Newly-Released Documents Show Enron Ties To Bush White House

by Emad Mekay

Enron, a bankrupt company that allegedly paid no taxes in the 15 years before it went broke in 2001 despite earning billions of dollars in declared profits, regularly and aggressively called on staff from Treasury, the State Department, the office of the U.S. Trade Representative and the World Bank to meet with foreign officials to favorably resolve its problems and disputes with their governments.

The company collapsed at the end of 2001 with billions of dollars in debt and facing accusations of accounting frauds.

The incidents, according to Treasury documents obtained by consumer groups under the U.S. Freedom of Information Act, concerned its subsidiaries' activities in countries including Argentina, India, Nigeria, the Dominican Republic and Turkey.

Nations like India, Argentina and Mozambique have long publicly complained that Enron was particularly heavy-handed in using the local U.S. embassy or Washington to apply pressure if disputes were not resolved to its satisfaction.

The new documents, though heavily censored, are among the first concrete evidence of how the highly controversial company managed to outdo other U.S. firms in aggressively pulling strings in Washington.

What "sets Enron apart was that it was always willing to take things a little further than everybody else," said Tyson Slocum, a research director with Public Citizen, a U.S.-based consumer group.

"Enron for its size flexed an enormous amount of political muscle that gave it tremendous access that a lot of other companies did not enjoy as consistently. It just excelled at pushing its influence to a level more advanced and a little higher than many of its competitors," he told IPS.

In India, for example, according to the documents, senior government officials intervened with their Indian counterparts to settle a dispute over the Dabhol power plant in Enron's favor.

Officials from Treasury, the State Department and even the National Security Council were involved in resolving problems over the three-billion-dollar project on behalf of the U.S. firm.

The Indians were concerned that the project was not viable in the first place and that Enron had been accused of profiteering by charging power prices that were at least three times higher than elsewhere in the country.

But in negotiations between India, Enron, and other agencies, "the objective is to steer the discussion away from whether the (Dabhol) project is in default or not," wrote Geetha Rao of the Treasury Department's India Desk, in correspondence seen by IPS.

In another document, U.S. officials briefing then Secretary of Treasury Paul O'Neil suggested that messages he deliver on a trip to Indian include, "without a quick resolution of the Enron dispute, the financial relationship between the U.S. and India would suffer as a result."

"Unless expeditiously resolved, the Enron dispute could affect India's investment climate and hamper development of our bilateral economic and political relations," said another "talking point" provided to O'Neil.

It continues: "The U.S. government hopes that a creative resolution can be found to Dabhol so that we can focus without distraction on our growing economic and political ties."

Enron even reportedly pushed administration officials to threaten foreign governments with sanctions if their disputes could not be settled advantageously. In 2001, the 'Financial Times' newspaper said that company executives threatened to have the United States impose sanctions on India.

The Dabhol plant, which is still 65 percent owned by Enron, was shut down as the company went into bankruptcy and Indian lenders started court action to recover loans.

The end results of lobbying efforts on behalf of Enron are unclear, but the documents clearly show how the firm arm-twisted U.S. officials to intervene on its behalf.

"To get a secretary of the Treasury to raise the issue of a specific company's contractual dispute in high-level official diplomatic meetings is not common," said Slocum, referring to O'Neil's trip to India.

Washington intervened on Enron's behalf elsewhere.

Other documents show that in 2001 the company lobbied the government to "exercise the influence of the United States in the World Bank" to persuade the international lender, which often attaches economic policy conditions to its credit, to intervene in economic policy in Turkey so that Enron's investment there would be protected.

Both the World Bank and the International Monetary Fund (IMF) had at the time wanted to impose a deadline on offering guarantees for certain energy projects in Turkey, some of which involved Enron.

A World Bank official told IPS on Thursday that the company's pressure tactics did not work, and that the Bank went ahead and restricted guarantees to the energy sector.

Similarly, in 2001 Enron sought help from "officials who are handling U.S. foreign policy relations with Argentina," including the U.S. Trade Representative, State Department officials and the Treasury, to resolve a conflict with Argentina over a 500-million-dollar investment dispute with Enron's water services subsidiary, Azurix.

The U.S. firm had complained that local authorities would not allow Azurix to charge the high rates provided in the contract for its portable water and wastewater services. Argentina finally agreed to buy back the project.

"These documents help explain how Enron used its money and connections to distort government policies in a way that gave it a free rein to cheat consumers," said Slocum.

Activists and watchdog groups have long decried the apparently open channels between corporations and successive U.S. administrations, often established through hefty election campaigns contributions.

According to the Washington-based Center for Responsive Politics, which analyses federal elections documents, from 1989 to 2002 Enron and its employees gave nearly six million dollars in individual, political and soft money contributions to federal candidates and parties.

Three-quarters of the candidates were from the Republican Party of President George W. Bush.

Enron was also a major donor to the election campaign of Bush and Vice President Dick Cheney, while at least 15 high-ranking administration officials owned stock in the energy company in 2001.

Activists say this cozy relationship between the U.S. government and corporate executives leaves consumers and the poor at a disadvantage, particularly in defenseless developing nations.

"That's the kind of corporate behavior that an organization like ours is trying to change," said Nadia Martinez of the Institute of Policy Studies in Washington.

"It is when the U.S. government uses its influence to arm-twist to do things that are favorable to the U.S. and its corporations, when it may or may not be in line with the wishes of the people or the interests of the people in that country," she added..