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Delusions of Sanity

Arthur AndersenÕs Contract to Audit FBI Unaffected by Mounting Evidence of Criminal Activity


Michael C. Ruppert

[Copyright 2002, From The Wilderness Publications and Michael C. Ruppert, All rights reserved. May be reprinted, copied, distributed or posted on the internet for non-profit purposes only.]

FTW, January 15, 2002 - In the exploding popcorn mix of new Enron investigations, increasingly focusing on possible criminal misconduct by accounting giant Arthur Andersen, a Justice Department spokesperson has told FTW that a contract for Andersen to review sensitive FBI management and recordkeeping procedures has been unaffected.

Recent statements by Senators Joseph Lieberman (D-CT) and Russ Feingold (D-WI) indicating that investigations of Andersen may turn criminal, and a January 14 commentary by CNNÕs Lou Dobbs indicating that the scandal may put the company out of business, raise serious questions about the Department of JusticeÕs contract calling for Andersen to "review the FBIÕs management practices, including recordkeeping, technology and human resources issues," as described in an August 29, 2001 story by reporter Kellie Lunney on the website This is especially relevant since FBI agents will themselves be investigating Andersen in newly announced DoJ probes related to Enron.

The Gov Exec story, relying on documents from the Federal Register, detailed that, "In July, Justice and FBI officials revealed that more than 400 weapons and 180 laptop computers - including some holding sensitive and classified information - were missing from the agency. The FBI has faced harsh criticism over the last few months, most notably for its failure to turn over all documents to lawyers for Oklahoma City bomber Timothy McVeigh, a controversy that resulted in a temporary postponement of McVeighÕs execution."

In August, Attorney General John Ashcroft authorized the creation of a special commission to evaluate years of serious and well-documented FBI lapses ranging from mishandling of key evidence in the crime lab, as exposed by FBI whistleblower Fred Whitehurst, to the loss of sensitive intelligence materials. Commission members include former CIA Director William Webster, former Secretary of Defense William Cohen, former House Speaker Tom Foley and former HUD Secretary and U.S. Trade Rep Carla Hills.

According to the GovExec story, "All of the commissionÕs meetings will be closed to the public to protect sensitive informationÉ according to a July 16 memo from the Justice Department." The key question is, "Information sensitive to whom, that might damage whose interests?"

DoJ spokesman Brian Sierra indicated on January 14, that the issue of AndersenÕs contract, which would give them access to many of the FBIÕs most sensitive files, has not yet been raised in the wake of the rapidly evolving Enron debacle. "As of this moment the contract is still in effect," said Sierra. I canÕt speak to the issue and I donÕt think the question has been brought up at Justice."

Spokespersons for Andersen, headquartered in Chicago, did not return an FTW call asking for comment.

The obvious conflict of interest could not come at a worse time for an Administration that is frantically attempting to get ahead of the Enron scandal. It also comes at a time when the impartiality of other government agencies including the Securities and Exchange Commission and the General Accounting office is called into question because of the past relationships of the heads of those two agencies with the embattled accounting firm. Harvey Pitt at SEC once represented Andersen in his private law practice. GAO chief David Walker is a former board member at Andersen whose tenure there ended in late 1998, long after the time period in which Andersen has been implicated in the falsifications of EnronÕs financial statements which began in 1997.

WalkerÕs former partners may now become the subject of criminal probes by the FBI, the SEC and the GAO. Unlike the SEC and the FBI, the GAO is known as the investigative arm of Congress - the same Congress which is now representing itself to be the champion of the public interest. Headed by Walker in the Comptroller General position, the GAO remains one of the last defensible positions that the government - both the White House and the Congress - can offer as a statement of government credibility to an increasingly cynical population.

The notion that Andersen could now be trusted to investigate the FBI and gain access to information that would damage the FBIÕs credibility and possibly be traded off for softer handling for its own actions stretches the imagination to the breaking point and beyond. Congress and the administration need to understand that by failing to walk the most perfect of lines with Enron and Andersen they risk the credibility of the entire government and not just the Bush White House.

A previous FTW story on unexplored conflicts of interest related to Enron is located at:á

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