"Bill Clinton was the best president Enron ever had!"
Ken Lay: Part of the Clinton Administration!
-August 1993. New President Bill Clinton takes his first vacation, a ski weekend to Vail, Colorado. Who shows up to visit with Clinton? Ken Lay, Enron CEO.
"A tired-looking Clinton, off on his first real vacation since becoming president, seemed reluctant Saturday morning to admit to reporters that he was having a good time. He kept mumbling stuff about health care being the next big ticket item on his domestic agenda. But by evening, he'd had such a good time on the local links with Ford, golf legend Jack Nicklaus and Houston's own Ken Lay, chairman of the Enron Corp..." (Source: The Houston Chronicle, August 16, 1993, Monday, 2 STAR Edition SECTION: A; Pg. 5; "Clinton Takes Real Vacation")
-1994/1995 Clinton Administration "makes a sale" for Enron. Enron and the administration work together to win Enron the contract for a power plant in India. Clinton uses resources from the CIA to assess risk and analyze the strategy of Enron's British competitor. The administration is instrumental in procuring $400 million in financing from the Export-Import Bank of the United States and the Overseas Private Investment Corporation.
"For 18 months, the Indian power-plant deal has floated near the top of the list of 100 or so big infrastructure projects around the world that the United States Government desperately wants American firms to win. It is the first of eight big power generation projects in India, and if the American consortium could close this one, it would create a precedent likely to give other American companies an advantage in billions of dollars of follow-on deals. In years past, American officials would have offered some modest help, but only as a sideshow to bigger foreign policy concerns, from containing Communist influence in South Asia to keeping India and Pakistan from accelerating their nuclear arms race. But that was another era in American foreign policy, before the Commerce Department built what Jeffrey E. Garten, the undersecretary of commerce for international trade, calls "our economic war room."
From that Washington war room, the negotiators for the Enron Corporation, the lead bidder in the American consortium, have been shadowed and assisted by a startling array of Government agencies. In a carefully-planned assault, the State and Energy Departments pressed the firms' case. The American ambassador to India, Frank G. Wisner, constantly cajoled Indian officials. The Secretary of Energy, Hazel O'Leary, brought in delegations of other executives -- including some last week -- to make the point that more American investment is in the wings if the conditions are right.
To sweeten the pot, the Export-Import Bank of the United States and the Overseas Private Investment Corporation put together $400 million in financing. And working just behind the scenes, as it often does these days, was the Central Intelligence Agency, assessing the risks of the project and scoping out the the competitive strategies of Britain and other countries that want a big chunk of the Indian market.
The big push by Washington Inc. paid off last month when the Indian government awarded the power plant project to the American consortium." (Source: The New York Times, February 19, 1995, Sunday, Late Edition - Final SECTION: Section 3; Page 1; Column 2; Business/Financial Desk; "How Washington Inc. Makes a Sale")
-October 1995. Bill Clinton recruits Ken Lay to act as a point man for Clinton in drumming up support for Fast Track legislation. Lay just happens to be an old friend of Mack McClarty.
"Two distinguished political doctors have been brought in to try to revive a nearly dead bill allowing President Clinton to secure new trade agreements with other nations.
Bill Frenzel, a former Republican member of the House Ways and Means Committee, and Ken Lay, chief executive of natural-gas giant Enron Corp., have been called in to break a year-long impasse that has blocked meaningful progress on trade pacts with Chile, the rest of Latin America, and the Pacific im.
Both men are well known to one player in that dispute - Ways and Means Chairman Bill Archer, R-Texas, whose district includes Enron's headquarters in Houston. The two also have connections to the Clinton administration. Mr. Frenzel served as a special adviser to Mr. Clinton to lobby his former colleagues on the North American Free Trade Agreement. Mr Lay has been a friend of Clinton adviser Thomas "Mac" McLarty since Mr. McLarty's time as head of Arkansas' largest natural-gas utility." (Source: Journal of Commerce, October 10, 1995, Tuesday SECTION: FOREIGN TRADE, Pg. 3A; "Outsiders Called in to End Logjam on Trade Authority")
-August 1997 Clinton hosts Ken Lay at White House to discuss upcoming meeting in Kyoto, Japan concerning greenhouse gas.
"The Clinton administration, when calling business leaders to the White House to discuss what the United States' bargaining position on global warming should be at upcoming negotiations in Kyoto, Japan, chose John Browne of British Petroleum to represent the oil industry. But Browne is British, head of a London-based company. And Britain's new Labor government has blasted the United States for failing to go far enough to reduce greenhouse gases. So why was a Brit asked to participate? Browne has broken ranks with other oil executives to concede a buildup of carbon dioxide gases may be changing the Earth's climate. BP also happens to be the United States' largest crude oil producer with 13,000 employees in this country, company officials pointed out. Enron Corp.Chief Executive Ken Lay, who also was at the Monday meeting, said Clinton sounded Browne out on his opinions of the policies being pushed by the Europeans. Nobody seemed to worry the United States was tipping its hand. ""This is kind of early in the process,'' Lay said." (Source: The Houston Chronicle, August 6, 1997, Wednesday, 3 STAR Edition SECTION: BUSINESS; Business Digest; Pg. 1; "White House warms to BP exec")
-September 1997 Clinton helps Enron get a 3 billion dollar power-plant project in India.
"On Nov. 22, 1995, for example, Clinton scrawled an FYI note to McLarty, enclosing a newspaper article on Enron Corp. and the vicissitudes of its $3 billion power-plant project in India. McLarty then reached out to Enron's chairman, KEN LAY, and over the next nine months closely monitored the project with the U.S. ambassador to New Delhi, keeping Lay informed of the Administration's efforts, according to White House documents reviewed by TIME. In June 1996, four days before India granted final approval to Enron's project, Lay's company gave $100,000 to the President's party." (Source: Time Magazine, SEPTEMBER 1, 1997 VOL. 150 NO. 9; "THAT INVISIBLE MACK SURE CAN LEAVE HIS MARK")
-October 2000 Near end of Clinton's Presidency, but prior to the November election, a Clinton Assistant Treasury Secretary takes a position at Enron as vice president for federal government affairs. Observers call it a slap in the face to George Bush.
"Enron announced yesterday that Linda Robertson, assistant Treasury secretary for legislative affairs and public liaison, will join the Houston energy company in early November as vice president for federal government affairs. She will replace Joe Hillings, who earlier announced his retirement.
Ken Lay, chairman and chief executive of Enron, has given more than $ 290,000 of his own money to the Republican Party this year to help elect Bush, his longtime friend, president. But that didn't insulate Enron from criticism in some Republican quarters on Capitol Hill. "Enron has just slapped George W. Bush across the face. It just makes little sense," a GOP leadership aide said yesterday." (Source: The Washington Post, October 12, 2000, Thursday, Final Edition SECTION: A SECTION; Pg. A23; SPECIAL INTERESTS; "Enron Hire Faces Some Partisan Fire")
Clinton gave Enron vast support during Energy Crisis in California
Enron got from the Clinton White House during the California power crisis:
Clinton Treasury Secretary Summers and FERC Chairman Hoecker sided with Enron in opposing increased regulation of energy markets, including the critical question of capping electricity prices during California's power crisis last year.
