Fired executive says Enron shredded papers

She had been fired. One of thousands

She had been fired. One of thousands. And she was looking for wrapping material to pack her belongings when she came across box upon box of shredded paper on the 19th floor of Enron's corporate HQ in Houston.

Ms Maureen Castaneda, a manager in Enron's foreign investments section, said yesterday the shredding was continuing 10 days ago in what was a blatant defiance of internal memos. The memos, dated October, ordered the preservation of documents following the launch of a formal Securities and Exchange Commission (SEC) investigation.

Ms Castaneda claims in a sworn affidavit that the shredded papers include accounting information, which is colour-coded in the firm, and says the names of controversial partnerships under investigation are still legible. She has given her lawyer a full box of the paper.

Enron says it is investigating the allegations.

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The revelation comes only days after accountants Arthur Andersen admitted it too had been involved in the shredding of audit papers. The disclosure will add fuel to hearings opening tomorrow in the Senate where the first of 10 Congressional inquiries will open.

The Governmental Affairs committee will look at whether regulators could have done more to control Enron's practices, but the sparring between Democrats and Republicans ahead of the hearings gives some indication of how partisan this process may be.

Determined to break perceptions that the Enron scandal is a Republican scandal, Republicans are demanding that the committee chairman, Senator Joe Lieberman, should excuse himself from presiding because of his links with the firm. Since 1997 the largest campaign contributor - $112,000 (€126,754) - to the ex vice-presidential contender for the Democrats has been Citigroup, Enron's largest lender. Enron itself contributed some $25,000 to a group co-founded by Mr Lieberman, the New Democrats Network. His chief of staff, Mr Michael Lewan, was an Enron lobbyist.

Mr Lieberman, like many of the 73 per cent of the Senate who were also recipients of Enron's munificence, has been demonstrating the zeal of the convert in pledging a full and vigorous inquiry.

Republicans have also turned their fire on Mr Thomas McLarty III, the Clinton aide who, from the White House, monitored the progress of a prospective Indian contract for Enron. The company paid $100,000 to the Democratic National Committee just days after the deal was signed.

"He who is without sin ...", say Republicans in damage limitation mode.

Congressional sources say, however, that fallout from Enron has already begun to give new impetus to campaign reform legislation stalled in the House. "It's a huge development," said Mr Christopher Shays, a Republican from Connecticut. Mr Shays, a sponsor of a bill to ban unregulated donations, known as "soft money", is battling his own leadership on the issue. Reform lobbyists have targeted 25 "vulnerable" previous opponents of the reform and say there are already defections.

At the weekend, the House Minority Democratic leader, Mr Dick Gephardt, pledged: "We are going to clean up politics in this country once and for all." Ambitious talk, but this is an election year.

Meanwhile, a deeply conservative Bush nominee to the US Court of Appeals, Ms Priscilla Owen (47), appears likely to face particularly close scrutiny in the Senate over a ruling she made in the Texas Supreme Court that saved Enron $15 million after she had accepted $8,600 in campaign contributions from the company. Since 1993, Enron has contributed some $134,000 to the election campaigns of members of the Texas Supreme Court, more than any other company.

Patrick Smyth

Patrick Smyth

Patrick Smyth is former Europe editor of The Irish Times