Re: [A-List] Enron's corporate welfare

["Anne Williamson" <annewilliamson@xxxxxxx>]

townhall.com

Robert Novak

May 1, 2002

Enron's corporate welfare

WASHINGTON -- A bipartisan Senate Finance Committee investigation has found
that Enron Corp., no paragon of free-market deregulation, gorged itself on
corporate welfare. The Clinton administration gave more than $650 million in
Export-Import Bank loans to Enron-related companies. While the Senate now
probes whether the bankrupt energy company falsified loan requests, the
bigger question is why Enron was subsidized at all.

Export-Import officials early this year, expressing confidence in the
accuracy of information provided by Enron in its loan applications, were not
interested in an investigation. However, Ex-Im Vice Chairman Eduardo Aguirre
sang a different tune in his April 23 letter to Sen. Chuck Grassley of Iowa,
the Finance Committee's senior Republican. "Please let me assure you that
Ex-Im Bank takes very seriously potential violations of law . . . and works
very closely with the Department of Justice," wrote Aguirre.

Finance staffers have found that Ex-Im, as well as the Overseas Private
Investment Corp. (OPIC), in a Democratic administration routinely approved
loan requests from a supposedly Republican company. Lavish bipartisan
political contributions may have helped, as well as a top Enron executive
sitting on Ex-Im's Advisory Committee.

Actually, one official of the agency informed a Senate investigator that all
Ex-Im really monitors is loan repayment. Ironically, it is unclear whether
Enron loans will be defaulted at American taxpayer expense. While the
rationale for the Export-Import Bank's existence is to give U.S. businesses
a level playing field against government-subsidized foreign competition, the
Enron loans merely buttressed questionable projects where the company often
was both producer and exporter.

The classic case is a September 1994 Ex-Im direct loan of $302 million ($175
million of which remains unpaid) to Dabhol Power Co. in India, then 80
percent owned by Enron. In this deal, Enron was the "foreign" company, and
its allies, Bechtel Group and General Electric, were the exporters. With an
Indian utility that could not pay its bills (and was pressured by the Bush
administration to do so) as its only customer, Dabhol went bankrupt even
before Enron.

A less publicized loan scrutinized by Senate investigators provided $135
million (only $4 million of which has been repaid) to the Accroven
partnership for a natural gas plant in Venezuela. Nearly half the company's
stock was owned by Enron while Enron also was the exporter. Thus, the U.S.
taxpayer was paying Enron money so that Enron could buy gas from Enron.

Enron's loan application for the Accroven project included the company's
1998 annual report, which the company has admitted was falsified. "I'm
troubled by the Ex-Im's seeming lack of interest in this matter," Grassley
wrote Aguirre on April 2.

Ex-Im loaned $250 million to Trakya Elektrik of Turkey, owned 50 percent by
Enron, which was buying goods and services from Enron. Ex-Im insured a $3.6
million Citibank loan to Promigas in Colombia, owned 42.3 percent by Enron.
Whether or not these loans were based on misleading information, it is
difficult see how any of these deals fulfills the Export-Import Bank's
avowed purpose of promoting American competition against the world.

While Democratic Sen. Ernest F. Hollings delivered his memorable judgment
that Enron benefited from the Bush presidency on a cash-and-carry basis, the
symbiosis between big business and the purveyors of corporate welfare is
bipartisan. Just as Enron gave to both parties, Bechtel has contributed
$820,000 to Republicans and $730,000 to Democrats since the 1992 elections.
Rebecca A. McDonald, CEO of Enron Global Assets, was on Ex-Im's Advisory
Committee under President Clinton in 2000 and remained there under President
Bush in 2001. How can it be that a major recipient of government largesse is
advising the agency handing it out?

Except for a fitful effort to trim it down in the early months of the Reagan
administration in 1981 and some restraint by the current Bush
administration, the Export-Import Bank has sailed through governments of
both parties -- hardly noticed and never critically examined. Sen. Max
Baucus of Montana, the Finance Committee's Democratic chairman, and Sen.
Grassley in a Jan. 31 letter to Ex-Im questioned whether the American
taxpayer "ultimately" would be stuck with the bill for Enron. A broader
scrutiny of the agency's global pursuits is still wanting.