Enron executives met frequently and dined with Clinton-appointed commissioners and their staff when they were deciding on the price cap and other contentious issues affecting California.
Enron Chairman Ken Lay attended meetings hosted by Mr. Summers in the last week of Clinton's term aimed at brokering an agreement between the state and large power generators such as Enron, which the state accused of price gouging.
Mr. Summers and Mr. Hoecking opposed price controls, and the commission repeatedly spurned California's demands for hard price caps on wholesale prices that were soaring as high as $250 per MWH.
Mr. Summers rejected a plea by Gray Davis for a federal bailout of the state's beleaguered utilities.
Mr. Summers agreed with Ken Lay on not regulating Enron and other energy derivative dealers. President Clinton signed into law an exemption for over-the-counter energy derivatives, as requested by Ken Lay.
Hard price caps were not adopted until President Bush's Chairman, Pat Wood, came on board in June.
Enron was particularly active in courting Commissioner Linda Breathitt, the swing vote on California issues. There were several meetings and dinners between Ms. Breathitt and Enron officials.
During the time the power crisis was exploding in December, 2000, Enron hosted several top commission staff members at its Houston headquarters. The sessions included lunch for the staff members with Jeffrey Skilling.
Clinton to Enron: Over One Billion Tax Dollars!
The Clinton administration provided more than $1 billion in subsidized loans to Enron Corp. projects overseas at a time when Enron was contributing nearly $2 million to Democratic causes.
Clinton officials refused to finance only one out of 20 projects proposed by the energy company between 1993 and 2000 to build power plants, natural-gas pipelines and other big-ticket energy facilities around the world, according to the Export-Import Bank and the Overseas Private Investment Corp., the agencies that provided the subsidies.
In addition, the administration, which lauded Chairman Kenneth L. Lay as an exemplary "corporate citizen," granted about $200 million worth of insurance against political risks for nine Enron projects in such politically volatile areas as Argentina, Venezuela and the Gaza Strip, according to documents the agencies provided to the Senate Finance Committee.
"These projects obviously were a tremendous benefit to Enron's operations," said Sen. Charles E. Grassley, Iowa Republican and ranking minority member of the committee. He noted that the Reagan and Bush administrations approved no loans for Enron between 1985 and 1992 and provided insurance for only one Enron power project in Guatemala in 1992.
The Clinton administration provided three loans between 1994 and 1998 to the now-defunct Dabhol power project in India. Mr. Clinton's commerce secretary, Ron Brown, trumpeted the approval of the Dabhol loans on a trade mission to India in 1995, with Mr. Lay by his side.
The trip was one of 11 Clinton trade missions provided at taxpayer expense for corporate executives from Enron and other companies. The U.S. Trade and Development Agency, which sponsored the trips, also provided $1 million in funding to study Enron energy projects in Russia, Eastern Europe and former Soviet states. (Source: The Washington Times, February 21, 2002; Section: Business "Clinton helped Enron finance projects abroad")
"Enron did surprisingly well during the Clinton years," declared NBC News reporter Lisa Myers on the February 25 NBC Nightly News. She explained: "Lay played golf with the President, and Enron received $1.2 billion in government-backed loans for projects around the world. Documents obtained by NBC News show the Clinton administration billed three Enron projects in India and Turkey as success stories, personally pushed by the late Commerce Secretary Ron Brown. About that time, Enron made its first $100,000 contribution to the Democrats." (Source: NBC Nightly News, February 25, 2002)
Under the Clinton administration, the Overseas Private Investment Corp. "gave hundreds of millions of dollars" in loans and other government support to risky Enron-related projects overseas, according to a Senate Finance Committee audit released today.
As WorldNetDaily first reported Jan. 22, Enron became one of OPIC's biggest customers during the Clinton years.
From fiscal year 1993 to fiscal 2000, OPIC gave at least $544 million in loans to Enron-related projects, the agency reported in a letter to the Senate panel. It provided another $204 million in political-risk insurance. OPIC listed only currently supported projects.
The Export-Import Bank, another federal overseas economic-development agency, gave more than $650 million in loans to Enron-related projects over the same period, confirming WorldNetDaily's earlier reporting.
Between 1993 and 1995 alone, Ex-Im Bank supported Enron deals in India, Turkey, the Philippines and China worth nearly $4 billion, making the Houston-based company one of the biggest beneficiaries of the Clinton administrations export policy. The head of the federal bank at the time, Kenneth Brody, is a close friend of former Treasury Secretary Robert Rubin, having worked with Rubin at Goldman Sachs. In his financial disclosure report, Rubin listed Enron among firms with which he had significant contact at his Wall Street firm. Former Enron CEO Ken Lay offered Rubin a seat on Enrons board in 1999, as he was resigning from the Clinton administration.
The Senate panel asked for data back to 1985. "It appears the agency made no loans to Enron-related businesses from 1985 to 1992," during previous Republican administrations, said Sen. Chuck Grassley, R-Iowa, ranking committee member.
Current outstanding balance on all the Clinton-era federal loans to Enron-related projects is $965 million, according to documents. With the insurance liability, the federal agencies' indirect exposure to Enron-related projects approved by the Clinton administration totals nearly $1.2 billion.
"These loans obviously were a tremendous benefit to Enron's operation," Grassley said, particularly since commercial banks rarely finance such long-term projects in unstable foreign markets.
A committee investigator told WorldNetDaily that the panel is reviewing confidential memos written or received by OPIC and Ex-Im Bank officials regarding the Enron transactions.
Former OPIC head Ruth Harkin was appointed by Clinton after her husband, Sen. Tom Harkin, D-Iowa, campaigned vigorously for Clinton in '92 and '96. The senator was one of the ex-president's biggest boosters during his impeachment trial.
Prior to joining the Clinton administration, Ruth Harkin was a top corporate lawyer at Akin Gump Strauss Hauer & Feld, a Washington firm that includes Clinton pal Vernon Jordan and Democratic power broker Robert Strauss. Akin Gump has listed Enron among its clients.
Ex-Im Bank board members during the Clinton years include Jackie Clegg, wife of Sen. Chris Dodd, D-Conn., and Maria Haley, a former aide to Clinton in Little Rock and ex-wife of John Haley, who was convicted in the Whitewater investigation.
Dodd served as co-chairman of the Democratic National Committee during the '96 Clinton-Gore campaign. Clinton appointed Clegg vice chair of the Ex-Im Bank board in June 1997.
Haley has ties to the crooked Riady family who operate the Lippo Group out of Jakarta, Indonesia. The Riadys ran afoul of federal bank regulators after they took control of the Worthen Bank in Little Rock in the 1980s. Haley's long-time law partner, Mark Grobmyer, a Clinton golfing buddy, is a Lippo lobbyist.
While at Ex-Im Bank, documents show Haley OK'd federal loans for Indonesian projects worth more than $40 billion, including many involving Lippo and its subsidiaries.
