David Duncan

Aged 43 Andersen employee for 20 years In charge of Enron account since 1987 Salary in 2001: $700,000 Dismissed by Andersen in January Pleaded guilty on 9 April Maximum possible prison sentence: 10 years

The preservation of the memos - among others - is further proof that Arthur Andersen did not engage in a conspiracy to destroy Enron documents as the government has suggested, said Andersen lead attorney Rusty Hardin.

"You must not have been worried about the [Securities and Exchange Commission] then, huh?" Mr Hardin said sarcastically, which prompted federal prosecutors, who have previously complained about such tactics, to object to the question.

'Smoking gun'

During his second day of cross-examination, Mr Duncan said he made a point of keeping a memo by Enron vice president Sherron Watkins.

In that memo, Ms Watkins complained to then-chairman Ken Lay that Enron's accounting procedures could cause the firm to "implode in a wave of accounting scandals".

"I believe I retained everything relevant to the Watkins memo in a separate folder," Mr Duncan said.

Also preserved by Mr Duncan was an e-mail sent from Houston-based Andersen partner James Hecker, who alerted other Andersen partners to the concerns of Ms Watkins.

"You actually retained what you might call the "smoking gun" memo?" Mr Hardin asked of Mr Duncan about the Hecker e-mail.

"You never tried to get rid of it in October and November of 2001?" Mr Harding asked.

"I did retain that memo," Mr Duncan replied.

Pleading innocence

Mr Duncan entered into a plea agreement with the Department of Justice in early April in which he admitted guilt in obstructing justice by ordering the destruction of documents related to Enron accounting practices.

In doing so he hopes to gain leniency from the court, which could sentence up to 10 years in prison.

Andersen, which fired Mr Duncan in January, contends it did nothing wrong in destroying documents.

If convicted, Andersen could face of fine of $500,000 (�343,000) and could be fined up to twice any gains or damages as determined by the court.

In addition, the firm would be barred from practicing before the SEC, effectively putting the firm out of business.