In an important breakthrough for federal prosecutors in the Enron case, Arthur Andersen's former lead auditor on its Enron account, Mr David Duncan, yesterday pleaded guilty in a US District Court in Houston to a felony count of obstruction.

He told US District Judge Melinda Harmon: "I accept that my conduct violated federal criminal law and I'm ready to accept responsibility for it." Mr Duncan faces up to 10 years in prison and a maximum fine of $250,000 as well as potential restitution costs.

Mr Duncan, the key link between the firm and its accountants, was fired in January over his ordering of a massive document-shredding spree in October after the Securities and Exchange Commission (SEC) opened its inquiry into Enron. Several shareholder suits had been lodged.

His willingness to co-operate fully with prosecutors, assumed to be a key part of the plea-bargain deal, is likely to enable them to pinpoint exactly which Enron executives played which role, and knew what, in the complex web of partnerships that were at the centre of Enron's collapse.

Prosecutors are pursuing a range of possible charges against Enron and its former executives, including securities fraud, mail and wire fraud and conspiracy, law-enforcement officials have said. And because Mr Duncan was a senior partner in Andersen, his guilty plea is said to simplify considerably the issue of the accountancy firm's liability in pending litigation, both civil and criminal, against it.

Andersen was indicted last month for obstruction of justice over the shredding. It is pleading innocent, its lawyers insisting there was no intent to conceal information, an argument on which Mr Duncan's testimony will certainly bear.

Lawyers for Andersen were at the Justice Department last Friday to negotiate a settlement, but no deal was reached. The case is expected to be heard on May 6th.