WASHINGTON, Jan 26: US President George W. Bush’s administration has asked federal agencies to review contracts with bankrupt energy giant Enron and its auditor Arthur Andersen, seeking to distance itself from the two firms at the heart of a financial scandal.
White House budget director Mitch Daniels, in a letter dated Jan 25, asked Stephen Perry, the top official at the General Services Administration, to consider the “initiation of suspension or debarment proceedings for all, or a part of Arthur Andersen and Enron as appropriate.”
Responding to allegations of “potential irregularities” in work done by the two firms, Perry’s office, which oversees the federal administration, was asked to review government contracts to “ensure that existing contracts with Arthur Anderson and Enron are being performed in accordance with ... proper business practices.”
Allegations of widespread document shredding, manipulative accounting practices and “other activities that could reflect poorly on these corporate entities” have been hurled against the two industry giants, Daniels said, which could undermine “their ability to provide quality work.”
In the grand scheme of things, the companies’ contracts with the government are relatively inconsequential, worth only 60 million dollars — a paltry sum for the disgraced Enron, which last year boasted a balance sheet of more than 100 billion dollars.
But the role Enron executives played in the development of the federal energy plan presented last spring by the White House is under the microscope, with questions of the extent to which the company may have influenced federal policy possibly subject to federal prosecution, said US Comptroller General David Walker.
Walker’s General Accounting Office has been denied in its repeated requests to the White House for documents produced by the energy task force headed by Vice President Dick Cheney, himself the former head of oil giant Halliburton.
Kenneth Lay, who recently resigned from his position atop Enron, was among those consulted by the task force and some of the company’s other top executives attended the closed-door meetings.
In interviews published Saturday, Walker threatened legal action if the documents remained under wraps.
“Unless we get the information or we’re in the middle of intense negotiations (to do so), I am not going to sit on this much longer,” the Washington Post quoted him as saying.
According to the New York Times, such action would mark the first time in its history that the Congressional auditing agency sued a federal entity or federal official for information.
Walker and Cheney were in telephone conversations Thursday, but no compromise was reached, the comptroller was quoted as saying.
Enron had once been phenomenally successful, its pioneering energy trading concept helping to send company stock soaring to a high that once exceeded 80 dollars a share.
Some of that largesse was passed on to President Bush, whose longtime friend Kenneth Lay contributed substantially to both his gubernatorial and presidential campaigns.
The firm has since tumbled like a house of cards after its questionable accounting practices were revealed in the autumn and thousands of investors and employees saw their life savings evaporate as Enron stocks plummeted to a worth of less than the paper they were printed on.
Arthur Andersen, too, is embroiled in the financial devastation, its executives admitting knowledge of the destruction of thousands of pages of documents. Both firms could face reams of criminal and civil charges as a sheaf of judicial, financial and Congressional hearings have been opened into the affair.
The affair took a tragic turn Friday, with the presumed suicide of Clifford Baxter, a former vice president of Enron who had sold off more than 35 million dollars in stock before his death of a gunshot wound to the head. He had been subpoenaed to testify in Congress.
draft plan: The White House apparently changed a draft energy proposal circulated by the State Department last year to add a provision aimed at helping Enron in India, a Democratic lawmaker says.
Rep Henry Waxman of California wrote on Friday to Vice President Dick Cheney, who headed the administration’s energy policy task force, to point out the change.
A week ago Waxman said he had found 17 policies in the White House’s May 2001 energy plan, including the India provision, that were either advocated by Enron or benefited Enron.
He said in his letter to Cheney that it now appeared the India provision had been missing from the draft energy policy proposal circulated by the State Department during an interagency review in March last year.
“Instead, the provision appears to have been added to the plan during the period in which the White House directly controlled the drafting,” Waxman wrote.—AFP/Reuters