White House orders review of companies' contracts

Sunday, January 27, 2002

WASHINGTON -- Embattled Enron Corp. and the Arthur Andersen accounting firm, already being investigated by Congress and law enforcement agencies, now will have their $70 million in U.S. government contracts put under scrutiny.

The White House on Friday ordered a government-wide review to determine whether the bankrupt energy trading company and its longtime auditors, both accused of massive destruction of documents in the face of federal subpoenas, are worthy of government business.

The order came a day after senior officials of Andersen appeared under subpoena at a congressional hearing where lawmakers denounced the destruction of Enron-related documents at the Big Five accounting firm. Andersen officials blamed the fired chief auditor of the Enron account, who invoked his Fifth Amendment right against self-incrimination and refused to answer questions.

In a letter to the General Services Administration, which oversees government contracts, White House budget director Mitchell Daniels said charges of document shredding, manipulative accounting practices and other activities "could reflect poorly" on the companies and their ability to meet government ethics standards.

Both companies have large contracts with the Justice Department, which is investigating their activities for potential criminal wrongdoing. The Securities and Exchange Commission has been pursuing a civil investigation since Oct. 31.

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