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Wednesday, 30 January, 2002, 23:22 GMT
Labour's Arthur Andersen links
Andersen and Enron logos

By BBC News Online's Ollie Stone-Lee

While Tony Blair toured Britain aboard his election battle bus in 1997, senior members of his economic team were working alongside experts at Arthur Andersen, Enron's accountants.

That relationship - which produced key planks of current economic policy - lies behind the awkward questions Labour now faces over Andersen's return to government work.


They have a habit of backing everybody in order to have influence with everybody

David Heathcoat- Amory
Tory MP
As the Enron row rumbles on, opposition parties are putting under the spotlight those links with Andersen, the renamed accountancy arm of the former Arthur Andersen group. (The consultancy arm is now a separate company called Accenture).

That stems from the 1981 De Lorean affair when the car company, which made the wing-doored cars featured in the Back to the Future films, collapsed.

With the company went the millions of pounds of taxpayers' money the government was using to support De Lorean.

Settlement claims

The then Prime Minister, Margaret Thatcher, was furious with Arthur Andersen, accountants to De Lorean, for failing to prevent the fiasco.

Not only did she effectively bar them from working for the government but she also started trying to sue Andersen for about 200m.

Downing Street says it settled that case for 21m when Labour came to power in 1997 in a process already begun under previous ministers.

And the Whitehall ban on Andersen was lifted, again on legal advice, according to Number 10.

That has not stopped Conservative and Liberal Democrat suspicions about how the close Labour links with Andersen may have brought that change in fortunes for the accountancy giant.

Robinson's evidence

That close relationship is clear from the memoirs of Geoffrey Robinson, the former Paymaster General and a key player in Chancellor Gordon Brown's economic team before Labour came to power.

Mr Robinson praises the way Andersen, reportedly for free, helped to put together policies like the windfall tax on public utilities (which, ironically Enron lobbied against), as well as reform of corporate and capital gains tax.

Geoffrey Robinson
Andersen's advice affected four Budgets, says Geoffrey Robinson
The former minister tells how he approached managing partner Stephen Hailey, a Labour Party member, at the accountants, which were at the time called Arthur Andersen.

Even with the election under way, Mr Robinson and Ed Balls, now chief economic adviser at the Treasury, managed to spend much of the campaign working with Andersen.

"It was interesting to note how seriously the Andersen team was by now taking the responsibility they had amorphously assumed for advising on what became an extensive and bold set of taxation reforms over four budgets," writes Mr Robinson.

Seeking influence

Conservative MP David Heathcoat-Amory has called Andersen "a very political firm".

"They have a habit of backing everybody in order to have influence with everybody," the Tory MP told the Guardian this week.

But such a strategy is used by many companies, not least Enron, and many would argue it is simply good business practice that can bring real expertise to political policies.

Nonetheless, in Andersen's case it has prompted questions, not least because the government has commissioned the company to do lucrative work in the last five years, including reports on Railtrack and the London Underground.

Other major accountants have also been working for the government, however.

Indeed National Audit Office figures for 1999-2000 show Andersen trailing behind the other "big five" accountants in the amount of government income.

John Ormerod, managing partner of Andersen UK, told BBC News there was no question of the company winning work except on merit through competitive contracts.

Hewitt's links

Confusion is added to the Andersen angle by the fact that Accenture (the renamed Andersen Consulting), until 2000 its sister company, has also been close to Labour - Trade Secretary Patricia Hewitt used to be its research director.

The companies split in 2000 when Andersen Consulting left the Andersen Worldwide group following a long running and bitter court case.

The accounting and consulting arms of the group had been running as separate companies within the group since 1989.

Andersen Consulting, renamed Accenture in 2001, has never been involved in accounting or auditing.

The company complains its history is often inaccurately reported and indeed highlights that Accenture/Andersen Consulting was never banned from government work after De Lorean.

Those ties - or lack of them - are just one more complexity in a row devilled by detail.


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