Enron probes alleged destruction of documents

Bankrupt US energy giant, Enron, is investigating the reported destruction of documents that allegedly took place at its Houston headquarters after the federal government began investigating the company, a lawyer for the company said.

A former Enron executive, identified as Maureen Castaneda, yesterday said the shredding of documents took place in an accounting office on the 19th floor.

Ms Castaneda displayed one box of the shredded material which ‘‘I got ... when I was leaving work to basically use ... for packing material’’.

‘‘There were ... a lot more than this,’’ she said, standing next to the box. She said some of the shredding may have occurred as recently as this month.

Ms Castaneda said the destruction began in late November and continued to at least last week.

The Securities and Exchange Commission began looking into Enron, the world’s largest energy trading company, in mid-October.

‘‘We are investigating the circumstances of the reported destruction of documents,’’ Washington attorney Robert Bennett, who is representing Enron, said in a statement.

‘‘In October 2001 the company issued several directives to all Enron employees worldwide that all relevant documents should be preserved in light of pending litigation,’’ Mr Bennett added. ‘‘If anyone violated those directives, they will be dealt with appropriately.’’

Enron’s collapse on December 2 is the largest corporate bankruptcy in US history.

The reported shredding at Enron follows revelations over the past week and a half about document destruction at Arthur Andersen, Enron’s accounting firm.

Some of the shredded Enron paper contained the word, ‘‘Jedi’’, one of the entities involved in an array of off-the-books partnerships which kept hundreds of millions of dollars in Enron debt off the company’s balance sheet for several years.

Plaintiffs’ attorney William Lerach, who is suing Enron’s board and officers, said he plans to take the box of shredded documents to federal court.

Enron’s inquiry into shredding at its headquarters came as congressional investigators pressed for public testimony by an Andersen auditor fired over the destruction at the accounting firm.

‘‘This whole sorry affair keeps getting uglier by the minute, and we’re determined to get to the bottom of it,’’ said Ken Johnson, spokesman for the House Energy and Commerce Committee, which has been investigating the destruction of documents at Andersen.

‘‘Making bad business decisions is one thing, but trying to cover up bad business decisions is another,’’ said Mr Johnson when told of the reported shredding at Enron.

Meanwhile, a lawyer for Kenneth Lay, Enron’s chairman and chief executive, said Mr Lay disposed of millions of dollars in Enron stock before the company’s collapse last year because he needed to raise cash to repay loans, not because of concerns about the health of his company.

Also yesterday, the US State Department disclosed that Secretary of State Colin Powell referred to Enron’s problems regarding a power plant in India in a discussion with India’s foreign minister on April 6, last year. Enron was trying to collect a multi-million dollar debt on the project.

According to the state department, Mr Powell said failure to resolve the matter could have a serious deterrent effect on other investors.