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THE ANDERSEN VERDICT

'I Recommend ... Deleting My Name'

June 16, 2002

Jurors in the Arthur Andersen trial said Saturday that their guilty verdict was based on a staff attorney's suggestion that an auditor make changes to a memo about an Enron Corp. earnings release last fall.

According to testimony, Andersen auditors believed that Enron's description of certain losses as "nonrecurring" was inaccurate because the losses were related to Enron's core business. Andersen accountants and lawyers had discussed the issue in a series of conference calls and e-mails.

Here is the text of the Oct. 16 e-mail sent by Andersen staff attorney Nancy Temple to Houston-based partner David B. Duncan, leader of the firm's Enron audit team.

*

Dave--Here are a few suggested comments for consideration--I recommend deleting reference to consultation with the legal group and deleting my name on the memo. Reference to the legal group consultation arguably is a waiver of attorney-client privileged advice and if my name is mentioned it increases the chances that I might be a witness, which I prefer to avoid.

--I suggested deleting some language that might suggest we have concluded the release is misleading.

--In light of the "non-recurring" characterization, the lack of any suggestion that this characterization is not in accordance with GAAP [generally accepted accounting principles], and the lack of income statements in accordance with GAAP. I will consult further within the legal group as to whether we should do anything more to protect ourselves from potential Section 10A [*] issues.

Nancy

[*Section 10A refers to federal regulations requiring auditors to report illegal acts committed by clients.]

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