Clinton replaced her on the board with Vanessa Weaver, who was forced by the Senate Banking Committee to recuse herself from Lippo transactions after a 1999 Investor's Business Daily story exposed her close ties to Lippo executive John Huang.
Both Huang and James Riady have since been convicted of fraud relating to Clinton-Gore fund-raising.
Two Enron executives -- Joseph Sutton and Rebecca McDonald -- have served on the Ex-Im Bank's advisory committee.
Enron, which usually backs Republicans, gave more than $150,000 to Clinton's party during the 1996 election cycle.
Yet another federal agency, the Trade and Development Agency kicked in more than $1.1 million from 1992 to 2001 for foreign projects involving Enron or its subsidiaries. It also sponsored 11 visits to the U.S. by foreign officials who participated in Enron-related projects. (Source: World Net Daily, January 22, 2002; "Senate probes Clinton loans for Enron deals")
Two administrations listened to Lay
Hoping to fulfill the energy giant's biggest ambition to create a nationwide electricity market, former Enron Chairman Kenneth Lay played a part in getting President Clinton to propose a power deregulation bill, internal Enron documents show.
Mr. Clinton sent the bill to Congress within weeks of receiving a Feb. 20, 1998, letter from Mr. Lay, obtained by The Washington Times, urging him to get personally involved because Congress appeared ready to act on legislation promoting competition and consumer choice in electricity.
Mr. Lay wrote the letter at the suggestion of Federico Pena, then the energy secretary. That day in a meeting, Mr. Pena had told Mr. Lay that he was "frustrated" that the bill was being held up by environmental "roadblocks," but he believed Mr. Clinton could be persuaded to release the bill "within days" if "motivated by some key contacts from important constituents," according to an internal Enron memo recounting the meeting, also obtained by The Times.
A spokesman for Mr. Clinton declined to comment. Mr. Pena at the meeting sought Mr. Lay's help and advice not only on the power deregulation bill drafted by his department, but also on a "comprehensive national energy strategy" that the administration was developing, according to the memo, written by Enron lobbyist Jeff Keeler.
The evidence of Enron's input into Clinton energy policies comes as former Vice President Al Gore and other Democrats are criticizing President Bush's energy task force for consulting with energy executives in writing the administration's energy policies.
The Senate Governmental Affairs Committee, headed by Sen. Joseph I. Lieberman, the Connecticut Democrat who was Mr. Gore's running mate in the 2000 presidential election, and other Democratic-led panels have been probing since Enron collapsed late last year to find out if the company unduly influenced the Bush administration.
Available evidence suggests Mr. Lay, a major contributor to both parties, assiduously cultivated top officials of all stripes to further the company's interests.
One of the more influential backers won over by Mr. Lay was Mr. Clinton's treasury secretary, Lawrence H. Summers. In a note to Mr. Lay in May 1999, Mr. Summers promised to "keep my eye on power deregulation and energy infrastructure issues."
But ultimately Enron's efforts failed during the Clinton years, so it continued to press its case to create a national electricity market when Mr. Bush took office. It was a critical issue for a major power broker hoping to enlarge its market.
Enron executives lobbied on power issues in meetings with the Bush task force last year, as evidenced by a memo Mr. Lay wrote to Vice President Richard B. Cheney April 17, 2001, detailing Enron's recommendations on dealing with the California power crisis and restructuring the electricity market.
Some of Enron's ideas were included in the Bush energy plan in May 2001. But by that time, the momentum for federal power deregulation had diminished substantially with the collapse of California's partially deregulated power system. Enron itself was in decline and headed toward bankruptcy.
A comparison of the Enron interactions with the two administrations and the policies that came afterward suggests that the Houston company had no more influence over one than the other.
For example, Mr. Lay told Mr. Pena he strongly supported the Clinton administration's "market-based" approach to electricity restructuring over other approaches on Capitol Hill. But he opposed efforts by Mr. Clinton to link the deregulation bill to measures to curb global warming.
"[Mr.] Lay discussed the importance of divorcing environmental mandates, like Clean Air Act amendments [to deal with climate change and emissions] or renewable mandates, from electricity legislation," Mr. Keeler said in his memo to Enron executives in Houston.
But Mr. Pena rejected that advice, telling Mr. Lay that the bill would include a requirement that some electricity sales be generated from renewable sources such as solar and wind power, to satisfy environmental advocates within the administration.
Mr. Pena pointed out that a key Republican bill in Congress had such a renewable mandate and "the administration can't be 'out-greened' by Republicans," the memo recounted.
As a result, Mr. Lay did not mention the environmental issue in his letter to Mr. Clinton, but he assured Mr. Pena that the disagreement was only on strategy.
"Enron will certainly be supportive of the administration's climate change/emissions reduction initiatives," Mr. Lay told the energy secretary. He already was working with Mr. Clinton to develop support for the 1997 global warming treaty.
Enron viewed the meeting with Mr. Pena as a success. "In all, it seems that Secretary Pena and his staff agree with us on the urgency of [the electricity] legislation, and are willing to work to get something done this Congress,"
The company also won agreement on details of power restructuring from the Bush administration, according to the memo to Mr. Cheney, first published by the San Francisco Chronicle.
Mr. Bush's energy plan included a contentious proposal pushed by Enron to give the federal government the authority to override state decisions and assert eminent domain to put power lines where needed to expand electricity production.
Though opposed by many in Congress, energy analysts said the authority was needed to prevent power shortages like those in California, which are due in part to inadequate transmission facilities.
On the other hand, the Bush administration went against Mr. Lay's advice in June when it decided to establish caps on wholesale power prices in California. As a major power seller in the state, Enron opposed such price controls.
Ironically, it was Pat Wood, whom Mr. Lay had recommended to Mr. Bush to be chairman of the Federal Energy Regulatory Commission, who pushed the price caps through, in a move that sent Enron's stock plummeting. (Source: Washington Times, May 7, 2002; "Two administrations listened to Lay")
Enron and the Clinton Administration: Ties That Bind
(CNSNews.com) - While Capitol Hill Democrats have been trying with limited success to tie the Bush administration to the energy conglomerate Enron Corporation, the now-bankrupt firm actively cultivated a long-term relationship with the Clinton administration, according to documents obtained by CNSNews.com and authenticated by the company.
The seeds of the relationship were planted even before Bill Clinton was sworn in as president, and lasted until the final months of his administration. The documents also show the company and the Clinton administration sought to use each other to promote their respective agendas, both in Congress and abroad.
While the documentation gives no indication of any illegal activities, it does paint a picture of an American corporate giant seeking to influence an administration and exploit its policies, while entertaining the prospect of using its corporate clout to advance Clinton administration initiatives.
The Seeds of a Relationship Sown
Enron Corporation saw the opportunity to exploit the newly minted Clinton administration even before Clinton was sworn into office, and saw 1992 campaign issues including investment tax credits and restrictions on carbon dioxide (CO2) as beneficial to the company.
According to the November 1992 edition of the Enron corporate newsletter, 'To The Point,' the company looked forward to dealing with the upcoming Clinton administration.
