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Wednesday, 23 January, 2002, 12:30 GMT
FBI searches Enron head office
An Enron ex-employee
Enron's collapse is the biggest in US corporate history
Federal investigators have searched Enron's headquarters in Houston after a former executive alleged that documents had been shredded there despite a court order.

And Enron has confirmed that security guards are stationed in the offices to prevent further shredding and to block employees from floors holding accounting and finance records.


A lot of the stockholders didn't know all the facts. And that's wrong

President Bush
The US Justice Department is investigating the collapse of the energy giant, and criminal charges could be brought if it is found that papers were destroyed after October's court order.

President George W Bush on Tuesday said he was "outraged" that Enron, which contributed to his presidential campaign, had misled shareholders and employees about its financial situation.

"A lot of the stockholders didn't know all of the facts. And that's wrong," Mr Bush said, adding that his mother-in-law, Jenna Welch, had lost about $8,000 in Enron stock.

The actions of Enron and its auditor Andersen are also the subject of half a dozen Congressional inquiries and an investigation by the Securities and Exchange Commission.

Congressional investigators will also require senior officials of Andersen, including its chief executive Joseph Berardino, to give evidence in an effort to gain further information about the destruction of documents at the auditor's offices.

'No halt'

Former Enron employee Maureen Castaneda told television network ABC that the shredding was still going on when she left the firm a couple of weeks ago.

She said she was given some of the shredded documents as packing material for her belongings, when she, like 20,000 others, lost her job at the beleaguered company.

A lawyer for Enron, Robert Bennett, said he was investigating the allegations.

Andersen dismissed David Duncan, its lead Enron auditor, last week over allegations of document shredding.

Systematic shredding

Ms Castaneda said the documents were shredded in the accounting office.

She told of boxes full of documents stacked in the corridors waiting to be shredded.

Andersen's New York HQ
Andersen: Also reportedly destroyed documents

She said that most were destroyed after mid-October, when the Securities and Exchange Commission first started to investigate the company.

"I left the second week in January, so the shredding was going on until I left and I have no idea if it continues," she said.

"There was a great interest in the accounting documents which were stored in the storage facility.

"They pulled out all the boxes and they lined them up in the hallway and people had to go through every box."

Some of the papers displayed the word "Jedi", one of the so-called off-balance sheet partners which Enron executives allegedly used to hide the company's losses from investors.

These partnerships were a major factor in sending the company into bankruptcy - the largest corporate failure in US history.

It has attracted considerable interest not only because of the sums of money involved but also because Enron donated funds to President Bush's election campaign, and to leading Democrats.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Nick Hawton
"The allegations come from a former employee"
The BBC's Andrew Walker
discusses the latest developments
Maureen Castaneda, former Enron employee
"I left in the second week of January and the shredding was still going on"
See also:

17 Jan 02 | Business
Andersen 'warned' of Enron crisis
14 Jan 02 | Business
Audit giants called to account
14 Jan 02 | Business
Timeline: Enron's rise and fall
14 Jan 02 | Business
Andersen attacked for Enron role
12 Jan 02 | Business
Enron chief asked Treasury for help
10 Jan 02 | Business
Enron documents 'disposed of'
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