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Friday, 10 May, 2002, 05:03 GMT 06:03 UK
Andersen witnesses 'bullied'
Arthur Andersen lead attorney Rusty Hardin outside the Houston District Courthouse
Rusty Hardin called the government's actions illegal
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by David Schepp
BBC News Online's North America Business Reporter in Houston

Arthur Andersen's lead lawyer has used the third day of the accountancy firm's obstruction of justice trial to accuse government prosecutors of intimidating and tampering with witnesses.

There was absolutely no reason, or need, to bring her in before this media, or that public, other than to both humiliate her and send a message to us

Rusty Hardin, Andersen attorney
Rusty Hardin made the charge after the government called former Andersen employee Kate Agnew to the stand on Thursday afternoon to testify in the government's obstruction of justice case against the beleaguered accountancy.

"This is the most outrageous thing I've ever seen," Mr Hardin said to a group of reporters, shortly after the government announced its decision to call Ms Agnew to the stand.

Mr Hardin was angered because Ms Agnew had said she would not testify in the case, invoking her Fifth Amendment right against self incrimination.

Ms Agnew was a member of the specialised Andersen accounting team that worked exclusively on Enron's books.

Letter of complaint

Mr Hardin said the it was not necessary for Ms Agnew to appear in court to invoke her right against incriminating herself.

"Today was an attempt to send a message," Mr Hardin told reporters gathered outside the Bob Casey Federal Building in downtown Houston following Thursday's proceedings.

"There was absolutely no reason, or need, to bring her in before this media, or that public, other than to both humiliate her and send a message to us," he said.

That message, he insisted, was the government would resort to humiliating witnesses in order to prove its case.

He said government prosecutors had threatened three witnesses, hoping to persuade them to change their stories. He did not name the other two witnesses.

Where's Waldo?

Mr Hardin told reporters he intended to send a letter of complaint over prosecutors tactics to Department of Justice (DoJ) late on Thursday.

Mr Hardin was barred by District Court Judge Melinda Harmon from asking witnesses taking the stand in the case, "Are you Waldo?" a not-so-subtle reference to the government's search for criminal actions surrounding the collapse of Enron.

US attorneys implored the judge to prevent Mr Harding from making references to the childhood game as well as other courtroom manoeuvres they felt distracted jurors.

Chicago-based Arthur Andersen partner Ben Neuhausen
Neuhausen: Enron pushed the accounting envelope

Those events were preceded by the testimony of Benjamin Neuhausen, a member of Andersen's Professional Standards Group (SPG), which advises other Andersen accountants.

Mr Neuhausen testified that he believed Enron's proposed accounting procedures involving certain Special Purpose Entities (SPEs) "seemed like such a terrible idea".

Awaiting Mr Duncan

Also testifying on Thursday was Carl Bass, a Houston-based Andersen partner who became the first member of Andersen's SPG to be based outside of its Chicago base - on account of Enron.

Mr Bass was removed from his position of consulting Enron's accounting actions following complaints by Richard Causey, then Enron's chief accounting officer.

Testimony resumes on Friday. David Duncan, the government's prize witness, is expected to testify as early as Friday.

The former Andersen employee led the firm's efforts to consul Enron. He pleaded guilty in April to an obstruction charge in an agreement with federal prosecutors.

With his presence in the courthouse on Thursday, speculation rose the Mr Duncan may testify very soon.

The BBC's Mark Gregory
"There is no sign necessarily this is going to influence the outcome but it is a real sign of the rising tension"
See also:

08 May 02 | Business
KPMG Consulting eyes Andersen units
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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