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U.S. seeks review of its contracts with Enron

WASHINGTON (CNN) -- The White House Office of Management and Budget has asked for a review of more than 100 federal contracts with bankrupt energy giant Enron and its accounting firm, Andersen LLP, to determine if their performance is up to the standards required to do government business in the future.

OMB chief Mitch Daniels requested the investigation in a letter Friday to General Services Administration head Stephen Perry.

"As you know, Federal Acquisition Regulation (FAR) provisions require that firms seeking to do business with the government have a satisfactory record of business ethics and integrity," Daniels wrote. "Consideration should be given to the initiation of suspension or debarment proceedings for all, or a part, of Arthur Andersen and Enron as appropriate."

Andersen and Enron have contracts with several government agencies totaling about $60 million.

Daniels cited "recent press reports (highlighting) potential irregularities" -- including document shredding and manipulative accounting practices -- and asked the GSA to launch its review "on behalf of all federal agencies doing business" with the two companies.

Daniels copied his letter to other agencies with existing Enron or Andersen contracts, and said that they "should ensure that existing contracts ... are being performed in accordance with contract terms and proper business practices."

Part of the GSA's responsibilities are to ensure that government contracts are signed with responsible firms. It is the only agency with the authority to "debar" or suspend contractors from government service. Conviction of fraud, anti-trust violations, embezzlement, theft forgery, bribery, making false statements, tax evasion, commission of any offense indicating a lack of integrity or honesty are among the causes that can result in debarment.

Existing contracts with Enron or Anderson would not be automatically terminated if the GSA debars them, and the companies would have an opportunity to argue against debarment before it actually takes place.

Enron, once a giant energy corporation, collapsed in the biggest bankruptcy filing in U.S. history amid accusations of mishandling of funds and shredding of crucial documents. Enron and its accounting firm are under congressional investigation.

On Friday, former Enron Vice Chairman J. Clifford Baxter -- who made millions on the sale of Enron stock but was unhappy with Enron's business practices and quit last May -- was found dead, the victim of an apparent suicide, police said. Friends told CNN that Baxter had been disappointed and seemed depressed over the last few days, and said that he was "stressed" because he had been named in lawsuits filed by shareholders against the company.




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