The star witness at the first Congressional hearing today on the Enron scandal will refuse to testify, and will plead the Fifth Amendment unless given immunity from prosecution, his lawyer said yesterday. Conor O'Clery, International Business Editor, reports from Wall Street.
The stonewalling by Mr David Duncan, the Arthur Andersen partner fired for his role in the shredding of Enron-related documents, came as the FBI moved into Enron's Houston, Texas, headquarters after revelations that documents there were also being shredded.With Enron and its long-time auditor, Andersen, perceived to be engaged in a massive cover-up, President George W. Bush has expressed outrage that shareholders at Enron did not know all the facts before it declared bankruptcy on December 2nd.
"My own mother-in-law bought stock last summer and it's not worth anything now," said Mr Bush, who received more campaign contributions from Enron and its chairman and chief executive, Kenneth Lay, than from any other donor.
The First Lady's mother, Mrs Jenna Welsh, bought 200 shares in the energy-trading company at $40.90 a share in 1999. She sold the lot on December 4th when its shares fell to 42 US cents, showing a loss of $8,096.
Mr Duncan will today plead the Fifth Amendment when he appears before a House Energy and Commerce Committe sub-committee. "He will rely on his constitutional right not to testify" unless he is given immunity, his lawyer Mr Robert Giuffra, told the committee in a letter.
Congress can compel witnesses to show up, but cannot force them to answer potentially incriminating questions without granting them immunity from criminal prosecution. "He's now flying from Houston and the committee is going to make him exercise his constitutional rights on national television," Mr Giuffra said, referring to the often granted right to witnesses not to appear publicly if they say they will plead the Fifth Amendment.
Mr Duncan was fired on January 17th by Andersen for destroying documents after the Securities and Exchange Commission (SEC) had started a criminal investigation into Enron. He said he was instructed to do so by Andersen.
Subpoenas were served yesterday on Mr Duncan as well as Andersen lawyer Ms Nancy Temple and risk manager Mr Michael Odom. Andersen chief executive Mr Joseph Berardino was negotiating last night to send a deputy rather than appear personally.
Eleven House and Senate committees, the Justice Department, the SEC and the FBI are all investigating aspects of the biggest bankruptcy in US history.
In Houston, FBI agents moved into Enron's headquarters after reports of shredding there, as lawyers for investors suing Enron asked a federal judge to bar the company and Andersen from destroying any more records. Enron said it was co-operating and had posted security guards to stop employees entering floors holding accounting and finance records.
A former Enron executive, Ms Maureen Castaneda, has alleged that documents were being destroyed openly until as recently as last week, despite an SEC probe starting in mid-October.
A lawyer for investors, Mr William Lerach, said Enron had been "caught destroying the evidence" and added, "I'd say they've got trouble on their hands." Mr Robert Bennett, a Washington lawyer representing Enron, said the company was looking into charges papers were destroyed.
