O&M

Enron says it notified employees to retain documents

By Sylvie Dale
Online Editor

HOUSTON, Jan. 21, 2002 — Enron Corp. said today it had emphatically instructed all its employees to save documents that might refer to subsidiaries being investigated by several government groups, including the Securities and Exchange Commission.

The failed energy giant, which filed for bankruptcy protection last year, was responding to an ABCNews broadcast which said employees had been seen “working overtime” to shred and dispose of accounting documents since Thanksgiving.

Since October 25th Enron has notified employees in no uncertain terms that they are to preserve all documents and materials, Enron said in a statement. The company said it sent out four emails to that effect from Oct. 25, 2001 through January 14, 2002.

According to the ABCNews.com report, document-shredding was done at a frenzied pace at Enron’s headquarters until at least last week. Former Enron executive Maureen Castaneda told ABC that she worked across the hall from the accounting department. She said she saw the employees sorting through lots of boxes from Thanksgiving through last week and shredding documents.

An attorney handed over shredded Enron documents to a federal court in Houston today, claiming they were important papers company workers had attempted to destroy as recently as last week, the report said.

Attorney William Lerach, who filed a class-action suit against Enron on behalf of employees and shareholders, said he thought the court should start taking possession of evidence from Enron and its auditor Arthur Andersen, and try to restore deleted e-mail.

Enron said its employees were warned on October 25th to “Please retain all documents (which include handwritten notes, recordings, emails, and any other method of information recording) that in any way relate to the company’s related party transactions with LJM1 and LJM2 … You should know that this document preservation requirement is a requirement of federal law and you could be individually liable for civil and criminal penalties if you fail to follow these instructions.”

In subsequent messages sent on October 26 and October 31, 2001, employees were told the requirement to preserve all documents extended not only to LJM documents but included all documents relating to: the Broadband Services Division, Chewco, Azurix, New Power, the accounting for any Enron investments, and Enron public statements to investors, the Securities and Exchange Commission or other regulatory bodies.

Enron said its communications with its employees were very clear on the destruction of documents, and that any breach of the company’s policy would be dealt with swiftly and severely. The company said it has been cooperating fully with congressional investigators, including handing over 41 boxes of documents and materials.

To read the complete ABCNews.com story, visit http://abcnews.go.com/sections/business/DailyNews/enron_020122.html.