Minister orders investigation of accountants

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Indy Politics

A review of the role of accountants will be announced by Trade and Industry Secretary Patricia Hewitt this week to examine issues raised by the collapse of Enron.

The review will look particularly at the role of auditors, with the possibility of bringing in a rating system to assess the independence and effectiveness of particular firms. Other options will also be studied.

The Government will also launch an inquiry into non-executive directors to find ways of ensuring they are drawn from a bigger pool and are "stronger, more active, more independent and effective".

In her Mansion House speech on Wednesday night, Ms Hewitt will try to re-establish Labour's relationship with business following a string of "sleaze" stories.

Ministers have been staving off criticism over Labour's links with business for several weeks. The Enron scandal following the firm's collapse last December became uncomfortable when it emerged the firm had funded both Labour and the Conservatives. Links between ministers, including Ms Hewitt, and Arthur Andersen, Enron's auditors, piled further embarrassment on the Government.

Tony Blair's intervention on behalf of steel billionaire Lakshmi Mittal in a business deal in Romania only added to the impression, expressed in a recent poll, that Labour is significantly more sleazy than the Conservatives.

"The big picture is that the Government has got to have a relationship with business just as we have to have a relationship with the unions," an aide to Ms Hewitt said. "It's got to be a grown-up relationship based on fairness and not favours." The review of accountants and auditors will be carried out jointly by the Department of Trade and Industry, the Treasury, the Financial Services Authority and the Accountancy Foundation to "co-ordinate the response in the UK to the issues raised by the collapse of Enron".

The firm's collapse is already the subject of 14 inquiries in the United States.

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