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Tensions ran high at the Arthur Andersen LLP obstruction of justice trial in Houston Friday as defense attorney Rusty Hardin continued to question the government’s star witness — fired auditor David Duncan — in an attempt to show that he was neither actively shredding paper nor worried about a Securities and Exchange Commission investigation the week after getting a reminder from the firm’s attorney about its document retention policy. Before the jury was let in, U.S. District Judge Melinda Harmon held a hearing about a document Andersen lawyers tried to introduce that the government claimed it had not seen before. After the judge excused the jury Thursday, she yelled that the move was an “underhanded” effort to impeach Duncan’s testimony. Hardin said her comments showed her “bias” toward the prosecution and he “deeply” resented it. At the hearing, Hardin contended that the government had already seen the document, which was a draft of a bill for services rendered from Andersen on the Enron Corp. account, just not the cover letter. Assistant U.S. Attorney Andrew Weissmann said he had not seen the document before Thursday and not only the cover letter, but also the attachment. He also complained that document discovery stopped when Hardin and Davis, Polk & Wardwell took over the case. Hardin countered that prosecutors had seen the bill but chose to introduce a draft with a higher amount and didn’t ask Andersen to explain the different versions. He also complained that the government had introduced at least seven documents that it had not shown to the defense, which runs counter to an agreement between the parties aimed at making the trial move faster. Hardin also said Andersen was not required to provide the government with any more documents after it indicted the firm in early March. “Not only do they want to eat their cake, they want to devour the cake and you too,” Hardin said. The judge was quiet during the hearing and said nothing about how or when she would rule on the document-sharing issue. After the jury was let in, Hardin questioned Duncan about a long conference call between Enron officials and Andersen partners Oct. 23. Duncan said the Andersen participants agreed the call had not gone well, and one partner suggested they meet with the entire Enron engagement team that afternoon to discuss the Enron matter. Duncan’s executive assistant sent an e-mail about the meeting titled “urgent.” Duncan characterized the meeting as part “pep talk” of where Andersen stood and “part discussion” of the document retention policy, repeating his earlier testimony to “do no more nor less than what was in the policy.” Duncan said even though the SEC had launched a formal inquiry into Enron’s accounting practices, Andersen officials were not worried that it would involve their firm. Hardin repeatedly asked Duncan about whether Duncan was destroying documents during this time. He generally responded that he was not. He also repeatedly denied ever using the word “destroy.” “I did not intend for anyone to get rid of … important documents,” he said. Hardin then asked Duncan about all the things his staff was working on at the time, trying to prove that the document retention policy was not his top priority. Prosecutors began to object when Hardin tried to cover old ground, including asking about whether the document retention policy was discussed and whether there were worries the SEC was looking at Andersen. Hardin was clearly trying to hit home the idea that those issues, which the government has offered as cause and effect, were not at the top of Duncan’s mind at that time. At one point when Hardin asked whether there was any shredding during October, which prosecutors objected to as asked and answered, Hardin retorted before the judge could rule, “that has not been asked.” When the judge motioned the attorneys to the bench, Hardin said, “I beg you, I don’t want to come back up there. Nothing good happens up there.” A 10-minute sidebar followed. The tedious third day of Duncan’s cross-examination was peppered with a few funny incidents from the famously flamboyant Hardin. Before beginning his questioning, Hardin asked if he could be excused from the courtroom (he told a U.S. marshal that his fly was down). At another point, he turned his back to the judge and jury and counted to 10 after yet another objection from the prosecution. Copyright (c)2002 TDD, LLC. All rights reserved.

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