The newsletter noted, "Senator [Al] Gore has been an avid proponent of a strong global warming policy" that would lower greenhouse gas emissions, and the Enron communique noted that Clinton and Gore's support of restrictions on CO2 emissions "should provide a real opportunity for natural gas."
Enron stood to benefit from any government restrictions on greenhouse gas emissions because the company had ownership or financial stake in numerous natural gas and wind power technologies, which produce little or no greenhouse gas emissions.
The company often described itself as "a major supplier of solar and wind renewable energy worldwide," and Enron also praised the newly elected Democrats for their "plans to aggressively convert government and other vehicles to alternate fuels, mainly natural gas."
The November 1992 newsletter also praised the Clinton campaign's economic policies, including its proposed investment tax credit, which the newsletter stated "would be beneficial to Enron and the natural gas industry," by facilitating lower costs for future Enron projects.
Enron even praised Clinton for his proposed health care plan, which ultimately died in the Democratic-controlled Congress in 1994. "Anything the new administration can do to control health costs will be of tremendous value to Enron and the nation," the newsletter noted.
Enron Feeds at Government TroughEnron's ability to harness feelings of goodwill with Clinton's new team bore fruit in short order.
By 1995, Enron was able to successfully secure financing for the Dabhol Power plant in India with loans from the U.S. Export-Import Bank totaling $298 million dollars to cover about 32 percent of the costs. Enron's ownership stake was 80 percent in the Indian power plant.
Enron was able to secure another $100 million in investment money from the U.S. federal agency, Overseas Private Investment Corporation (OPIC).
In 1996, the investment corporation provided another $200 million dollars in "political risk insurance" for the India project, according to OPIC documents.
But Enron's relationship with the Clinton administration was not a one-way street, and top corporate officials lent their aide to the president.
Former Enron Chairman and CEO Kenneth Lay wrote a personal letter to Clinton in 1995, supporting the president's budget proposal in Congress.
The letter, dated June 27th and blind copied to Clinton senior advisor Mack McLarty, Enron Vice President Joe Hillings and Enron Senior Vice President of Environmental & Government Relations Terry Thorn, was sent at the height of the budget battle with the newly elected Republican-controlled 104th Congress.
"I applaud your political courage and leadership in supporting a balanced federal budget," Lay wrote. "The debate should be about budget priorities and timing, not whether a commitment should be made to fiscal responsibility."
After offering his opinions on how to limit federal spending, Lay ended by writing, "I believe the American public will look kindly upon your leadership to bring closure on this vital issue."
Later that year, Clinton administration officials helped Enron during the company's negotiations over a natural gas project in Mozambique.
The top negotiator on the gas project for Mozambique was Minister of Mineral Resources John Kachamila, who complained of "outright threats to withhold development funds if we didn't sign," with Enron.
Kachamila said U.S. diplomats, "especially [U.S. Embassy Deputy Chief of Mission] Mike McKinley, pressured me to sign a deal that was not good for Mozambique. He was not a neutral diplomat," according to the Houston Chronicle.
The Clinton administration's U.S. Agency for International Development (USAID) was also reportedly involved in the pressuring of Mozambique to sign the deal with Enron.
USAID is especially powerful because of the volume of money it pumps into the developing world. Mozambique was receiving over $40 million dollars during this time from USAID.
Enron Entertains Favors for Clinton Administration
In an Oct. 15, 1996 memo from John Palmisano, senior director for environmental policy and compliance at Enron, it was noted that the Clinton administration sought the company's help in gaining support from China and India for proposed climate change regulations.
Palmisano's memo, which was sent to Thorn, Hillings and a variety of other Enron corporate officials and lobbyists, noted, "the Administration is concerned about getting China and India into the family of nations committed to both carbon emissions trading concepts.
"We have been asked how we can help in this regard and how natural gas might be part of [joint implementation] activities in China," Palmisano wrote in the memo. Joint implementation involves a wealthier "donor" country that invests in pollution reduction measures in a "host" country in exchange for "credits," which the donor nation may use to meet its own pollution reduction targets. The Palmisano memo was written following meetings in Washington, D.C. with Clinton administration officials.
Palmisano's memorandum indicated he had met with several representatives of Clinton's Environmental Protection Agency, the Department of Energy, the State Department and the Office of Management and Budget.
The memo continued, "there seems to be an opportunity to get Administration support, and maybe money, to identify natural gas related activities in China that link to climate change in general and joint implementation in particular. I was approached twice during last week on this issue."
Palmisano bluntly sought guidance from his colleagues at Enron when he asked, "Does anyone have a notion as to how I should follow up?"
Enron also entertained requests on helping the Clinton administration move its climate change agenda on the domestic front.
A Feb. 7, 2000 memo from Jeffrey Keeler, Enron's Director of Environmental Strategies, to various Enron executives recalled another attempt to secure the company's help.
"I spoke with Jeff Seabright of the White House Climate Change Task Force today, who asked if Enron might become involved in supporting an initiative in the FY 2000 budget request on the subject of 'international energy collaboration.'"
Keeler noted how the proposal could benefit Enron because it "provides $100 million, spread across various agencies [Dept. of Energy], USAID, Commerce Dept. [Export, Import Bank], [U.S. Trade and Development Agency] for collaboration on energy technologies ..."
Climate change in general and the Kyoto Protocol on climate change specifically were the target of criticism in some quarters of Congress, and Keeler's memo explained one way in which some of the objections to Kyoto could be decreased or eliminated.
"The White House would be interested in our assistance in building support for such 'international' support," wrote Keeler, while also cautioning against the use of word "Kyoto" when referring to climate change initiatives.
"This proposal avoids direct mention of 'Kyoto' - in fact is more in line with the [Alaska Republican Sen. Frank] Murkowski, [Idaho Republican Senator Larry] Craig, [Nebraska Republican Sen. Chuck] hagel (sic) approach to climate change - supporting R&D for energy technologies," the Keeler memo stated.
Conversely, Keeler, a strong proponent of climate change initiatives, was not happy with President Bush's decision in 2001 to oppose any new laws that set mandatory reductions on carbon dioxide emission from electric power plants.
In 2001, he told the environmental group Natural Resources Defense Council's Amicus Journal, "You can do something meaningful on carbon without collapsing the economy or causing an energy crisis. We believed that before the Bush announcement. We believe it now,"
Keeler viewed this decision as a broken Bush campaign promise and dubbed it "carbongate." (Source: Cybercast News Service, March 18, 2002; "Enron and the Clinton Administration: Ties That Bind")
Enron: Courting Clinton and the Environmentalists
(CNSNews.com)- Enron Corporation benefited from an eight year relationship with the Clinton administration and used that clout to successfully lobby for tax credits, subsidies and other favorable legislation, according to documents obtained by CNSNews.com and authenticated by the company.
And while Congressional Democrats try to link the now-bankrupt corporation with the Bush administration and the Republican Party, there is evidence that Enron actually aligned itself with the environmental lobby, which put the company squarely at odds with most of the GOP on climate change issues.
While touting its relationship with militant environmental groups including Greenpeace, Enron worked to strengthen and preserve certain funding programs that helped finance hundreds of billions of dollars in Enron projects around the world during the years Bill Clinton was in the White House, documents show.
