PracticeAccounting FirmsBush issues warning on hiring Andersen

Bush issues warning on hiring Andersen

The Bush administration has warned federal agencies to think carefully before hiring Andersen or Enron again, following allegations of 'document shredding, manipulative accounting practices, and other activities' at both companies.

In total the two companies hold government contracts worth about $60m (£42m).

In a letter issued on Friday, Mitchell Daniels, director of the government Office of Management and Budget, cautioned another department, the General Services Administration, to ensure that existing contracts between federal agencies and both companies are ‘performed in accordance with contract terms and proper business practices’.

Daniels told the GSA to refer to the government’s ethics and integrity requirements before awarding either company future contracts.

While Daniels said in an interview that he was not forbidding agencies from hiring the companies the letter reads: ‘Consideration should be given to the initiation of suspension or debarment treatment for all, or part of, Arthur Andersen or Enron as appropriate.’

Andersen’s 64 government contracts were understood to be worth $24.7m in June last year. The letter also noted that the GSA had’ ‘significant contract activity with Arthur Andersen and Enron’ in the third fiscal quarter of last year.

While these contracts are small change for a $10bn firm like Andersen, the government’s caution will hardly help boost confidence in the company’s already tarnished reputation.

It seems more than likely that at least some of the firm’s corporate customers will follow the government’s cautious lead.

Bankrupt energy company Enron has government contracts worth $34.8m.

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