Wednesday, March 29, 2006

Angst over Accenture

One of the major companies closest of all to New Labour is Accenture, the US-based consultancy outfit.

Its reputation is not of the highest, to put it politely. Accenture and its predecessor Arthur Andersen were involved in many of the worst business scandals in both Britain and America in recent decades, from De Lorean to Enron.

Even the Tories considered them too dodgy to do business with. Yet when an important multinational starts hitting on it, the Labour Party invariably swoons.

Since the early 1990s, the Arthur Andersen/Accenture set up has provided ample free policy advice and lucrative employment for key Labour figures.

For its part, Labour has awarded Accenture many lucrative public sector contracts that were debarred to it under Thatcher and Major.

Among them is a $3.5bn contract to design, build and manage information systems for the National Health Service. The project includes such vital functions electronic medical records, appointment booking and prescription systems.

The bad news for NHS users among us is that Accenture is messing it up big time. Delivery has slipped badly behind schedule.

But last July, the company assured everybody that things had been sorted out. Not so.

The work is now so seriously delayed that the government has been forced to let doctors and local healthcare providers use alternative computer systems.

Meanwhile, Accenture has today announced a $450m charge to its accounts.

By way of a bit of background, here’s an extract on Accenture from my book, Labour Party plc:

‘The Tories had stripped Arthur Andersen of the right to receive government contracts in 1982, after it failed to prevent fraud at Northern Ireland-based car maker DeLorean, resulting in the loss of massive amounts of public money. Andersen had even then mastered the knack of doing whatever it takes to keep a client happy.

‘Three years later, the British government sued the firm for £200m. The action dragged on for years, excluding the company from all the lucrative privatisation work of the Thatcher period.

‘Still out in the cold by the mid-1990s, both wings of Andersen actively courted the opposition. In 1993, Andersen Consulting offered its services to an internal Labour commission on social justice. The following year, the commission’s deputy chair Patricia Hewitt left her job as Kinnock’s press officer to become Andersen Consulting’s director of research.

‘Three years later, the firm arranged a seminar for Labour backbenchers on how to handle being a minister. Meanwhile, Arthur Andersen provided Gordon Brown with substantial cut-price help in devising his policies on the windfall tax, capital gains tax and advanced corporation tax.

‘After Labour’s 1997 election win, the legal action was rapidly settled, following the Treasury solicitor’s proposals for mediation. Andersen paid just £21m, only one-tenth of what the Conservatives had demanded. It went on to advise the Government on numerous matters, including the London Underground sell-off, Railtrack, the Millennium Dome, Education Action Zones, the Jubilee Line extension, British Nuclear Fuels, the air traffic control privatisation and many other deals.

‘Two senior Andersen staffers, Chris Wales and Chris Osborne, became advisers to Brown and Robinson at the Treasury. The firm also proved helpful to beleaguered Paymaster General Geoffrey Robinson.

‘As liquidator of Robert Maxwell’s private companies, Andersen controlled many of the papers relating to the £200,000 payment allegedly made by Maxwell to Robinson, but prevented parliamentary investigators from seeing them.

‘Hewitt, meanwhile, had got herself elected MP for Leicester West, and was rapidly promoted to Economic Secretary to the Treasury, then e-business minister. After the 2001 victory, she became Secretary of State for Trade and Industry, giving the firm a former employee in high places.

‘But the backlash from Enron has left Andersen no longer in a position to call-in any outstanding favours. Following the defection of a string of major clients, Andersen is in the process of being dismembered, with practices in various countries sold off to the highest bidder.’


Accenture, of course, represents the bulk of what emerged from the wreckage, and has been mopping up PFI deals ever since.

UPDATE: I see from my stats counter that Accenture servers in both Britain and the US have been reading this post. Hi, guys.

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