In fact in 1997, Enron joined forces with the Clinton administration to defend the federal Overseas Private Investment Corporation (OPIC) from budget cuts in Congress.
The agency had provided Enron with both funding and, in 1996, $200 million in "political risk insurance" for Enron's Dabhol Power plant in India, which had also been funded in large part by OPIC.
In efforts to save the agency from cuts, OPIC President Ruth R. Harkin announced the Clinton administration was solidly behind the agency and would not allow it to be the victim of budget cuts, according to the March 19, 1997 edition of The Oil Daily, an industry publication.
That month, Harkin requested a three-year, $9 billion increase in the agency's contingent liability cap to aid U.S. corporations, and Enron Senior Vice President for Global Affairs Linda F. Powers warned that if OPIC did not receive sufficient funding, the U.S. economy would suffer, according to The Oil Daily.
"If programs like OPIC were not available, we would have no choice but to move our sourcing to other countries where financing is available," Powers stated on March 18, 1997 to the House International Relations Subcommittee on International Economic Policy and Trade.
But another witness testified before the same committee that OPIC was nothing more than a "corporate welfare agency."
Tom Schatz of Citizens Against Government Waste stated that OPIC was only benefiting corporations at the expense of American taxpayers.
A follow-up memo dated Sept. 17, 1997 from Enron Vice President Joe Hillings and Vice President of Global Project Finance John Hardy, noted that both the Senate and House had passed the appropriations bill for OPIC, but it was awaiting authorization in the House International Relations Committee.
The memo expressed frustration with House Majority Leader Richard Armey (R-Texas) for not making the OPIC bill a "first tier priority," but noted that the House Congressional Black Caucus "was helpful in the consideration of the OPIC appropriation," and that Black Caucus members felt "Africa deserves more attention in export financing."
Kyoto Protocol is Good for Enron
The Kyoto Protocol on climate change represented an opportunity for Enron to make a profit, because the carbon dioxide requirements of the treaty dovetailed with numerous corporate projects that emitted less CO2 and other greenhouse gasses.
Vice President Al Gore championed the Kyoto Protocol, which would have required 40 industrialized nations to drastically reduce greenhouse gas emissions by the year 2012.
Toward realizing that opportunity, Enron Chairman Kenneth Lay applauded Clinton's support for the Kyoto Protocol in an Oct. 22, 1997 corporate statement, calling it "a comprehensive, yet realistic, program that starts to move the United States and the world toward minimizing carbon dioxide emissions."
Lay liked the emission targets and incentives to develop new energy and environmental technology as well as the "carbon dioxide trading program."
Enron was invested in both natural gas energy alternatives and wind power technologies, both of which fit the profile of what the Kyoto Protocol demanded, and the company needed little prodding when it came time to support the global warming treaty.
John Palmisano, senior director for environmental policy and compliance at Enron, wrote in a Dec. 12, 1997 internal memo regarding Kyoto, that "if implemented, this agreement will do more to promote Enron's business than will almost any other regulatory initiative outside of restructuring of the energy and natural gas industries in Europe and the United States."
In the memo, Palmisano also promoted the carbon emissions trading provisions in the Kyoto treaty and said the "additional demand for renewable technology is enormous."
"Enron has immediate business opportunities which derive directly from this agreement," he wrote. Palmisano envisioned that the Clinton administration would be receptive to any of Enron's policy goals. "I do not think it is possible to overestimate the importance of this year in shaping every aspect of the agreement," Palmisano declared.
He then wrote that the Kyoto Protocol represented a victory for Enron's lobbying efforts. "The endorsement of joint implementation within [the Protocol] is exactly what I have been lobbying for and it seems like we won," Palmisano wrote. "The endorsement of emissions trading was another victory for us."
Palmisano praised the carbon trading with "transitional economies" because "this means that Enron projects in Russia, Bulgaria, Romania or other eastern countries can be monitized (sic) ..."
Enron Trumpets Inroads With Greens
Besides enjoying a close relationship with the Clinton administration, Enron also cultivated friends in the environmental movement. Palmisano, in the Dec. 12, 1997 memo, boasted that because of its support for climate change treaties, "Enron now has excellent credentials with many 'green' interests including Greenpeace, [World Wildlife Fund], [Natural Resources Defense Council], German Watch, the U.S. Climate Action Network, the European Climate Action Network, Ozone Action, WRI, and Worldwatch."
Palmisano continued, "This position should be increasingly cultivated and capitalized on (monitized). (Parenthetically, I heard many times people refer to Enron in glowing terms. Such praise went like this: 'Other companies should be like Enron, seeking out 21st century business opportunities' or 'Progressive companies like Enron are ...' or 'Proof of the viability of market-based energy and environmental programs is Enron's success in power and [sulfur dioxide] trading.')
He ended the memo regarding the Kyoto Protocol by stating, "I predict business opportunities within 18 months." The final line reads, "This agreement will be good for Enron stock!!" (sic)
Enron also used its "excellent credentials" with environmental groups to help lobby the Clinton administration for tax breaks on development of wind energy technologies.
A Nov. 3, 1999 Enron statement boasted that the environmental group, "National Audubon Society today praised Enron Wind Corp." for an agreement to re-locate a wind-powered generating facility to accommodate an endangered species.
According to the statement, "the agreement directly benefits the California condor recovery effort while facilitating a wind power project that would provide green energy to the Los Angeles area."
But the Audubon Society did not only publicly praise Enron. It also engaged in lobbying for tax breaks to benefit the company.
"The National Audubon Society has also announced that it unconditionally supports the Wind Energy Protection Tax Credit and will seek to convince legislators to pass the measure," Audubon Society Sr. Vice President Dan Beard said in a statement.
Further evidence of Enron's ties to environmentalists was revealed when Lay used a meeting of the environmental group Nature Conservancy to announce new wind power initiatives, according to a Nov. 18, 1997 Enron statement.
In announcing the wind power program, Lay told the group, "The cost of entry for companies to make the claim to be environmentally friendly is their commitment to add incremental generation of renewable energy." Source: Cybercast News Service, March 19, 2002; Enron: Courting Clinton and the Environmentalists"
Enron Capitalized on Clinton Alternative Energy Plans
(CNSNews.com) - Slightly more than a year into his administration, then-President Bill Clinton laid down a marker on what his administration commonly referred to as "renewable energy sources."
While so-called 'green energy sources' had been part of Clinton's agenda since before the election of 1992, the president's commitment to this strategy was cemented with his signing of Executive Order 12902 on March 8, 1994.
Clinton's order specified that renewable energy sources be defined as "agriculture and urban waste, geothermal energy, solar energy, and wind energy."
Among the requirements of the order was one instructing the federal government to "begin implementing cost-effective recommendations for installation of energy efficiency, water conservation, and renewable energy technologies," for most federal facilities.
This commitment was reinforced five years later, with Executive Order 13123, signed by Clinton on June 3, 1999.
