Andersen figure balks at testifying

Auditor of Enron wants immunity in House investigation

Several probes to begin

Ex-SEC chairman to lead off testimony before Senate panel

January 24, 2002|By Karen Hosler | Karen Hosler,SUN NATIONAL STAFF

WASHINGTON - An executive at Arthur Andersen who was in charge of auditing Enron Corp. will refuse today to testify before Congress about his role in the shredding of Enron-related documents, his lawyer said yesterday.

As Congress prepared to begin what could be months of hearings into the stunning collapse of Enron, the auditor, David B. Duncan, made clear he would invoke his constitutional right against self-incrimination unless a House committee granted him immunity from prosecution.

Separate Senate and House inquiries will examine details of the Enron case, in which employees and shareholders lost billions of dollars. They will also look into the broader issue of how federal regulators failed for so long to detect signs of the impending disaster.

Scheduled to testify first before the Senate Governmental Affairs Committee is Arthur Levitt, the former chairman of the Securities and Exchange Commission. Levitt is expected to be asked about the intensive lobbying by members of Congress that thwarted his effort two years ago to bar accounting firms from taking consulting fees from corporations they audit.

Levitt and other critics have complained that companies like Andersen that do lucrative consulting work for companies they audit face an inherent conflict of interest that raises doubts about their impartiality as auditors.

Duncan, who was recently fired by Andersen, was called to appear today before a panel of the House Energy and Commerce Committee. The committee wants him to testify about Andersen's destruction of Enron-related documents at a time when Enron was the subject of an investigation by the SEC.

Yesterday, Duncan appealed to the committee through his lawyer not to force him to come to Washington to invoke his Fifth Amendment right in public at the hearing. But his appeal was rejected, and his appearance before the panel is being compelled.

"Mr. Duncan should not be punished for exercising his constitutional rights," his lawyer, Robert Giuffra, wrote to the committee, noting instances during the Watergate, Iran-Contra and Whitewater investigations in which witnesses who invoked the Fifth Amendment were not forced to appear.

But Ken Johnson, a spokesman for the committee chairman, Rep. Billy Tauzin, a Louisiana Republican, said of Duncan: "He has been subpoenaed to appear before the committee, and we will accept nothing less."

Johnson referred last week to the Enron-Andersen saga as a tale of "white-collar crime and greed."

Enron's relationships to members of Congress run wide and deep. More than half of all House members and nearly all senators are linked to the two companies in some way, mostly through campaign donations. Congressional watchdog groups have expressed concern that those connections impair Congress' ability to perform its oversight role.

"All of us are tainted," said Sen. John McCain, an Arizona Republican, who is among those who have received contributions from both corporations. "The burden of proof will be on us as investigators to show that we can do a thorough and impartial job."

Sen. Phil Gramm, a Texas Republican who was a top recipient of campaign donations from both companies and whose wife, Wendy, serves on Enron's board of directors, sought to distance himself from the investigation yesterday.

"On any issues about Enron, and what happened and who did wrong, I'm going to recuse myself because my wife's on the board," Gramm said. "Issues about setting public policy like accounting standards, I'm not going to stay out of."

As a board member, Wendy Gramm earned between $915,000 and $1.85 million from Enron between 1993 and 2001, according to Public Citizen, a watchdog group. She is likely to be called to testify during the congressional inquiries.

And Phil Gramm received a combined $174,000 in donations from Enron and Andersen over the past dozen years, more than anyone else in Congress.

Gramm complained about "a desperate attempt somehow to link me to Enron." He said that he had done no inappropriate favors for the company and that anyone who has looked into the matter has found that to be true.

In one case, he was alleged to have won enactment of legislation that exempted from regulation financial transactions used by Enron, when, in fact, he blocked the measure for unrelated reasons.

Gramm also argued that, despite his wife's position, he had had no advance knowledge of the company's collapse, in which the couple lost nearly $700,000 in her deferred compensation.

"It's irritating, but ultimately the truth outs," he said. "When the truth outs, it'll look fine."

Gramm is the senior Republican on the Senate Banking Committee, whose chairman is Paul S. Sarbanes, a Maryland Democrat, and which is also investigating the Enron debacle.

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