(Attached below is a copy of the letter sent today to Andersen Managing Partner and CEO Joseph F. Berardino.) 

January 17, 2002

Mr. Joseph F. Berardino
Managing Partner and Chief Executive Officer
Andersen LLP
33 W. Monroe Street
Chicago, Illinois 60603 

Dear Mr. Berardino: 

As you know, the Committee on Energy and Commerce is investigating matters relating to the financial collapse of the Enron Corporation (“Enron”).  As part of this investigation, the Committee requested and received thousands of pages of documents from Enron, Andersen, and other individuals involved with Enron.  During the course of reviewing these documents, Committee investigators uncovered two Andersen documents that raise additional questions.  Committee investigators questioned former Andersen partner David Duncan about these documents yesterday, and today we are writing to you to request additional information about the events discussed in these documents. 

The first document is a February 6, 2001 e-mail from Michael Jones to David Duncan and Thomas Bauer (attachment).  In the email, Mr. Jones forwarded notes he made from a meeting of senior level Andersen officials the previous day in which they discussed whether “to retain Enron as a client.”  The notes indicate that there were “significant” discussions about potential areas of concern, including (1) “Fastow’s conflicts of interest” in his capacity as Enron CFO and LJM fund manager; (2) disclosure of Fastow’s earnings stemming from his participation in LJM; (3) Enron Board of Director views regarding the transaction with LJM, and Andersen’s and Enron management’s communication of such transactions to the Board; (4) whether the Board received competing bids when executing transactions with LJM; (5) “intelligent gambling” related to Enron’s mark-to-market earnings; and (6) the possible $100 million-per-year in fees Andersen could receive by continuing its services for Enron.  

The second document is an August 21, 2001 memorandum from Andersen audit partner James Hecker to “The Files,” copying other senior Andersen partners. Mr. Hecker notes that Enron Vice President Sherron Smith Watkins had contacted him the day before with questions and concerns about “the propriety of accounting for certain related-party transactions” with LJM.  The memorandum lists Ms. Watkins’ concerns, including questions surrounding the formation, operation, and financial statement disclosure of LJM.  Ms. Watkins also informed Mr. Hecker that “she was concerned enough about these issues that she was going to discuss them with Ken Lay, Enron’s Chairman on Wednesday, August 22, 2001.”  After his discussion with Ms. Watkins, Mr. Hecker relayed her concerns that same day to Andersen partner Bill Swanson (head of the Houston office audit practice), and Andersen Enron engagement partners David Duncan and Debra Cash.  Michael Odom, Andersen’s risk management practice director for the Houston office, also was informed of this discussion on August 21, 2001. According to the memorandum, it was agreed that they would consult with Andersen’s legal advisor “about what actions to take.”   

In order for the Committee to gain a more complete understanding of the events surrounding these particular matters, we are requesting that, pursuant to Rules X and XI of the U.S. House of Representatives, Andersen produce to the Committee the following information by Thursday, January 31, 2002: 

1.       All records relating to the February 5, 2001 meeting described in the February 6, 2001 attachment, including (1) notes or other records created by the meeting participants (including Samek, Swanson, Jeneaux, Jonas, Kutsenda, Stewart, Bennett, Goddard, Goolsby, Odom, Lowther, Duncan, Bauer, and Jones); and (2) the records prepared and distributed in advance of such meeting, as indicated by Mr. Duncan during his interview yesterday. 

2.       All records relating to any action taken as a follow-up to what was discussed at the February 5, 2001 meeting, including but not limited to the items referenced in the “To Do’s” list. 

3.       All records relating to communications with, or preparation for communications with, the Enron Board of Directors or its Audit Committee relating to matters raised during the February 5, 2001 meeting, including but not limited to the Audit Committee meeting dated February 12, 2001, at which Mr. Duncan made a presentation.  

4.       All records relating to the events described in the August 21, 2001 attachment, including notes or other records of the participants in these discussions (including James A. Hecker, Debra A. Cash, David B. Duncan, Michael C. Odom, William E. Swanson, and any Andersen legal advisor consulted). 

5.       All records relating to any action taken as a follow-up to what was discussed as a result of Ms. Watkins’ phone call to Mr. Hecker. 

6.       The memorandum created by Mr. Duncan concerning his recollection of events relating to Ms. Watkins’ allegations, including the discussions referenced in the August 21, 2001 attachment as well as the Vinson & Elkins review of Ms. Watkins allegations on behalf of Enron. 

Please note that, for the purpose of responding to these requests, the terms "records" and "relating" should be interpreted in accordance with the attachment to this letter.  If you have any questions, please contact Mark Paoletta, Chief Counsel for Oversight and Investigations, at (202) 225-2927, or Edith Holleman, Minority Counsel, at (202) 226-3400. 

Thank you for your prompt attention to these matters. We appreciate your continuing cooperation with our investigation.

Sincerely,

W.J. “Billy” Tauzin
Chairman                                                         

John D. Dingell
Ranking Member

James C. Greenwood
Chairman
Subcommittee on Oversight and Investigations

Peter Deutsch
Ranking Member
Subcommittee on Oversight and Investigations

(For copies of the February 6, 2001 e-mail from Michael Jones and the August 21, 2001 memo from Andersen audit partner James Hecker, visit: http://test.archives.republicans.energycommerce.house.gov/107/pubs/andersenmemos.pdf )