Tags: Conflict | Interest | Questions | Raised | GAO | Enron | Lawsuit

Conflict of Interest Questions Raised in GAO Enron Lawsuit

Friday, 01 February 2002 12:00 AM

GAO Comptroller General David Walker Wednesday announced the intended lawsuit, but made no mention of his ties with the Arthur Andersen firm, which handled the accounting for Enron and is also under scrutiny for its role in the energy firm's collapse.

Immediately prior to accepting his current position, Walker was a partner and global managing director of Andersen's "human capital services practice" and a member of the board of Arthur Andersen Financial Advisors, according to GAO documents.

Congress is asking questions about a possible conflict of interest created by Andersen serving as both auditor and financial consultant to Enron and now, some question whether Walker's past involvement with Andersen might compromise the GAO inquiry.

Walker was appointed to his 15-year term as comptroller general in 1998 by then-President Clinton. In that capacity, Walker heads GAO, the agency responsible for "activities [that] are designed to ensure the executive branch's accountability to the Congress under the Constitution," according to the agency's Internet website.

Calls for comment on Walker's relationship with Andersen and any potential connection to Enron were not returned.

The information regarding Walker's involvement with Andersen, along with his service in the Reagan administration as assistant secretary of labor for Pension and Welfare Benefit Programs, is included in his official biography on the GAO website.

Rep. Mark Souder, R-Ind., a member of the House Government Reform Committee investigating the Enron collapse, agrees with GAO that the names of those who advised the administration should be released. He also says Walker's ties to Andersen are probably not of legal or political consequence, but they are cause for concern on one count.

"The Arthur Andersen tie," Souder said, "does lend itself to doubt as to the appearance, not the substance, at a time when the public is justifiably very skeptical."

James Gattuso, a regulatory policy researcher with the Heritage Foundation, agreed, saying that if Walker is demanding transparency from the White House, it is fair to question his involvement with Andersen and any potential conflict of interest.

"We do need to find out more about what his role was at Arthur Andersen," Gattuso said. "Did he handle any Enron accounts? Was he involved in this [and] to what degree?"

Gattuso stressed that Walker should be given the benefit of the doubt, regarding those questions.

"It is a fair question to ask," Gattuso said. "[But] I don't know if we could say that just being at that firm would mean he has to recuse himself."

At least one senior Republican staff member, who expressed shock upon learning that a former Andersen executive was leading the investigation of Enron, thinks Walker should disengage from the investigation.

"He should recuse himself," said the staff member, who spoke on condition of anonymity.

Even among Republicans, opinion on Walker's past role with Andersen is split.

"I don't think his past with Arthur Andersen in any way taints him in doing his duty," said Rep. Joe Barton, R-Tex., a member of the House Energy and Commerce Committee. "I assume him to be a man of integrity and believe that if his past duties interfered, he would recuse himself from the investigation."

Democratic members of Congress directed the General Accounting Office to investigate whether campaign contributions by Enron were rewarded with access to Vice President Dick Cheney's National Energy Policy Development Group (NEPDG) and favorable positions in the administration's energy plan.

"Recent revelations regarding the extent of Enron's contacts with the White House energy task force have only underscored the need for full public disclosure," wrote Rep. Henry Waxman, D-Calif., ranking Democrat on the House Committee on Government Reform in a Jan. 16 letter to Cheney.

"Numerous policies in the White House energy plan are virtually identical to the positions Enron advocated," Waxman stated.

The White House has refused to release documents detailing which companies and individuals it consulted during the formulation of its energy policy.

The administration says it has the right to seek candid advice from outside experts, and that objective recommendations would be impossible to obtain if participants had to fear political harassment as a result of their suggestions.

"The president will stand strong on principle," White House spokesman Ari Fleischer said Wednesday, "fighting for his right and the right of all future presidents to receive advice without it being turned into a virtual news release."

GAO originally made the request for information from Cheney at the behest of Waxman and Rep. John Dingell, D-Mich., ranking Democrat on the House Energy and Commerce Committee.

Walker announced Wednesday afternoon that, "GAO will take the steps necessary to file suit in United States District Court" to obtain information from NEPDG.

"We would have strongly preferred to avoid litigation in connection with this matter," Walker stated in a letter announcing the decision. "This will be the first time that GAO has filed suit to enforce our access rights against a federal official. We hope it is the last time that we will have to do so."

Cheney wrote the Senate and House of Representatives Aug. 2, 2001, claiming that, in demanding records from the NEPDG, Walker had taken actions "which exceeded his lawful authority and which if given effect, would unconstitutionally interfere with the function of the executive branch."

Walker's letter, published on the GAO website Wednesday, outlined the reasons he believes the requested information should be released.

"Clearly, the formulation and oversight of energy policy and the investigation of Enron-related activities represent important institutional prerogatives of the Congress," Walker wrote. "Furthermore, a number of other important principles are involved. Failure to provide the information we are seeking serves to undercut the important principles of transparency and accountability in government."

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GAO Comptroller General David Walker Wednesday announced the intended lawsuit, but made no mention of his ties with the Arthur Andersen firm, which handled the accounting for Enron and is also under scrutiny for its role in the energy firm's collapse. Immediately prior to...
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Friday, 01 February 2002 12:00 AM
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