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Enron accused of new shredding

A former Enron executive took home these shredded company documents to use as packing material.

WASHINGTON (CNN) -- Shredding of documents possibly pertinent to the demise of Enron continued as recently as last week, despite federal subpoenas and court orders since late October forbidding the practice, a former executive for the bankrupt energy giant said Monday.

Maureen Castaneda, who served as director of international investment for Enron, told ABC News the shredding was carried out in an accounting office on the 19th floor of Enron headquarters in Houston.

"I left in the second week of January, so the shredding was going on until I left, and I have no idea if it continues," she said, holding what she claimed were some of the shredded documents.

Castaneda said her office was across the hall from the accounting office. "After Thanksgiving, there was a great interest in the accounting documents, which were stored in the storage facility," she said.

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"They pulled out all the boxes and they lined them up in the hallway, and people had to go through every box."

When she lost her job, Castaneda took one of the boxes of shredded material home to use for packing material.

She showed ABC several of the shreds: one document is dated December 7, 2001; another refers to a secret off-the-books partnership called Jedi II that some investigators said they believe might have contributed to the company's demise.

"We have no knowledge about the documents in possession of ABC News, nor the significance of those documents, but we do know what we have repeatedly told our employees since October 25 -- and that is in no uncertain terms that they are to preserve all documents and materials," said Enron spokesman Mark Palmer when asked by CNN about the report.

More specifically, he said, employees were told in a company-wide e-mail on October 25 to "retain all documents which include handwritten notes, recordings, e-mails and any other method of information recording.

"You should know that this document preservation requirement is a requirement of federal law, and you could be individually liable for civil and criminal penalties if you fail to follow these instructions."

Palmer said the company has sent out four e-mails on the subject -- the most recent one last week. Each one broadened the scope of what employees are asked to retain, he said.

Ken Johnson, spokesman for the Republicans on the House Energy and Commerce Committee, said in a statement the allegations were "likely to be of interest to our committee" as well as the Justice Department.

"Making bad business decisions is one thing, but hiding or covering up bad decisions is another," Johnson said.

"If it turns out it is true -- that they were shredding documents while knowing inquiries were under way by Congress and the Department of Justice -- somebody's probably going to be in hot water."

Bill Lerach, an attorney for Milberg Weiss, a San Diego-based law firm that specializes in class action suits, said the alleged recent shredding of documents is solid evidence of a criminal act.

"I think, unfortunately, what happened here is Andersen and Enron were together in perpetrating a huge fraud, and they got caught," said Lerach, whose firm is representing the regents of the California university system, which lost $144 million when Enron declared bankruptcy.

"They knew it was coming out, and they made a horrible, horrible decision. They made the decision to destroy the evidence. It's never the right decision."

"I left in the second week of January, so the shredding was going on until I left," Castaneda says.

The shredded pieces of paper will be pieced back together, he said. "These aren't payroll records from five years ago. These are important documents that were shredded."

The shredding continued over Thanksgiving and on Christmas Day, until at least January 14, Lerach said.

Lerach said he planned to take the box of shredded papers to federal court Tuesday, demand an explanation and ask that all relevant Enron documents be put in the custody of the court.

Enron's Palmer said, "These guys are notorious for stunts like trying to drum up more claimants for their class actions."

-- CNN Capitol Hill Producer Ted Barrett contributed to this report.