Leahy Seeks Clarifications
On Andersen’s DOJ Contract

Attached is a letter sent today (Wednesday) by Sen. Patrick Leahy (D-Vt.), chairman of the Senate Judiciary Committee, to Deputy Attorney General Lawrence Thompson, concerning the Department's contract with Arthur Andersen LLP for work relating to DOJ and FBI reorganization.

Leahy suggests precautions, such as a fire wall, to prevent conflicts of interest between the firm's work with DOJ and the Department's and the FBI's investigation of the Enron matter. Leahy also asks for information to clarify Andersen's role in working with the Department and with the FBI on reorganization issues. Under the terms of the contract, entered into last summer, Andersen has access to confidential and sensitive FBI and DOJ files and databases.

The Judiciary Committee is the Senate's committee of oversight for the Justice Department and the FBI.

The text of Leahy's letter to Thompson is attached.

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January 15, 2002

The Honorable Lawrence Thompson
Deputy Attorney General
United States Department of Justice
950 Pennsylvania Avenue, N.W.
Washington, D.C. 20530

Dear Mr. Thompson:

I write to you in your capacities both as Acting Attorney General in the Enron matter and as the Department of Justice official spearheading the Department's reorganization.

The investigations into the actions of Enron, its associates, and its directors and officers during the time both leading up to and following its bankruptcy come at a crucial juncture in the Department's efforts to reorganize the Federal Bureau of Investigation. Although the full scope and facts in the Enron matter are not yet known, it is already clear that the investigation will be carefully scrutinized by the public because of the devastating financial consequences which Enron's sudden demise had for so many Americans. I write to bring a particular matter to your attention to ensure that the Department is taking appropriate steps to guarantee that the reorganization efforts underway at the Department of Justice and the FBI and this investigation do not taint each other.

In June, 2001, the Attorney General directed you to initiate a comprehensive review of the Federal Bureau of Investigation and to submit your recommendations for any reform this month. To assist in this review, in July you commissioned a study, costing more than $700,000, to be conducted by Arthur Andersen LLP, to evaluate the mission, structure, information technology, internal problem-spotting mechanisms and crisis management systems within the FBI. Under the terms of the service contract with the firm, Arthur Andersen personnel have access to confidential and sensitive FBI files and databases.

The Arthur Andersen management assessment is currently underway and, I understand, has produced a draft report which is being used by the Department in making key decisions relating to FBI reorganization and reform. At the same time, it is now clear that Arthur Andersen will come under scrutiny from both the Department of Justice and the Securities and Exchange Commission for its role in alleged financial irregularities at Enron and in the preservation or destruction of documents important to the investigation.

The role that Arthur Andersen or any related entity has or will play in the Department's review of the FBI, while this same firm is simultaneously a subject of high-profile investigations, raises

obvious concerns and questions, and I would welcome your thoughts. Please advise me as to both the precise role that Arthur Andersen has played to this point regarding review of the FBI and how Arthur Andersen was selected for this vital role. Please also indicate which Department of Justice or FBI officials have had contact with representatives of Arthur Andersen throughout the review or selection process, and whether any of those individuals are involved in any aspect of the Enron investigation.

Please also advise what continuing role Arthur Andersen will have and whether there are any specific precautions which have been taken to date or are being contemplated, such as erecting fire walls, to mitigate any of the concerns regarding the involvement of Arthur Andersen in this Departmental review at the same time that the Enron matter is under investigation by the Department. I also welcome any analysis or observations that you wish to share on this matter.

Last summer the Judiciary Committee launched the first FBI oversight hearings in many years, and we will resume the series during this session. Even before September 11 there was general agreement in the Congress and in the Department about the need for FBI managerial and mission reforms, and today both the Department and the FBI truly are at a crossroads. FBI and departmental reorganization offer superb opportunities to address several fundamental problems. As this process moves forward, it will be important to continue to inform the public and to respond to the committees of Congress. Now that the Enron investigation threatens to cross paths with FBI reorganization, it has also become important to understand and resolve any actual, potential or apparent conflicts of interest between them. By doing so, we can continue to maintain public confidence in both the investigation and the reorganization of the Department of Justice and the FBI. Such information is also vital for the Congress to fulfill its oversight responsibilities concerning the Department and the FBI.

I look forward to your prompt response to these questions.

Sincerely,

PATRICK LEAHY
Chairman