May 1 05:33 UTC 2002

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. 



            ©2002 Creators Syndicate, Inc.

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