HOUSTON -- Enron Corp. shredded documents after the company came under federal investigation, attorneys for shareholders said Monday, and the energy company said it would review the allegations.

The claim that shredding took place in Enron's accounting offices was made Monday by a former Enron executive who was laid off from the company this month.

The executive, Maureen Castaneda, collected a box of shreddings and will be a witness for plaintiffs suing over stock losses in the Enron collapse, said attorney William Lerach, who represents a group of shareholders.

"Not just one document was destroyed, but it looks like hundreds of thousands were destroyed."

Lerach said he intended to raise the issue at a federal court hearing here today.

Castaneda, a director in Enron's foreign investments section, said in an interview with ABC News that she witnessed the shredding of documents that began around Thanksgiving and continued at least until she left the company in the second week of this month.

Enron's accounting firm, Andersen, previously acknowledged that thousands of documents related to Enron were shredded by its Houston office. But Castaneda is the first to say publicly that Enron destroyed relevant papers.

Paul Howes, an attorney working with Lerach, said text was legible in some of the shredded documents and included references to controversial partnerships such as Jedi II and Chewco. Losses by such off-the-book partnerships played a key role in triggering Enron's collapse.

Based on statements from witnesses, Lerach estimated that possibly hundreds of thousands of documents were destroyed.

"We are investigating the circumstances of the reported destruction of documents," Robert Bennett, a Washington attorney who is representing Enron, said in a statement issued late Monday.

Bennett said Enron had issued "several directives" in October to all employees saying that "all relevant documents should be preserved in light of pending litigation."

"If anyone violated those directives," Bennett said, "they will be dealt with appropriately."

Ken Johnson, a spokesman for the House Energy and Commerce Committee, said congressional investigators will look into the allegations.

"This whole sorry affair keeps getting uglier by the minute," he said. "It's one thing to make bad business decisions. It's something else entirely to try to cover up bad business decisions."

Howes said fired Enron employees were told to gather their work papers in boxes and turn them over to company officials, who went through them and shredded numerous documents.

He said the shredding began with the layoffs triggered by Enron's Dec. 2 declaration of bankruptcy, and accelerated during the Christmas and New Year's holidays. He said the shredded documents were dated from at least 1994 through Dec. 20, 2001.

Enron spokesman Mark Palmer said the company does not "have any knowledge of the material that the plaintiffs' attorneys are parading in front of the media." But he said that if the allegations prove true, the people responsible will be fired.

The company sent e-mails to employees on Oct. 25, Oct. 26, Oct. 31 and Jan. 14 instructing them to retain all documents dealing with "related-party transactions, SEC requests, or any Enron transactions or accounting for those transactions," he said.

The January e-mail was sent as a reminder after it was revealed that Andersen had shredded Enron-related documents.

"These e-mails were very specific that employees who did not follow these procedures were liable for civil or criminal penalties," Palmer said.

Palmer confirmed that Castaneda was an employee at Enron who left the company in a recent round of layoffs.

She was director of "foreign exchange and sovereign risk," analyzing currency exchange rates and the possibility that companies outside the U.S. would nationalize assets.

Phil Schiliro, chief of staff to Rep. Henry A. Waxman (D-Los Angeles), a senior Democrat on the House Energy and Commerce Committee, said that if documents were destroyed, it "raises the real possibility of obstruction of justice. We need to know if Enron is destroying documents, and if they are, learn what Enron is trying to hide."

Though many companies routinely shred old or sensitive documents, business experts expressed surprise Monday that Enron might have destroyed key records, particularly after the company became the target of numerous lawsuits and government investigations.

On Oct. 22, the company disclosed that the Securities and Exchange Commission had launched a preliminary inquiry into some of the company's partnerships.

"Under the circumstances, this could be a very serious issue," said Nicholas Economides , business professor at New York University's Leonard N. Stern School of Business.

"'When someone destroys documents, people start wondering what was in those documents," Economides said. "Even if they didn't say something horrible, a bad impression remains. And at Enron, there's no justification. Certainly no one could say they destroyed documents because they thought they were unimportant."

