The General Services Administration Mar. 15 suspended Enron Corp., related Enron corporate entities, several former Enron officials, the accounting firm Arthur Andersen LLP, and a former Andersen official from conducting new business with the federal government. GSA said the suspension is for 12 months for all parties except for Andersen, whose suspension remains as long as it is under indictment.
The US Department of Justice alleges that at numerous locations throughout the world Andersen officials knowingly destroyed documents and other information relating to the auditor's work for Enron and that it was done to impede a DOJ investigation of Enron's financial collapse.
Anderson maintains it was a few rogue officials, not a company-wide conspiracy, that directed certain documents be destroyed. Former Enron officials, meanwhile, say they never tried to artificially prop up the company's stock price by intentionally hiding losses.
GSA said it continues to review other Enron subsidiaries and other Enron and Andersen officials. In late January, the Office of Management and Budget asked GSA to determine whether the business performance of Andersen and Enron met proper business standards.
GSA said that it was justified in its action because "Enron itself admits to organizational failures, a lack of accounting and operational controls, and a collapse of their internal control structure.
"These organizational, accounting, and operational deficiencies have had very real-and deleterious-consequences that directly affect their present responsibility as government contractors. These deficiencies have caused a host of irregularities, which in turn have given rise to several pending criminal and civil investigations and legal proceedings.
"Matters under current investigation include securities fraud, falsification and destruction of records, making false statements, and other serious offenses. The available evidence indicates a lack of business integrity and business honesty that directly and seriously affects the present responsibility of Enron and its subsidiaries as government contractors or subcontractors."
