Enron Used U.S. to Bully Poor Nations

Defunct energy giant Enron used the U.S. government to coerce the World Bank and poor nations to grant concessions and resolve its investment problems, according to documents and correspondence released by the Treasury Department.

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 the 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, billions of dollars in debt and facing accusations of accounting frauds.

According to Treasury documents obtained by consumer groups under the U.S. Freedom of Information Act, the incidents concerned Enron subsidiaries' activities in 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."

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 the Treasury, the State Department and even the National Security Council were involved in resolving problems over the $3 billion 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 India 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.