Enron’s attorney, Robert Bennett, to say that the company would immediately look into the allegation made by former executive Maureen Castaneda in an ABC News interview.
Displaying a box of shredded material, Castaneda, identified by ABC as the former director of Enron’s foreign investments section, said the document destruction began after Thanksgiving and continued as late as last week in the 19th-floor accounting office of the company’s Houston headquarters. She said she got the box of paper to use for packing material and that there were “a lot more” boxes like the one she showed on the air.
Federal authorities and congressional committees are already investigating the shredding of documents by Enron’s auditor, Andersen LLP, in connection with Enron’s failure. The revelations that Enron may have done the same thing added a new dimension to the burgeoning scandal.
“It’s one thing to make bad business decisions; it’s another thing to cover up bad business decisions,” said Ken Johnson, spokesman for Rep. Billy Tauzin, R-La., chairman of the House Energy and Commerce Committee, one of the panels investigating the firm. “If it’s true, this is an even bigger mess than we thought.”
Johnson said the committee undoubtedly would look into the new allegation and probably call Castaneda to testify. Meanwhile, the panel will hold a session Thursday to hear evidence on the shredding of documents at Andersen, and is threatening to force a former Andersen auditor, David Duncan, to testify. Duncan has sought a postponement.
Castaneda told ABC she found shredded paper with references to some of Enron’s controversial businesses partnerships, such as Jedi, which the firm used to hide millions of dollars in debt.
“A lot are accounting documents,” she added. “You can tell because of the colors yellow and pink.”
“I left the second week of January, and the shredding was going on until the day I left, and I have no idea if it continues,” said Castaneda, who worked across the hall from the accounting office.
Bennett issued a statement after the broadcast, saying that “we are investigating the circumstances of the reported destruction of documents. In October, the company issued several directives to all Enron employees worldwide that all relevant documents should be preserved in light of pending litigation. If anyone violated these directives, they will be dealt with appropriately.”
The Securities and Exchange Commission began investigating Enron in mid-October, and this month the Justice Department said it had opened a criminal investigation. Other federal agencies are looking into various aspects of Enron’s collapse. A number of committees on Capitol Hill have launched their own probes.
Enron’s demise has political significance in that the firm was an active contributor to political campaigns, especially those of President Bush. The firm gave money to both parties and lobbied extensively for its causes in the nation’s capital.
The investigations cover not only the shredding of documents, but also the possibility of criminal behavior in the use of partnerships to hide the true financial condition of the company from investors. Some congressional Democrats also allege that the Bush administration’s energy policy was heavily influenced by Enron and its top executive, Kenneth Lay.
The shredding of documents also is becoming a major issue in a suit against Enron’s board and its officers. William Lerach, attorney for plaintiffs who have sued the firm’s board and its officers, said he plans to take the box of shredded documents to federal court, according to The Associated Press.
“They even shredded on Christmas Day,” Lerach told the AP.
Chicago Tribune correspondent Flynn McRoberts in Houston contributed to this report.