That order stipulated, among other things, that federal agencies "shall use off-grid generation systems, including solar hot water, solar electric, solar outdoor lighting, small wind turbines, fuel cells, and other off-grid alternatives, where such systems are life-cycle cost-effective and offer benefits including energy efficiency, pollution prevention, source energy reductions, avoided infrastructure costs, or expedited service."
These two executive orders and other Clinton administration initiatives laid the groundwork for the Enron Corporation to profit at the expense of American taxpayers, according to Enron documents obtained by CNSNews.com and authenticated by the company.
Moving the Clinton Administration Agenda
In 1994, the same year Clinton signed Executive Order 12902, the Department of Energy awarded $1 million to a company called the Central and South West Services, Inc. for a wind turbine plant near Fort Davis Texas. Central and South West Services then hired a California firm, Zond Systems, Inc., to install the 12 wind turbines, which it did in 1996. Enron benefited indirectly from the deal when it acquired Zond Systems, Inc. in 1997.
The first wind plant built under the DOE/EPRI Wind Turbine Verification Program (TPV) was the 6.6-MW Central and South West Services, Inc., plant, built in 1995 in west Texas near Fort Davis. The machines used at Fort Davis were the first 12 commercial Z-40 turbines manufactured by Zond Systems, Inc., of Tehachapi, California. Zond is a subsidiary of Enron Wind Corporation, a subsidiary of Enron Renewable Energy Corporation. Central and South West received $1 million from DOE and $4.4 million from EPRI for the project.
Like many new technologies in the early stages of commercialization, there have been problems to solve. For instance, Zond learned an important lesson from the Texas wind facility: Lightning can wreak havoc with a wind turbine. "The main construction of our wind power plant occurred during the summer, which is our peak lightning season," says Brian Champion, former renewable site supervisor for Central and South West. "We had a generator on one turbine destroyed by lightning before that turbine ever operated. That was a little hint that something was not quite right." Even when the turbines were properly grounded, lightning strikes occasionally damaged motors on the turbine and knocked out communication links between the turbines and the power plant's operations center.
The problem with lightning was not anticipated by the turbine manufacturer based in California, where the Z-40 prototypes were tested. Storms in California are paltry in comparison with the frequent, severe thunderstorms that move across the plains of west Texas during the summer.
"We've done studies of lightning strikes within a 300-mile radius of our wind facility," Champion says. "On occasion, we've seen 300 strikes a minute."
Working with the NWTC and the National Lightning Safety Institute, Central and South West and Zond found ways to alleviate the problem. They worked together to install an electronic lightning protection system in the communications cables and create better grounding around the turbines. Each turbine is now surrounded by an irrigated trench filled with copper straps and bentonite, a highly absorbent type of clay. Since the trenches were installed, the facility has not lost any major equipment such as motors to lightning.
Central and South West's Manager of Technology Development Ward Marshall is excited about solving the lightning problem. "The best lightning/wind energy research center in the world is in Fort Davis, Texas," he boasts. "No one in the world has studied lightning to the degree we have at our wind farm." Thanks to the turbine verification program, utilities throughout the Great Plains will be able to reap the benefits of Central and South West's experience.
The turbine manufacturer also profited from the experience. "The turbine verification program has been very valuable for us," says Dr. Amir Mikhail, vice-president of engineering at Zond. "It allowed us to move quickly from a prototype unit into full production. At the same time, we've been able to see how our machine operates in different environments."
Enron became a more direct beneficiary of the administration's alternative energy program and the tax money funding it. The Enron Wind Corp., located near Lake Benton, Minn., developed wind turbines in cooperation with the Department of Energy (DOE) during the Clinton administration.
----------Released by the U.S. Department of Energy----------
WIND FACILITY PROVIDES CLEAN, RENEWABLE ENERGY TO THOUSANDS IN THE MIDWEST
FOR IMMEDIATE RELEASE: Thursday, September 24, 1998
The world's largest single wind power generation facility will be dedicated this Saturday, in the Midwest plains near Lake Benton, Minn. Constructed, owned and operated by Enron Wind Corp., the wind turbines in use at this facility are based on an earlier machine developed in cooperation with the U.S. Department of Energy.
"Minnesota has shown visionary leadership in developing clean affordable energy from the immense untapped power of wind," said Secretary of Energy Bill Richardson. "We are excited that Enron developed this technology with technical contributions made by the Department, and we look forward to continuing our collaboration with Enron for the development of their next generation wind turbine."
Electricity generated by this wind facility is sufficient to power 43,000 homes and will displace greenhouse gasses equivalent to removing 50,000 new cars and light trucks from the road. Power is being purchased by the Northern States Power Company (NSP), a utility with a service territory that includes much of Minnesota, and parts of Wisconsin, North and South Dakota, and Michigan. NSP has been actively involved in wind energy for years and is now reaping a new crop from these Minnesota farm lands.
The Energy Department's Wind Program has played a key role in supporting Enron Wind Corp. as they have become the current premier wind turbine company in the United States. The Department partnered with Zond Energy Systems, the manufacturing arm of Enron Wind Corp., for the development and field testing of their 550 kW Z-40 wind turbine, the predecessor to their 750 kW turbine used in Lake Benton. The Department's Wind Program is currently in partnership with Enron Wind Corp. for the development of their next generation, 1000 kW wind turbine which is targeted to greatly enhance the competitiveness of wind energy and open up large markets in the Midwest.
A primary goal of the wind program is to develop wind energy technologies that are cost-effective and reliable and can be deployed widely throughout the country. To help Enron Wind and other wind companies verify the performance of their new wind turbines, the Department joined forces with the Electric Power Research Institute to create the Turbine Verification Program, which evaluates companies' early production units in small projects with utilities.
Such projects in Texas, Vermont, Wisconsin, Iowa, Nebraska, and Alaska have allowed wind companies to make many improvements in the design and operation of their new turbines, while providing the host utilities an opportunity to learn about wind power. The Department is also helping U.S. wind companies certify that their turbines meet international standards, and allow them to compete in rapidly growing international markets for wind energy. Dan Reicher, Assistant Secretary of Energy Efficiency and Renewable Energy, will represent the Energy Department at the dedication.
Department of Energy
Then-Secretary of Energy Bill Richardson announced in a Sept. 24, 1998 statement on the dedication of the Minnesota facility that the administration was "excited that Enron developed this technology with technical contributions made by the department, and we look forward to continuing our collaboration with Enron for the development of their next generation wind turbine."
The DOE statement also pointed out that its wind power program "has played a key role in supporting Enron Wind Corp. as they have become the premier wind turbine company in the United States."
That year, the Energy Department also touted its work with Enron "to develop a 1,000 (kilowatt) wind turbine, which will greatly enhance the competitiveness of wind energy and open up large markets in the Midwest," supporting the company's research and development efforts.
The following year, Zond Energy Systems partnered with the DOE to develop a wind power technology facility in Storm Lake, Iowa.
A Sept. 17, 1999 press release by the DOE boasts of the "public-private partnership" between Zond and the department.
----------Released by: U.S. Department of Energy (DOE)----------
WORLD'S LARGEST WIND POWER FACILITY DEDICATED.