Former employees reacted with concern and anger to the new charges.

"It does take it to a new level," said Maritta Mullet, 58, a 10-year employee who lost nearly half a million dollars in would-be retirement benefit when the company crashed. "It's criminal. You just don't destroy evidence."

The accusations of document shredding at Enron came as congressional investigators continued preparations for a hearing scheduled Thursday into the destruction of thousands of documents by Chicago-based Andersen.

Congressional investigators said they will issue subpoenas today for key witnesses who fail to commit to testifying at Thursday's hearing.

The House Energy and Commerce investigations subcommittee turned down an appeal Monday from David B. Duncan for more time to prepare. Duncan was Andersen's lead partner on the Enron account until he was fired last week for allegedly destroying documents. Duncan maintains he was following company orders.

"Apparently [Duncan] would like to have more time to refresh his memory about events," said Johnson, who works for committee Chairman Rep. W.J. "Billy" Tauzin (R-La.).

"The bottom line is he will agree to testify by [today] or he will be subpoenaed," Johnson said. "All the witnesses have been put on notice that they are expected to appear and will face contempt-of-Congress charges and criminal penalties if they do not."

In a letter to the committee Monday, Duncan's attorney, Robert Giuffra, said it is premature to require his client's testimony. Giuffra said Duncan wants to review boxes of documents that Andersen gave the committee but has not yet shared with him.

At issue is Andersen's destruction of documents relating to Enron, shredding that took place even after the accounting firm was aware that the SEC was looking into the company's collapse.

In firing Duncan, Joseph F. Berardino, Andersen's managing partner and chief executive, asserted that the 42-year-old executive had organized the destruction of records. The firm, he said, would not tolerate "unethical behavior, gross errors in judgment or willful violation of our policies."

In private interviews with congressional staffers last week, Duncan and another Andersen official, Michael C. Odom, indicated that others at the accounting firm were "at the table" when the memo regarding the destruction of material was discussed, one congressional investigator said Monday.

Andersen attorney Nancy Temple sent a memo Oct. 12 reminding employees of the company's long-standing policy to get rid of nonessential documents.

"Duncan and Odom said there were other partners and managers at the table when the retention policy was handed out," said an investigator, who spoke on the condition of anonymity. "Employees were told to do no less or no more than the policy called for."

A month later, and nearly three weeks after Enron disclosed it was the subject of an SEC probe, Temple wrote another memo instructing company employees to preserve Enron documents. As of late Monday, she was the only one of four Andersen executives summoned who has told investigators she will appear on Capitol Hill for the Thursday hearing.

The inquiry has been called to investigate who was involved in the destruction of evidence, which documents were destroyed and why.

Odom, who was in charge of risk management at Andersen's Houston office, was told Monday that he would be called to testify. The subcommittee also has summoned Berardino, who has been given the option of sending a proxy and who is familiar with his company's internal investigation into the document destruction.

In an appearance over the weekend on NBC's "Meet the Press," Berardino did not indicate his plans for the hearing.

Enron's bankruptcy is widely considered to have the potential to become a political scandal because of the donations--almost $6 million over the last decade--to both parties from the company's officers, directors, employees and political action committee. Kenneth L. Lay, Enron's chairman and chief executive, was one of President Bush's top donors.

A number of legislative efforts have been proposed to prevent a reoccurrence of Enron's unraveling.

Sen. Barbara Boxer (D-Calif.) said Monday that she plans to introduce a bill this week that would prohibit accounting firms from also serving as consultants for the companies they are auditing.

The practice, which in the case of Enron allowed Andersen to earn more in consulting fees than from actual audit charges, has been widely derided in the wake of the bankruptcy as a clear-cut conflict of interest.

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Garvey reported from Washington and Romney from Houston. Times staff writers David Streitfeld, Jeff Leeds, Edmund Sanders and Richard Simon contributed to this report.