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CAUGHT AT CORRUPTION

by Ritt Goldstein Thursday, Aug. 08, 2002 at 1:50 PM

TWO ARTICLES: ENRON'S GLOBAL RAPE OF CONSUMERS. SHORT PIECE QUOTING REUTERS; A LONG PIECE WITH THE SORDID DETAILS. THE LONG PIECE WAS POSTED TO INDYMEDIA 31 JULY, THE REUTERS PIECE BROKE 5 AUGUST.

FEDS INVESTIGATING ENRON'S DEVELOPING WORLD DEALS

In a heartening break with the see little and do less practices marking corporate law enforcement, Reuters just reported that:

"Federal prosecutors are investigating whether or not Enron Corp. bribed foreign government officials to win contracts abroad, the Wall Street Journal reported Monday. The Justice Department's Enron Task Force is examining the energy company's non-U.S. operations for possible criminal violations of the Foreign Corrupt Practices Act, the paper said."

No doubt motivated by the recent revelations of seemingly endless corporate corruption, the Feds "inquiry centers on Enron's efforts to win foreign pipeline, power and water-privatization projects, as far back as the mid-1990s, the sources were cited as saying. In some countries, projects were awarded to Enron without competitive bidding, or assets were acquired at below-market values, according to the Journal, amid allegations by the World Bank and others of government favoritism. Claims of corruption in Enron power or water projects have arisen over the years in several countries, including Ghana, Colombia, Bolivia, Panama, Nigeria and the Dominican Republic, the paper said."



ENRON, GLOBALIZATION'S NIGHTMARE

by Ritt Goldstein

While the the book-cooking machinations of too many US megacompanies have awaken concerns for regulation, little has been reported regarding their escapades abroad. But due to Enron's recent notoriety, documentation relating to allegations of bribery, undue official influence, coercion and corruption has surfaced.

Not long ago Enron had ongoing or developing operations in at least 6 EU states and over 30 countries worldwide. The company focused upon short-term profits and long-term contracts, ever using its influence to profitably manipulate markets while leaving a trail of wounded consumers and criminal allegations in its wake. Enron especially preyed upon markets where foreign investment was highly sought, such as the developing world and the former soviet bloc.

While the questionable circumstances surrounding Enron's failed Dabhol power plant in India are near legendary for their political pressures, exhorbitant charges, and questionable benefits, disturbing similarities exist across the globe. Beyond instances where direct pressure from the US government was exerted in promoting Enron's interests, critics charge Enron with engaging in a pattern of projects notorious for their "secretive negotiations, bullying tactics, unfair financial terms, and dubious economic benefits". The Dominican Republic stands as a disturbing monument to such criticism.

Cash-poor, during the early 1990's the Dominican Republic agreed to the introduction of Independent Power Producers (IPP's) in order to meet electricity needs. Enron entered the market with barge mounted power plants. By the late '90's the country privatized its power sector, Enron buying a stake in the country's existing generating capacity. Quickly electrcity rates rose 51 - 100%, consumers equally fast unable to pay the increased rates. Many charged that lengthy blackouts and criminal rate increases were privatizations only "benefits".

The Dominican government intervened, absorbing the rate increases, underwriting charges of about million per month from the power companies. But unable to meet such obligations, the government accumulated debt of 5 million.

Enron and its fellow producers cut-off power, the blackouts lasting as long as 24 hours. Hospitals, schools, businesses, and public services were affected, along with the Republic's consumers. Consumer frustration sparked public demonstrations, some turning violent. At least nine people died, including a 14-year-old boy. The Dominican government, echoing similar charges made by California officials, alleged that the rate increases were the product of a manipulted power market (charges found accurate in California).

The Dominicans charged that more than half the country's generating capacity was witheld from the market, raising prices. A clash with the US Embassy ensued when the government charged Enron and its partner had defrauded them, failing to meet the minimum promised electricity production.

Fueling the controversy, a local subsidiary of the now infamous Arthur Andersson allegedly undervalued the assets of the Dominican state power company by .1 billion, questions concurrently being raised as to whether what little was paid ever entered the country. And allegations of financial chicanery blanket descriptions of Enron's projects.

In Indonesia Enron was accused of being part of corrupt and nepotistic dealings with the Suharto regime, dealings nearly bankrupting the state-owned power company when it had to contractually buy so much power it needed to curtail its own generating capacity. Poland faced a somewhat similar contractual problem, in that local power producers were unable to sell their power as Enron had locked the Polish grid operator, PSE, into a twenty year contract to buy power at higher than market prices. Croatia found Enron's contract meant an immediate 25% price increase there. But in India, Enron fended off repeated court cases of charges including outright bribery, and questions surround the terms of numerous Enron contracts worldwide.

In Ghana the media revealed that Enron's project had found approval based upon million in bribes to "senior officials", a charge the company denied. But the World Bank did cancel the project's financing, charging negotiations had not been conducted in a "transparent" manner. Across the ocean, the Bolivian national congress formed a special committee to investigate similar concerns.

Formed in the aftermath of Enron's scandal, the committee pursued charges that Enron illegally acquired its stake in the Bolivia-Brazil pipeline, as well as the transportation division of the former state-owned oil and gas company (YPFB). The committee president, Bolivian national congressman Armando de la Parra, states facts indicate "a secret deal between Sanchez and Enron", Sanchez being former Bolivian President Gonzalo Sanchez de Lozada.

Of particular interest is a 1994 contract signed under New York State law between Sanchez and Enron. Illegal under Bolivian law, the contract allowed Enron to form an offshore company, avoiding Bolivian taxation. Accusations also swirl about the nature of the contract's bidding process. And now the original contract has mysteriously vanished, neither Enron nor the government able to locate it. But Enron's stake in the pipeline and YPFB's division, Transredes, were outgrowths of the agreement.

In '96 Enron entered a partnership with Shell, gaining control of Transredes. According to Parra, then Sanchez mysteriously granted Enron a 40% interest in the Bolivian side of the Brazil-Bolivia pipeline, a grant Parra charges was made without any evidence of Enron's investment in the Brazil-Bolivia venture.

Enron today stands accused of substantive Bolivian environmental damage, as well as the destruction of numerous communities' livelihoods. But it is splitting a reported "gift" of million per year with Shell as a result of its share of the Brazil-Bolivia pipeline. It's also sought a 5 million loan from the government funded Inter-American Development Bank to expand the pipeline through "ecologically sensitive" areas. And according to US Congressional findings, the Bolivian operations were part of Enron's discredited "partnership" network, reaping huge profits for individual Enron execs. Previously though, before Enron's escapades exploded in a wave of public outrage, the US had said rather supportive things of and for the company.

During the mid-90's Mozambique had acquired substantive reservations regarding Enron's plans to develop their Pande natural gas field, trying to terminate Enron's prospective involvement. It was reported that the US National Security Council threatened to terminate aid to the struggling African nation if they did so, or if Enron's proposal was impeded from coming to fruition. Letters from National Security Advisor Anthony Lake were reportedly sent to both the Mozambican Energy Minister and President, the confrontation concluding when President Joaquim Chissano quickly confirmed Enron's agreement would be pursued.

Worldwide, many of those who could least afford it have been badly victimized, the limited resources of whole populations disappearing under Enron's exploitative veil of privatization and de-regulation. Speaking to the Globalization issue, President Bush said, "When we negotiate for open markets, we are providing hope for the world's poor." As charges alleging criminal conduct have been raised against Enron in Europe, North America, South America, Asia, and Africa, when Mr. Bush spoke of "hope" for the world's poor, perhaps he meant their hope that they wouldn't be forced to deal with Enron or another like it.

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