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Wednesday, 8 May, 2002, 01:31 GMT 02:31 UK
Andersen trial starts with a bang
Artists rendering of US attorney Matt Friedrich addressing jurors
Jurors had greater distractions than duelling lawyers
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by David Schepp
BBC News Online's North America Business Reporter in Houston

If the US Government wins its case against accountancy firm Arthur Andersen, it would likely sound the death knell for the beleaguered firm.

This is something we have to live with daily in this courtroom

District Court Judge Melinda Harmon
Despite the high stakes, the most animated moments in Tuesday's proceedings were produced by the 40-year-old Houston courthouse in which the trial has begun.

Attorneys for both sides were interrupted several times when the sounds of drilling by construction workers pierced the diffident calm of Courtroom 9C of the Kennedy-era Bob Casey Federal Building.

Then, as assistant US attorney Matt Friedrich delivered his opening statement, an object fell from the prosecution's side of the courtroom with a startling bang, that in this post-11-September world left some in the courtroom more than a little jittery.

Microphones failed to work and the buzzing of the courtroom speaker system at moments grabbed greater attention from US District Court Judge Melinda Harmon then the questions being posed to the first witness in the case, Securities and Exchange Commission (SEC) lawyer Thomas Newkirk.

The distractions were enough to cause Judge Harmon to humorously note: "This is something we have to live with daily in this courtroom."


Amid the clatter, attorneys for Arthur Andersen and the Department of Justice (DoJ) nevertheless began opening arguments in the government's case against Andersen.

And if the first day of trial is any indication of the tenor of the pursuing days and weeks, it could be a long - and very dry - spring in Houston.

Assistant US Attorney Matt Friedrich
Friedrich: Andersen execs were cool and calculating
Andersen stands accused of obstructing justice by shredding documents of its then-client Enron last autumn, after the SEC had begun an informal inquiry in the energy-trading giant.

Former Andersen lead auditor David Duncan has as much as admitted he ordered the destruction of the documents, which led the federal government to indict Andersen on obstruction charges in March.

Irreparable harm

In his brief opening statement before the court, Mr Friedrich sedately laid out his plan to show jurors that Andersen knew full well the stakes involved in the Enron accounting debacle and sought to cover its tracks in order to avoid prosecution.

"There was a day when the firm knew that the law was going to come knocking at its door because of a series of billion-dollar accounting errors," he told jurors.

Arthur Andersen lead attorney Rusty Hardin
Hardin: Government evidence is "rank heresy"
Meanwhile, Arthur Andersen attorney Rusty Hardin sought in his initial presentation to convince jurors the government's case was not only unsound but that it had already done irreparable harm to the firm.

A federal indictment in March has caused more than 300 Andersen clients to dump the firm, and resulted in thousands of layoffs at the teetering auditor.

He sought to portray the firm's actions as professional as they scrambled to deal with the collapse of Enron, at the time Andersen's second-largest client.

'Rank heresy'

Dressed in a linen-coloured suit and a bright yellow tie, Mr Hardin argued the government's case was nothing more than a version of "Where's Waldo?" - the childhood game in which the goal is to find the cartoon character hidden among a multi-hued landscape.

In a spirited address to the panel, Mr Hardin accused the government of using a "laundry list" of allegations, rather than focusing on the sole obstruction of justice charges of which Andersen stands accused.

He called the government's inclusion of evidence in previous SEC cases involving Andersen "rank heresy" and objected repeatedly as pieces of evidence were presented to the court by the prosecution.

Despite his pleas, District Judge Harmon allowed the evidence even as she repeatedly instructed jurors not to place too much emphasis on it.

Not to be outdone, Mr Hardin objected to the judge's instructions to the jury - to no avail.

The case continues on Wednesday and is expected to take three weeks to complete.

See also:

07 May 02 | Business
Andersen trial begins in earnest
06 May 02 | Business
Lawyers line up Andersen jury
06 May 02 | Business
Q&A: Andersen in court
02 May 02 | Business
Andersen lawsuit talks collapse
02 May 02 | Business
Audit giants called to account
19 Mar 02 | Business
Q&A: Andersen offices defect to KPMG
19 Mar 02 | Business
Andersen regions in break-up talks
15 Mar 02 | Business
US bans Andersen from official work
29 Jan 02 | Business
Andersen on the defensive
06 May 02 | Business
The Andersen trial at-a-glance
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