The grilling of Arthur Andersen employees at a House Energy and Commerce subcommittee hearing Thursday provided more drama than new facts. It was a lot like the courtroom scene in the movie A Few Good Men. Instead of Tom Cruise asking Jack Nicholson “Did you order a Code Red?” however, subcommittee Chairman Jim Greenwood (R-PA) asked David Duncan, the former Arthur Andersen partner in charge of Enron auditing, “Did you give an order to destroy [Enron] documents?”

“Mr. Duncan, Enron robbed the bank; Arthur Andersen provided the getaway car, and they say you were at the wheel…,” said Greenwood, who is chairman of the Subcommittee on Oversight and Investigations. “You were fired by Andersen last week for orchestrating an expedited effort among the Andersen-Enron engagement team to destroy thousands of paper documents and electronic files relating to the Enron matter after learning of an inquiry by the Securities and Exchange Commission into Enron’s complex financial transactions. Did you give an order to destroy documents in an attempt to subvert governmental investigations into Enron’s financial collapse, and if so, did you do so at the direction or suggestion of anyone at Andersen or at Enron?”

As expected, Duncan gave a “You can’t handle the truth” response and refused to comment, invoking his Fifth Amendment right against self-incrimination despite the fact that all the other Andersen officials at the hearing were placing the blame squarely on his shoulders and denying they had any involvement in the matter.

Some subcommittee members, however, clearly wished he had stood up and said, “You’re damn right I did!” But many members also apparently believe Duncan was just a patsy, who did upper management’s bidding, and they saved some of their tough questions for other officials at Andersen.

Andersen’s so-called “document retention policy,” an apparently informal policy to get rid of documents rather than retain them under certain circumstances, was the “Code Red” of the hearing Thursday. The main question was why Andersen’s legal counsel and executives apparently failed to order Duncan to preserve all documentation related to Enron until 18 days after the SEC investigation into Enron finances was undertaken. During those 18 days, thousands of documents and e-mails were destroyed in an apparent cover-up of financial misdeeds that contributed to the downfall of the nation’s seventh largest corporation and the destruction of retirement funds of millions of Americans as well as the company’s own employees.

Greenwood asserted that the shredding of records and other steps by Enron accountant Arthur Andersen “compounded the catastrophic business failure” of the energy giant. He said the decision of Duncan to invoke his Fifth Amendment rights against testifying would “hamper the important work of this committee” to investigate the catastrophe and any wrongdoing that led to it.

Although very little new information came out of the hearing, Andersen officials reiterated that they had nothing to do with the document destruction and had no idea Duncan had called a meeting of employees involved in Enron auditing and had ordered them to carry it out.

Dorsey L. Baskin, managing director of Andersen’s assurance and professional standards group, said company officials later found out that “on Oct. 23, just six days after the SEC requested information from Enron, David Duncan…held an urgent meeting of the Enron engagement team in which he organized an expedited effort to shred or otherwise dispose of Enron-related documents. This effort was undertaken without any consultation with others in the firm or, so far as we are aware, with legal counsel. Over the course of the next several days, a very substantial volume of documents and e-mails were disposed of.”

Baskin said the document destruction “appears to have stopped” shortly after Duncan’s assistant sent an e-mail to other secretaries on Nov. 9, the day after Andersen received a subpoena from the SEC, telling them to stop shredding. At that point, he said Andersen notified the Department of Justice, the SEC and all relevant congressional committees, suspended its records retention and destruction policy and asked former Sen. John Danforth to conduct a comprehensive review of the situation.

Baskin and C.E. Andrews, another Andersen official, added that at this point in Andersen’s investigation it believes no formal audit materials related to Enron have been destroyed despite the fact that significant other materials were shredded.

Andrews, under questioning, called the destruction of thousands of pages of Enron documents “totally inappropriate.”

“We do not condone that. It is not what the firm’s policy would require,” he said.

Andersen officials’ denial of involvement drew skeptical responses from members of the House panel. Andersen lawyer Nancy Temple denied repeatedly that an Oct. 12 e-mail she wrote helped trigger the wave of document destruction. “I was not aware of any shredding activities,” she said.

Duncan has claimed to investigators that he was following company guidance on document destruction laid out in the October e-mail from Temple, based at the firm’s Chicago headquarters.

Asked about that e-mail on Thursday, Temple said she did not send the e-mail to Duncan but to others in Andersen’s Houston office.

“I never counseled any shredding or destruction of documents. I only wish someone had raised the question,” she testified.

The company claims the Temple memo was routine and aimed only to combat the “pack-rat” mentality of many accountants.

A new Andersen document suggests the Temple directive was more than routine. In the Oct. 24 memo from a manager, employees were told the document shredding was so important that it should be pursued even “on an overtime basis, if necessary, for the remainder of this week or for however long it takes.”

The efforts by Baskin and other Andersen officials to deflect the full blame on Duncan for the shredding prompted criticism from some subcommittee members.

“Is Mr. Duncan being made a scapegoat here this morning?” asked. Rep. Cliff Stearns (R-FL).

And Rep. Chris John (D-LA) said, “It is perplexing to me that no one in the highest management of Arthur Andersen had any indication…of what was going on.”

In related developments Thursday:

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