FOR IMMEDIATE RELEASE: Friday, September 17, 1999
Storm Lake, Iowa - The U.S. Department of Energy (DOE) tomorrow will help dedicate the world's largest wind power generating facility in Storm Lake, Iowa. Owned and operated by Enron Wind Corporation, the new facility will employ technology jointly developed and tested by DOE and Enron.
"The turbines at Storm Lake will allow us to better utilize the vast resource of wind power," said Energy Secretary Bill Richardson. "This public-private partnership is producing tangible results that will support the continued development of wind technologies and speed wind power to the open market."
The fastest growing world wide energy source for the past decade, wind power capacity in the United State's currently totals approximately 2,500 megawatts, enough electricity to supply more than 800,000 typical U.S. households. Today's wind technology is capable of delivering electricity at a cost of between 4 and 6 cents per kilowatt hour. In 1980, wind capacity provided less than 10 megawatts of power at a cost of approximately 40 cents per kilowatt hour.
The annual output at the Storm Lake site is projected to equal the electricity created from burning 1.3 million barrels of oil. With 257 wind turbines each capable of generating up to 750 kilowatts, the facility will, on average, generate enough electricity to supply 71,000 American homes or 191,000 people. The electricity will be purchased by Mid-American, headquartered in Des Moines, Iowa and IES Utilities, headquartered in Cedar Rapids, Iowa
The Energy Department's wind program has played a key role in supporting wind resources nationwide. The Department partnered with Zond Energy Systems, the manufacturing arm of Enron Wind Corp., to develop and test a 550 kilowatt (kwh) Z-40 wind turbine, the predecessor to the 750 kw wind turbine used in the new Storm Lake facility. The DOE is currently working with Enron Wind Corporation to develop a 1000 kwh wind turbine, which will greatly enhance the competitiveness of wind energy and open up large markets in the Midwest.
The Department's Wind Powering America initiative, announced by Secretary Richardson in Burlington, Vermont in June, will provide aid the continued development of wind energy in the United States. The goals of the initiative are to supply at least five percent of the nation's electricity needs with wind by the year 2020; triple the number of states which have more than 20 megawatts of wind capacity to 24 by 2010; and increase the federal government's use of wind generated electricity to five percent by 2010.
The Department has also joined forces with the Electric Power Research Institute to create the Turbine Verification Program to help wind companies verify the performance of their new wind turbines. Such projects in Texas, Vermont, Wisconsin, Iowa, Nebraska, and Alaska have allowed wind companies to make improvements in the design and operation of their new turbines. The Department is also helping U.S. wind companies meet international standards and compete in the rapidly growing international wind energy markets.
Dan Reicher, DOE Assistant Secretary for Energy Efficiency and Renewable Energy, will represent the Energy Department at the Storm Lake dedication event.
- DOE -
Richardson said at the time, "The turbines at Storm Lake will allow us to better utilize the vast resource of wind power." The secretary also praised the collaboration by noting that is was "producing tangible results that will support continued development of wind technologies..."
The Department of Energy's website noted on Nov. 3, 2000 that this single federal agency had provided "contributions to the programs that supported Zond's 750-kW turbine since 1994 total nearly $12 million."
Award Winning Enron 'Protects' ShareholdersIn 1998, Enron received the U.S. Environmental Protection Agency's Climate Protection Award. In a letter to Terry Thorn, Enron's Senior Vice President of Environmental and Government Relations, Virginia Lee, the EPA's Director of Climate Protection Awards, wrote that the honor was "in recognition of exemplary efforts and achievements in protecting global climate."
A year later, the government agreed to give the award winning Enron $200 million worth of loan guarantees to fund a natural gas pipeline from Bolivia to Brazil.
The funding through the federal Overseas Private Investment Corporation (OPIC) was part of the $570 million project that included a 480-megawatt power plant in Cuiaba, Brazil.
Enron spokeswoman Kelly Kimberly told the Houston Chronicle in 1999 that "We are very pleased that OPIC has voted in favor of the Cuiaba project."
Enron's history of well placed friends and overall political acumen helped the corporation mitigate financial risks and in September of 2000, it received the first-ever political risk insurance policy payout in the history of the World Bank.
The $15 million payment was a result of the cancellation of an Enron power project by the Indonesian government in 1997 before construction had begun.
"This shows that the system really works," said Enron's spokesman John Ambler to Bloomberg News service in September 2000. He added, "It's precisely the reason we purchased the policy in the first place, to protect our shareholders."
A Parting Shot
The relationship between Enron and the Clinton administration was not limited to corporate lobbyists and government bureaucrats and functionaries.
In a personal letter from Clinton to Enron chief Kenneth Lay dated Feb. 25, 2000, Clinton wrote how he was "pleased you were able to attend the reception following my address to the World Economic Forum in Davos."
Clinton took the opportunity to explain to Lay that he believed "that open markets and rules-based trade are the best ways to lift living standards, reduce environmental destruction, and build shared prosperity."
The former president also shared with Lay his views on globalization and ways to lift living standards.
Clinton's letter began with the typewritten salutation "Dear Kenneth," which was crossed out and the shorter moniker "Ken" handwritten over the type.
It concluded simply, "Sincerely, Bill." (Source: Cybercast News Service, March 20, 2002; "Enron Capitalized on Clinton Alternative Energy Plans")
Enron execs regulars on Clinton trade trips
Company gave $100,000 after Lay got seat on lucrative junket to India
WASHINGTON - "The Bush administration would like to downplay its intimate relationship with Ken Lay and Enron executives," Rep. Henry Waxman, D-Calif, recently charged.
Waxman, the House Government Reform Committee's ranking Democrat, has been pressing for an investigation into contacts between Lay and White House officials to see if bankrupt Enron Corp. got special treatment.
Lay, chairman of the Houston-based energy giant, "has had unlimited access to the administration," Waxman complained.
While that may be true, the same could be said of Lay's access to the previous administration something Democrats and the Washington media seem to be overlooking.
Government records examined by WorldNetDaily show that, during the Clinton years, Lay and other Enron executives got seats on at least four Energy Department trade missions and at least seven Commerce Department trade trips, including a junket to India that would later get Lay in some hot water.
From Jan. 13, 1995, to Jan. 21, 1995, Lay joined late Commerce Secretary Ron Brown on the India junket.
Half way through the mission, two federal export-finance agencies the Export-Import Bank and the Overseas Private Investment Corp. announced they had agreed to lend nearly $400 million to an Enron-led group to build a $920 million electric power plant in Dabhoi, India.
The second phase of the power project called for building a 1,320-megawatt plant that would be fired by liquefied natural gas.
The project's overall value was about $3 billion.
Lay pal Mack McLarty, then-White House counselor, helped him close the deal by tracking the project with the U.S. ambassador to New Delhi and briefing Lay on the administration's efforts. (President Clinton even helped. White House documents uncovered by Time in 1997 show he wrote a Nov. 22, 1996, FYI note to McLarty and enclosed a newspaper article on Enron and the power project.)
Then in June 1996 four days before India gave final OK to Lay's project Enron gave $100,000 to the Democratic National Committee and Clinton's re-election effort.
