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Thursday, 10 January, 2002, 23:51 GMT
Enron documents 'disposed of'
Enron graphics
Enron: World's largest buyer and seller of natural gas
Enron's auditors Andersen have revealed that some of its employees have destroyed a number of documents related to its handling of Enron's accounts.

The firm said it had told authorities that "in recent months individuals...disposed of a significant but undetermined number of electronic and paper documents and correspondence relating to the Enron engagement."

Andersen later clarified that the documents had been destroyed in the months before the Securities and Exchange Commission (SEC) had subpoenaed the firm. After the subpoena was issued, Andersen said it issued instructions to keep all documents.

The accountancy firm has come under fire for approving Enron's accounts, and not giving greater warning of the problems which eventually emerged.

The news comes a day after the US Justice Department announced it was launching a criminal investigation into Enron's collapse, the biggest corporate failure in US history.

'A deeply troubling development'

Andersen said it had suspended its current records management policy, and told all employees to keep all existing documents.

It added that it had managed to retrieve some of the electronic files which had been deleted.

The chairman of the House Energy and Commerce Committee Billy Tauzin said the destruction of documents was a "deeply disturbing development" and said criminal prosecutions could follow if it was found they were destroyed deliberately.

"Anyone who destroyed records simply out of stupidity should be fired. Anyone who destroyed records intentionally to subvert our investigation should be prosecuted," he said.

The SEC said the news was "extremely serious."

"The destruction of documents by Arthur Andersen will not deter us from pursuit of our investigation and will be included within the scope of our investigation," the SEC's director of enforcement Stephen Cutler said in a statement.

Attorney General steps aside

The US Attorney General John Ashcroft has removed himself from the criminal investigation into the bankruptcy of Enron.

Mr Ashcroft has received campaign contributions from Enron in the past, and the US Justice Department said he would not take part in the case.

"The attorney general has not been involved in any aspect of initiating or conducting any investigation involving Enron," it said in a statement.

Pension review

Earlier on Thursday, President George W Bush ordered a review of US pension regulations following the collapse of Enron.

Some 20,000 employees at Enron lost billions of dollars in their pensions plans, after they were barred by the company from selling Enron shares.

The energy company - one of the largest commodity trading firms in the world - filed for bankruptcy in December, and so far more than 5,000 employees have lost their jobs.

The BBC's Nick Bryant
"It's a big political embarrasement"
Hillary Cook, Barclays Stockbrokers
says the missing documents will make it harder to work out the true value of Enron
Prof Michael Greenberger, Uni of Maryland Law School
"It may become the largest financial tragedy that's hit the country in some time"

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10 Jan 02 | Business
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