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2002-03-22

Stunning Depths of Government Collaboration with Enron Revealed

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We are going to begin with a Democracy Now! exclusive. The Institute for Policy Studies in Washington DC today willrelease an explosive new report saying that Enron Corp. was able to become a global giant only because governmentagencies, both American and foreign, gave it more than $7 billion in publicly funded financing over the past decade.The report is called "Enron’s Pawns: How Public Institutions Bankrolled Enron’s Globalization Game." The reportbegins:

“Many public officials have described Enron’s demise as the product of corporate misbehavior. This perspectiveignores a vital fact: Enron would not have scaled such grand global heights, nor fallen so dramatically, without itsclose financial relationships with government agencies. Since 1992, at least 21 agencies, representing the U.S.government, multilateral development banks, and other national governments, helped leverage Enron’s global reach byapproving $7.219 billion in public financing toward 38 projects in 29 countries. For example:

  • In the Dominican Republic, eight people were killed when police were brought in to quell riots after blackoutslasting up to 20 hours followed a power price hike that Enron and other private firms initiated. The local populationwas further enraged by allegations that a local affiliate of Arthur Andersen had undervalued the newly privatizedutility by almost $1 billion, reaping enormous profits for Enron.
  • In India, police hired by the power consortium of which Enron was a part beat non-violent protesters whochallenged the $30 billion agreement-the largest deal in Indian history-struck between local politicians and Enron.
  • The president of Guatemala tried to dissolve the Congress and declare martial law after rioting ensued, followinga price hike that the government deemed necessary after selling the power sector to Enron.
  • In Panama, the man who negotiated the asking price for Enron’s stake in power production was the brother-in-lawof the head of the country’s state-owned power company. Rioting followed suspicions of corruption and Enron’s pricehikes and power outages there, too.
  • In Colombia, two politicians resigned amid accusations that one was trying to push a cut-rate deal for Enron onthe state-owned power company.

While all this was occurring, the U.S. Government and other public agencies continued to advocate on Enron’s behalf,threatening poor countries like Mozambique with an end to aid if they did not accept Enron’s bid on a natural gasfield.

So linked was Enron with the U.S. Government in many people’s minds that they assumed, as the late Croatian strongmanFranjo Tjudman did, that pleasing Enron meant pleasing the White House."Guests:

  • Jim Vallette, Institute for Policy Studies, co-author of report.
  • Daphne Wysham, Institute for Policy Studies, co-author of report.

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