Andersen on Thursday sought to convince a federal judge here that the embattled Chicago accounting firm is trying mightily to identify, retrieve and preserve documents related to its dealings with Enron Corp.
But some of the attorneys for shareholders suing Andersen and Enron asserted that a report filed by Andersen on its progress retrieving files destroyed by its Houston staff fails to make clear what files have been trashed and whether they’re gone for good.
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“There’s a lot of technical detail in the report, but it’s not ultimately very enlightening on the key issues,” said Chris Patti, counsel for the University of California Board of Regents, which lost about $145 million in Enron’s collapse.
For instance, the report stated that Andersen has collected “roughly 250 terabytes of electronic data.” A footnote explains that, “By comparison, the entire U.S. Library of Congress is estimated to represent between 20 and 100 terabytes of data. … A terabyte is a trillion bytes.”
Patti said, “We don’t know whether those are the documents we’re concerned with or not.”
Plaintiffs hope to answer such questions next week, when they take depositions from key Andersen officials, including David Duncan, Andersen’s fired lead partner in charge of its Enron account, and Nancy Temple, who authored an Oct. 12 e-mail on destruction of documents.
Andersen’s report, filed Tuesday with U.S. District Judge Melinda Harmon, also disclosed that the company had hired a subsidiary, Cypress Technology and E-Business Center, to convert paper and electronic documents into a form that attorneys could review. Critics called the arrangement a classic “fox guarding the henhouse” situation. Andersen’s outside legal counsel has told the court it expects to retain an outside firm for the work.
Harmon had ordered the report from Andersen on Jan. 23–nearly three weeks after Andersen advised the Securities and Exchange Commission and the Justice Department that “an undetermined number of hard copy documents and e-mails potentially related to Enron had been destroyed or deleted.” The SEC had opened a probe of Andersen’s Enron audits last fall.
Shareholders’ concerns about such document destruction only increased on the eve of the Jan. 23 hearing, when a recently laid-off Enron executive revealed that paper shredding had continued at Enron as late as mid-January.
In its report to the court, Andersen said it had assembled about 4,800 “official work paper files and reports” from 1997 through 2001, as well as “additional work papers and reports dating as far back as 1932.”
Andersen also reported collecting about 1,500 boxes of desk files consisting of 3 million sheets of paper from about 235 individuals. And it said it had assembled 4,000 “server backup tapes,” 340 personal computers, “100 gigabytes of connected network backup data,” at least 50 Palm Pilots and more than 300 floppy disks and CD-ROMs.
The main storage facility for the material, in downtown Houston, has an armed guard outside 24 hours a day, seven days a week, Andersen said.
“The process we’ve been going through is to procure documents throughout our system,” said company spokesman Charlie Leonard. “We’ve not yet completed the investigation, not yet fully identified all the materials.”
Leonard added, “We continue to believe, with respect to e-mail, that all or virtually all will be recovered.”
Andersen has hired an outside computer firm, ASR Data Acquisition & Analysis of Cedar Park, Texas, to assist in the recovery of the destroyed records. Andrew S. Rosen, chief executive of ASR Data, declined to comment in detail on Thursday.
Asked if Andersen had good reason to believe the bulk of the lost electronic data would be recovered, Rosen replied, “Their optimism is well placed.”
Rosen has worked in the past for government agencies retrieving lost electronic files. He is employing specially designed software to help Andersen “create the kind of copy that the legal system requires” by recovering and analyzing lost data.