Enron got U.S. help with India
Posted on Sat, Jan. 19, 2002
By DANA MILBANK and PAUL BLUSTEIN
The Washington Post
WASHINGTON - The White House coordinated a multifront effort last year to help Enron Corp. settle a dispute with the Indian government that the energy company hoped would deliver $2.3 billion as it was running out of cash in the weeks before declaring bankruptcy.
According to government records released Friday, President Bush's National Security Council led a "working group" with officials from various Cabinet agencies to resolve Enron's troubles over a power plant venture. Enron, facing nonpayment by its Indian government customer, wanted to sell its interest for $2.3 billion.
The administration's efforts - which included Vice President Dick Cheney's conversation with an Indian official and was to involve a personal appeal by Bush to Indian Prime Minister Atal Bihari Vajpayee - appeared to end Nov. 8. That's the day Enron filed documents with the Securities and Exchange Commission revising its financial statements to account for $586 million in losses. It's also the day that Enron Chairman Kenneth L. Lay talked by phone with Treasury Secretary Paul O'Neill about the company's dire finances.
The documents released Friday provide new details about Bush administration efforts to aid Enron, the once high-flying company that filed for bankruptcy law protection in December and now faces Justice Department and congressional investigations. The India episode demonstrates the ability of Enron - once one of the nation's most aggressive and innovative firms, and one of the biggest political donors - to command the attention, and sometimes the intervention, of the nation's highest government officials.
The Bush administration intensified government actions just as Enron's financial problems grew severe and the power plant venture reached a moment of crisis. Those efforts stopped when the scope of Enron's spectacular collapse was becoming known worldwide.
Administration officials say their efforts were appropriate and unremarkable, intended primarily to protect U.S. taxpayers' $640 million interest in the troubled Dabhol power plant. The Clinton administration, starting in the mid- 1990s, also had backed Enron in its dispute with Indian officials.
White House press secretary Ari Fleischer said Friday: "It's not uncommon for leaders of the United States, no matter what party they are, to help make certain that if contracts are to be awarded overseas, they're given to Americans. There's a lot of competition."
But Jon Sohn, the international policy analyst for the environmental group Friends of the Earth, said Enron received more government help with its projects than other companies - under both the Clinton and Bush administrations.
The group calculated that Enron received $2.4 billion for its overseas energy projects between 1992 and 2000 from the Overseas Private Investment Corp. and the Export-Import Bank of the United States in the form of loans, insurance and guarantees.
The $3 billion power plant, located south of Bombay, was built as India began to open its heavily state-run economy and allow foreign firms greater investment opportunities. The nation's biggest foreign investment by far, the plant was highly controversial from the start. It drew opposition from environmentalists, Indian nationalists and even the World Bank.
The project is "not economically viable," Heinz Vergin, the World Bank's country director for India, wrote in April 1993, rejecting a request for a bank loan.
But some U.S. taxpayer- financed institutions helped finance the project. OPIC provided $160 million in loans and $180 million in risk insurance; the Export-Import Bank lent the project $300 million. The agencies say such projects create U.S. jobs and exports.
Enron sought to sell its 65 percent interest in the Dabhol plant after years of squabbling with the plant's lone customer, the Maharashtra State Electricity Board. In a Sept. 14 letter to Vajpayee, Lay said he wanted $1.2 billion for the cost of the company's investment and $1.1 billion for the purchase of offshore lenders' debt.
The $2.3 billion total, he wrote, "strikes me as exceptionally reasonable when compared to the size of our legal claim," which Enron had put at $4 billion to $5 billion.
When Lay wrote the letter, Enron's stock had plunged to $32.76, from a high of $90 in August 2000. The drop left Enron scrambling for cash to keep its far-flung businesses afloat.
At the same time, the administration working group was trying to resolve the dispute between Enron and India.
"The acute lack of progress in this matter has forced Dabhol to rise to the highest levels of the United States government," OPIC President Peter Watson said in a Nov. 6 message to a top Vajpayee aide, Brajesh Mishra. "I ask that you give this matter serious and immediate attention."
The documents do not make clear whether the Bush administration was pressuring India to release Enron from the project or to reach another settlement.
Fleischer said the administration's actions had nothing to do with Enron political contributions. He noted that the Clinton administration had acted in a similar manner on Dabhol.
Indeed, according to the Center for Public Integrity, Lay accompanied Clinton's Commerce secretary, Ron Brown, on a trip to India in 1995.
By last summer, documents show, the National Security Council was intimately involved in discussions about the plant. A June 28, 2001, e- mail from an NSC staffer announced that there was "good news" regarding Enron and Cheney: "The Veep mentioned ENRON in his meeting with Sonia Gandhi" - the president of India's opposition Congress Party.
An intragovernmental e- mail sent on the afternoon of Nov. 8 and labeled "Importance: High," said, "President Bush can not talk about Dabhol as was already mentioned." The email, released by OPIC officials after they deleted the sender's and recipients' names, also said that Bush's top economic adviser, Lawrence Lindsey, a former Enron consultant, "was advised that he could not discuss Dabhol."
Fleischer said Lindsey did not get involved because the White House counsel warned of a possible conflict of interest. Bush did not get involved because "it was a matter of not rising up to his level," Fleischer said. |
