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Democrats jump on Enron memo

Were documents ordered destroyed to obstruct probe?

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WASHINGTON — The timing of an accounting firm's memo directing the destruction of documents raises the serious possibility of obstruction of justice, says the chairman of a Senate committee investigating Enron Corp.'s collapse.

Sen. Joseph Lieberman, D-Conn., said Sunday he was troubled that a lawyer at Arthur Andersen & Co., Enron's accounting firm, directed the destruction of Enron documents. The memo from a lawyer was dated Oct. 12, 2001, when Andersen and executives of the energy giant "knew that Enron was in real trouble and the roof was about to collapse on them," Lieberman said.

Rep. John Dingell of Michigan, senior Democrat on the House Commerce Committee, said Monday that panel's investigation will focus on allegations of insider trading, "payoffs for the company executives who were permitted to sell" their Enron stock and "most importantly, the fact that papers were destroyed and there were instructions to do so."

"There's pretty strong evidence of insider trading, there's clear evidence of failure to file honest and correct reports," Dingell said on CBS's "The Early Show." "False accounting appears to be a very major problem."

Two Cabinet members, meanwhile, said they had seen no need to inform President Bush of telephone conversations they had with Enron Chairman Kenneth Lay in late October and November as Enron was struggling to maintain its credit rating.

Commerce Secretary Don Evans said Sunday he discussed the calls with Treasury Secretary Paul O'Neill, who also had been contacted by Lay, and later told Andrew Card, White House chief of staff, but that Card never informed the president.

Presidential spokesman Ari Fleischer said the White House was not determining whether any other Bush aides had been contacted about the Enron situation.

"The White House will continue to be helpful to people with real and specific questions. But if people want to know every contact with anybody about anything, that is a fishing expedition," Fleischer said.

Lay called Evans Oct. 29 to see what the administration might do to help Enron with its credit problems, said Evans, but he offered no assistance. O'Neill, who described his call as "a heads up" from Lay on Enron's financial situation, also said he offered no assistance.

The memo from an Andersen lawyer was uncovered by congressional investigators and first reported by Time magazine.

Andersen, one of the nation's biggest and most influential accounting firms, disclosed last week that some documents related to Houston-based Enron had been destroyed, but the company gave no additional details.

"Andersen is committed to getting the facts and taking appropriate actions in the Enron matter," the statement said, adding that "it would be inappropriate to comment further."

Lieberman, whose Governmental Affairs Committee plans the first Senate hearings into the Enron matter Jan. 24, said that at the time of the Andersen memo, executives of both companies knew a corporate scandal was brewing.

"So this kind of memo raises very serious questions about whether obstruction of justice occurred," Lieberman said on CBS's "Face the Nation." Four days after the memo, Enron disclosed a third-quarter loss of $618 million, and a week later the Securities and Exchange Commission began an investigation into Enron's use of partnerships to mask losses.