ENRON: OIL SLICK DICK'S SICK STRONG-ARM TACTICS
Dave,
As you probably already know, since you are an expert on the Third World, that Dick Cheney was strong-arming the Indian national government and the government of Maharastra State during the final days of Enron as a going concern last fall. His efforts were aimed at raising cash for Kenny Boy's sinking ship, and Cheney wasn't adverse to using the cudgel of threatening IMF and World Bank sanctions on India if they didn't cave in to Cheney's craven demands. Here's the sordid history of sleazy American capitalists spreading their poisoned and criminal operations around the world with the aid of corrupted U.S. government organizations like OPIC. You may not like the Third World, but does that justify the rape of India that Enron was attempting here?
zmag.org
Shall We Leave It To The Experts
by Arundhati Roy
The Nation
February 12, 2002
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Enron in India
The fishbowl of the drive to privatize power, its truly star turn, is the story of Enron, the Houston-based natural gas company. The Enron project was the first private power project in India. The Power Purchase Agreement between Enron and the Congress Party-ruled state government of Maharashtra for a 740-megawatt power plant was signed in 1993. The opposition parties, the Hindu nationalist Bharatiya Janata Party (BJP) and the Shiv Sena, set up a howl of swadeshi (nationalist) protest and filed legal proceedings against Enron and the state government. They alleged malfeasance and corruption at the highest level. A year later, when state elections were announced, it was the only campaign issue of the BJP-Shiv Sena alliance.
In February 1995 this combine won the elections. True to their word, they "scrapped" the project. In a savage, fiery statement, the opposition leader L.K. Advani attacked the phenomenon he called "loot through liberalization." He more or less directly accused the Congress Party government of having taken a $13 million bribe from Enron. Enron had made no secret of the fact that in order to secure the deal, it paid out millions of dollars to "educate" the politicians and bureaucrats involved in the deal.
Following annulment of the contract, the US government began to pressure the Maharashtra government. US Ambassador Frank Wisner made several statements deploring the cancellation. (Soon after he completed his term as ambassador, he joined Enron as a director.) In November 1995 the BJP-Shiv Sena government in Maharashtra announced a "renegotiation" committee. In May 1996 a minority federal government headed by the BJP was sworn in at New Delhi. It lasted for exactly thirteen days and then resigned before facing a no-confidence vote in Parliament. On its last day in office, even as the motion of no confidence was in progress, the Cabinet met for a hurried "lunch" and reratified the national government's counterguarantee (which had become void because of the earlier "canceled" contract with Enron). In August 1996 the government of Maharashtra signed a fresh contract with Enron on terms that would astound the most hard-boiled cynic.
The impugned contract had involved annual payments to Enron of $430 million for Phase I of the project (740 megawatts), with Phase II (1,624 megawatts) being optional. The "renegotiated" power purchase agreement makes Phase II of the project mandatory and legally binds the Maharashtra State Electricity Board (MSEB) to pay Enron the sum of $30 billion! It constitutes the largest contract ever signed in the history of India.
Indian experts who have studied the project have called it the most massive fraud in the country's history. The project's gross profits work out to between $12 billion and $14 billion. The official return on equity is more than 30 percent. That's almost double what Indian law and statutes permit in power projects. In effect, for an 18 percent increase in installed capacity, the MSEB has to set aside 70 percent of its revenue to pay Enron. There is, of course, no record of what mathematical formula was used to "re-educate" the new government. Nor any trace of how much trickled up or down or sideways or to whom.
But there's more: In one of the most extraordinary decisions in its not entirely pristine history, in May 1997 the Supreme Court of India refused to entertain an appeal against Enron.
Today, everything that critics of the project predicted has come true with an eerie vengeance. The power that the Enron plant produces is twice as expensive as its nearest competitor and seven times as expensive as the cheapest electricity available in Maharashtra. In May 2000 the Maharashtra Electricity Regulatory Committee (MERC) ruled that temporarily, until as long as was absolutely necessary, no power should be bought from Enron. This was based on a calculation that it would be cheaper to just pay Enron the mandatory fixed charges for the maintenance and administration of the plant that it is contractually obliged to pay than to actually buy any of its exorbitant power. The fixed charges alone work out to around $220 million a year for Phase I of the project. Phase II will be nearly twice the amount.
Two hundred and twenty million dollars a year for the next twenty years. Meanwhile, industrialists in Maharashtra have begun to generate their own power at a much cheaper rate, with private generators. The demand for power from the industrial sector has begun to decline rapidly. The MSEB, strapped for cash, with Enron hanging like an albatross around its neck, will now have no choice but to make private generators illegal. That's the only way that industrialists can be coerced into buying Enron's exorbitantly priced electricity.
In January 2001 the Maharashtra government (the Congress Party is back in power with a new chief minister) announced that it did not have the money to pay Enron's bills. On January 31, only five days after an earthquake in the neighboring state of Gujarat, at a time when the country was still reeling from the disaster, the newspapers announced that Enron had decided to invoke the counterguarantee and that if the government did not come up with the cash, it would have to auction the government properties named as collateral security in the contract.
But Enron had friends in high places. It was one of the biggest corporate contributors to President George W. Bush's election campaign. US government officials warned India about vitiating the "investment climate" and running the risk of frightening away future investors. In other words: Allow us to rob you blind, or else we'll go away.
Last June the MSEB announced that it was ending its agreement with the Dabhol Power Corporation, a joint venture of Enron--which has the largest stake--General Electric and Bechtel. DPC ceased operations soon afterward, and is pressuring the government to cover its debts. Royal Dutch/Shell, the Anglo-Dutch petroleum group, TotalFinaElf and Gaz de France are currently bidding to take over Enron, Bechtel and GE's collective stake in the plant in a "distress sale."
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Cynics say that real life is a choice between the failed revolution and the shabby deal. I don't know...maybe they're right. But even they should know that there's no limit to just how shabby that shabby deal can be. What we need to search for and find, what we need to hone and perfect into a magnificent, shining thing, is a new kind of politics. Not the politics of governance, but the politics of resistance. The politics of opposition. The politics of forcing accountability. The politics of slowing things down. The politics of joining hands across the world and preventing certain destruction. In the present circumstances, I'd say that the only thing worth globalizing is dissent. It's India's best export.
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Dave, are you proud to be an American, and support the spread of Enron style American capitalism across the planet? I'm not. I'm ashamed of these scoundrels, including Oil Slick Dick with his cynical strong-arm operations....
Salaams, Ray |
