Arthur Andersen seeking to reopen negotiations with Justice

WASHINGTON -- Accounting firm Arthur Andersen, facing trial on a criminal obstruction charge related to the shredding of Enron Corp. documents, is renewing efforts to settle the case with the government.

Andersen lawyer Rusty Hardin said Thursday the firm had sent a letter to the Justice Department laying out its position in response to the government's request last week.

"We sent them a letter and just simply provided them our presentation on what conditions ... a succeeding company could survive under" if a settlement were reached that deferred prosecution of Andersen, Hardin said by telephone from Houston.

Justice Department spokesman Bryan Sierra would confirm only that the department had received a letter from the accounting firm. Officials are reviewing it and preparing a response, he said.

Andersen is scheduled to go on trial May 6 in Houston on the obstruction of justice charge.

Nancy Temple, an attorney at Andersen's Chicago headquarters whose e-mail has been credited with prompting the massive shredding of Enron documents, has been told she is under criminal investigation in the case, The Wall Street Journal reported Thursday.

The newspaper cited a sworn statement by a Justice prosecutor filed under seal in federal court in Houston. Sierra said the Journal apparently obtained a copy of the statement from the court clerk's office but it should not have been provided to the Journal reporter.

Temple's attorney, Mark Hansen, did not immediately return telephone calls from The Associated Press seeking comment.

Temple invoked her Fifth Amendment right against potential self-incrimination in a deposition in a related civil case last month.

She testified before Congress in January that her Oct. 12 e-mail to a manager in the firm's Houston office was not intended to trigger the wave of document destruction.

Andersen, one of the Big Five accounting firms, has been struggling for survival as it rapidly loses clients and affiliates following its indictment last month.

On April 18, Andersen notified the Justice Department that it was not in a position to make a decision on any criminal settlement.

"We just agreed that we're just not there right now," Hardin said at the time. "We rejected certain proposals by the government and agreed to continue to review other proposals of the government, but we could not complete that review within the time frame the government was demanding."

Both Hardin and company spokesman Patrick Dorton left open the possibility that negotiations could resume.

The collapse of the secret negotiations occurred after the outlines of a deal had been struck, a person familiar with the case said Thursday.

Among the sticking points was specific language on an admission of guilt in illegally destroying Enron documents. Andersen also had objected to the length of time the Justice Department had proposed for deferring possible prosecution of the accounting firm, arguing that three years was too long, this person said.

The Securities and Exchange Commission is pursuing a civil investigation of Enron and Anderson.

The grand jury indictment against Andersen, which was unsealed March 14, alleges that the firm destroyed tons of paper at its offices worldwide and deleted enormous numbers of computer files on its Enron audits.

David Duncan, the former senior Andersen auditor on the Enron account, has pleaded guilty to ordering the shredding of Enron documents and agreed to cooperate with prosecutors. He is scheduled to be sentenced in August.

The government had offered to defer any criminal prosecution of Andersen for up to three years, requiring Andersen as a corporation to cooperate in the investigation of Enron and promise not to violate any laws during that period.

Anderson also has been negotiating separately to settle civil lawsuits brought by Enron shareholders and creditors. Those talks broke off last week.

The firm has been losing clients and workers since its acknowledgment in January that it shredded audit documents and deleted computer files related to Enron's audits after the SEC launched an investigation into the energy-trading company.