A U.S. government investigation into the actions of executives at Enron's still-functioning overseas division, along with related charges of impropriety regarding Enron's activities in other countries, may hold important implications for U.S. policies on foreign investment, according to think-tank analysts in Washington.
An investigation into the company's overseas investment practices could "reveal something about how the international economy works, and what the level of corruption is in big government contracts," Ed Gresser, director of the trade and global markets project at the liberal-centrist Progressive Policy Institute (PPI), tells United Press International (UPI). The institute is affiliated with the Democratic Leadership Council, a political-action group with ties to former president Bill Clinton. "Is it more prevalent in some industries than in others, and if so what can you do about it?" Gresser asks. "I think it can be pretty valuable in the long run."
Criminal allegations of corporate impropriety at Enron, and the resulting media attention, have focused almost exclusively on the company's domestic operations. But a Justice Department investigation into the company has been expanded to include charges that executives in Enron's Global Services division have in the past bribed foreign officials in attempts to win foreign pipeline, power and water-privatization projects.
Investigators also are said to be examining whether Enron acquired some assets at below-market rates, and was awarded contracts without competitive bidding, as the result of bribes to government officials.
The federal probe seeks to determine whether the company violated the Foreign Corrupt Practices Act in the course of developing some of its foreign investment projects. Some of Enron's holdings include power plants in Poland and India, and a gas pipeline being run through the Bolivian jungle.
Analysts following the case say that although Enron declared bankruptcy, many of its foreign operations remain largely intact because of the long-term backing of institutions--such as the Inter-American Development Bank; the Export-Import Bank (Ex-Im); the Overseas Private Investment Corp. (OPIC); and the World Bank--that are funded by U.S. taxpayers.
According to a report published by the left-of-center Institute for Policy Studies (IPS), during the last decade Enron Global Services received more than $4 billion in loans and guarantees from these institutions, which seek to support U.S. corporate investment overseas to encourage economic development.
According to IPS fellow Daphne Wysham, 21 agencies representing foreign governments and multilateral development banks supported by the U.S. government have helped leverage Enron's global reach with $7.2 billion in public financing for 38 projects in 29 countries. "Enron Global is very much alive and well, and still in line for several government-backed loans," says Wysham, a critic of U.S. corporate economic-development practices overseas.
Wysham's report, Enron's Pawns: How Public Institutions Bankrolled Enron's Globalization Game, says Enron's overseas activities resulted not only in shady deals with foreign officials to ensure contracts, but also in energy-rate hikes, blackouts, social unrest and riots that sometimes were brutally repressed by the company's host governments.
"Enron was a nonentity until basically it began to get loans from international financial institutions and export credit agencies," Wysham says. "And one of the ways that it has profited and continues to profit internationally is not only from international institutions, but from the deregulatory agenda of free-trade agencies and financial institutions such as the World Trade Organization."
Wysham also alleges that U.S. government officials threatened the Mozambique government to go along with an Enron power project in that country. …