As the investigation into the collapse of energy trading Enron Corp. intensifies, the firm’s auditor, Arthur Andersen, admitted today that a “significant but undetermined” number of documents large numbers of documents relating to the firm may have been destroyed.

The accounting firm said company policy “required in certain circumstances the destruction of certain types of documents.” The documents were destroyed by Andersen employees.

The admission that one of the world’s leading auditors has destroyed documents relating to the biggest-ever bankruptcy has the potential to shake market confidence.

Andersen says that it has notified the U.S. Securities and Exchange Commission, the U.S. Department of Justice, and is also notifying congressional committees and other agencies investigating the Enron collapse.

The Enron bankruptcy is attracting attention not only as a big business story, but also because of close ties between its CEO Kenneth Lay and US president George W. Bush and other politicians. The Center for Public Integrity reports that 24 top executives and board members at Enron contributed nearly US$800,000 to national political parties, President Bush, members of Congress, and others overseeing investigations of the company for possible securities fraud, during 1999 to 2001.

In addition to notifying authorities, Andersen has suspended its current records management policy effective immediately and instructed all partners and personnel to retain all existing documents until further notice. The firm also has asked former U.S. Senator John Danforth to conduct an immediate and comprehensive review of Andersen’s records management policy and to recommend improvements.