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Andersen spent millions lobbying for energy deregulation
By Dean Calbreath
January 30, 2002
Bean-counting and paper-shredding may not have been the only services that the Andersen accounting firm provided for the collapsed energy giant Enron. In the late 1990s, Andersen also devoted a portion of its lobbying activities on Capitol Hill to fighting on behalf of energy deregulation, mirroring Enron's own lobbying work.
Between 1996 and 1998, Andersen spent more than $6 million for lobbying activities on Capitol Hill. Much of the lobbying focused on accounting-related issues, such as tax laws, trade regulations and intellectual property protection. But the firm also lobbied on four bills related to energy deregulation, an issue that is not often seen as being directly related to auditing.
"They were using an in-house lobbyist to do this work, rather than hiring outside lobbyists," said Bill Allison, part of a team that tracked Andersen's activities at the Center for Public Integrity, a nonpartisan group that monitors lobbying and political contributions.
"Generally, people use in-house lobbyists to lobby on matters directly affecting their own interests. Andersen's interest in energy deregulation went way beyond the issues involved in getting the numbers right on financial statements."
Andersen spokesman Patrick Dorton declined to discuss the firm's lobbying activity, responding to questions with a terse "no comment." The lobbying was conducted by Melinda Mullet, the firm's director of regulatory analysis. Mullet left the firm in mid-1999. Andersen's office in Washington said it did not know where she works now.
Critics question how independent Andersen was as an auditor if it was lobbying on issues primarily to benefit a handful of its biggest clients. Besides Enron, Andersen also represented at least two other companies with a major stake in deregulation: Dynegy and the Southern Co.
"To my knowledge, no other accounting firm lobbied on energy to the extent that Andersen did," said Tyson Slocum, an energy specialist with Public Citizen in Washington. "Their activity raises some flags, making it more and more clear that Arthur Andersen was in far more collusion with Enron than they have let on."
Lobbying records filed on Capitol Hill show that between 1996 and 1998, Andersen was involved on four key energy bills. Senate Bill 1526, the key Senate bill aimed at deregulating the energy industry.
Senate Bill 1317, which would repeal the Public Utilities Company Holding Act, a New Deal law designed to prevent utilities from spreading their grip from one region to another.
House Bill 3790, the House version of Senate Bill 1526.
House Bill 2929, which would overturn the Public Utility Regulatory Policy Act, passed during the 1970s energy crisis to promote energy conservation and alternative sources of power.
The congressional records do not specify what stances Andersen or any other lobbyist take on legislation. But the records also show that Enron was lobbying on the same issues during the same time frame as Andersen.
Beyond its lobbying activities, Andersen also directed some of its multimillion-dollar political contributions to key players in energy regulation.
According to data collated by the Center for Responsive Politics, the top recipient of Andersen's contributions in the House has been Rep. W.J. "Billy" Tauzin, a Louisiana Republican who chairs the Energy and Commerce Committee.
Beyond governing energy policy, Tauzin's committee also is in charge of commercial issues, including a number of issues of importance to accounting firms. His top 10 contributors typically include each of the Big Five accounting firms as well as the American Institute of Certified Public Accountants.
In the fall of 2000, Tauzin was instrumental in helping quash a move by the Securities and Exchange Commission to block auditors from providing consulting firms to their clients. Critics say that the dual role could lead to potential conflicts of interest among auditors such as Andersen, which received $27 million in consulting fees from Enron while it was auditing its books.
In recent days, Tauzin has put distance between himself and his top corporate supporter. Just yesterday, he wrote a letter to Andersen asking it to detail what consulting services it provided to Enron.
Holly Bailey, a researcher with the Center for Responsive Politics in Washington, said there is not much of a jump from providing consulting for a client to lobbying on behalf of its concerns.
"It's not unusual for a company to lobby on issues that are outside its realm, but it becomes more interesting when you throw in the fact that Andersen was Enron's auditor," she said. "That's what Congress is investigating now: What is the proper role for an independent accounting firm."
-- Cherri (firstname.lastname@example.org), February 02, 2002