Public-interest law firm Judicial Watch has pried away memo after memo showing that both Commerce and White House officials picked trade mission participants based on their support for the president's party.
Enron has denied the gift was political payback.
Seeds to the India deal may have been planted during a July 1, 1994, to July 15, 1994, trade mission led by former Energy Secretary Hazel O'Leary.
Terence Thorn, Enron's senior vice president for governmental affairs, accompanied O'Leary on that trip.
Clinton said he asked O'Leary to visit India "to further our talks on renewable energy."
Thorn had accompanied O'Leary previously, in February 1994, on a trade mission to China.
In September of that year, the Enron officer went on an Energy trade mission to Pakistan, and again, in August 1995, on a junket to South Africa.
O'Leary caught flak for her junkets because they ran over budget, and she couldn't account for many expenses.
But the controversy didn't stop there.
An analysis of Federal Election Commission records by Investor's Business Daily found that many of the major DNC donors who got seats on the trips tended to open their wallets wider after they returned, often scoring big business deals from the government-sponsored, taxpayer-paid overseas excursions.
There were several other Commerce trips, including one to Russia in March-April 1994 joined by Enron International Chairman and CEO Rodney Gray, one to South Korea in 1999 joined by Thorn, and one to the Middle East in October 1995 in which Lay participated.
Cronyism not limited to Bush
In a report last month exposing the cozy ties between Enron and the Bush administration, the Los Angeles Times pointed out that Lay is on a first-name basis with Bush, an old Texas oil buddy. Lay also has ties to top administration officials, such as White House economic adviser Larry Lindsey, an ex-Enron consultant, and U.S. Trade Representative Bob Zoellick, a former Enron advisory board member, the article noted.
Left out of the L.A. Times' analysis, however, were Lay's similarly close ties to Clinton administration officials.
McLarty and Lay developed a friendship while working in the energy field together. Before becoming Clinton's chief of staff, and later his counselor, McLarty was chairman of Arkla Inc., which later became NorAm Energy Corp.
Largely as a result of that connection, Lay was a frequent visitor at the Clinton White House, records show.
Lay returned the favor by snatching up McLarty for Enron after he left the White House.
He also hired as a consultant Betsy Moler, Clinton's deputy energy secretary. She was accused of stopping Energy Department counterintelligence chief Notra Trulock from briefing Congress early on about Chinese espionage and security lapses at Energy's nuclear weapons labs.
In addition, Lay recently hired former Clinton Treasury official Linda Robertson, a Democrat, to run Enron's Washington office.
Enron contributed some $530,000 to the DNC during the 2000 election alone. (Source: World Net Daily, January 11, 2002; "Enron execs regulars on Clinton trade trips")
Clinton agencies assisted Enron rise
Enron Corp. grew in the 1990s from a small Texas natural gas company to a $50 billion global energy-trading giant with extensive help from the Clinton administration.
The company's international stature grew remarkably in the 1990s, to a point that Clinton officials sought its help in solving problems big and small, including drumming up support for the global-warming treaty, promoting economic development in the war-torn Middle East and Bosnia and drafting the details of an arcane bankruptcy reform measure.
One key success for the company was getting the administration to propose a new round of world-trade negotiations on energy services, an industry Enron dominated at home and hoped to turn into a trillion-dollar enterprise abroad.
Documents released by the Treasury Department show that President Clinton's trade representative, Charlene Barshefsky, seized upon the idea, offered to her by a coalition of energy companies headed by Enron, and presented it almost verbatim in World Trade Organization negotiations in May 2000. Other nations agreed in March 2001 to start discussions on energy services, with the aim of lowering regulations and other barriers to trade.
With the help of more than $1 billion in subsidized loans and insurance from Clinton agencies, Enron also built dozens of international projects, from a natural gas pipeline in China to clean-burning power facilities in Brazil and the Gaza Strip, according to a top Clinton official. The projects are said to have dovetailed with Mr. Clinton's twin goals of promoting American business overseas and encouraging environmentally friendly energy development.
"The whole world was just waking up and becoming export oriented" in the 1990s, and Enron was on the cutting edge of the globalization wave, said the official, speaking on the condition of anonymity.
"Clinton was a big supporter of companies doing business overseas. He was a huckster for corporate America, and that's how he got big contributions" from companies such as Enron that had global ambitions, the official said.
Enron, its political action committee and its employees contributed more than $1.5 million to Democratic candidates and causes during the Clinton years.
While Enron and Mr. Clinton shared many interests, the official said he was shocked at how successful Enron was with the administration; it won approval for 19 of 20 loan applications it made for its far-flung and often risky international projects. The largest of those, in Dabhol, India, has since failed and may become a liability for U.S. taxpayers.
"They were great pros at working Washington, there's no doubt about it," the official said, ranking Enron among the most formidable corporate lobbying powerhouses with dozens of Washington representatives to push its interests in the 1990s. "The reality is, that's what our democracy begs for. You can't knock the fact that people play that game well."
The Clinton official noted the irony that Enron contributed more to Republican candidates but seemed to get more for its money from Democrats.
"We think it is a function of the government to support American companies and their workers. But conservatives say that's baloney," he said. Despite receiving generous campaign contributions from Enron, the Bush administration denied Enron requests for assistance as it was spiraling toward bankruptcy last fall.
That contrasts with the working relationship Enron had developed with the Clinton administration. One internal Enron document says the Clinton White House sought Enron's assistance in getting China and India to participate in the Kyoto global-warming treaty, mindful that the accord faced a key obstacle in the Senate: Lawmakers were loath to ratify any treaty that left out major developing nations whose greenhouse-gas emissions were projected to soon outstrip the emissions of the United States.
"The administration is concerned about getting China and India into the family of nations committed to" reducing emissions of carbon dioxide through an international-trading regime championed by Enron, said company lobbyist John Palmisano in an October 1996 memo describing how the company was working with the Clinton administration and environmentalists to secure support for the treaty.
Mr. Palmisano said the White House specifically suggested that Enron consider expanding its natural gas business by building clean-energy projects in China, a heavy user of coal, which is the biggest source of carbon emissions. In April 1999, three years later on a trade mission to China, Commerce Secretary William M. Daley announced a first joint venture between Enron and Beijing to build a natural gas pipeline.
It was one of more than a dozen Clinton trade missions in which Enron Chairman Kenneth L. Lay and other company executives accompanied the commerce secretary and touted Enron's international projects.
Enron expected to earn big money from its clean-energy projects under the Kyoto treaty. The accord rewards such projects with "credits" for carbon reductions that Enron expected to be able to resell at a large profit to other companies seeking to comply with the treaty. Enron was positioning itself to be a pioneer in the huge international emissions-trading market envisioned under the treaty.
At the time Mr. Palmisano wrote his 1996 memo, Mr. Clinton and Enron had hopes that other countries would agree to let companies like Enron build projects in Third World nations and then resell the credits they earned to other companies a provision that would have made the energy giant's projects in China, India, Brazil and other developing countries more lucrative.
Negotiators at subsequent U.N. talks, however, did not agree to authorize such "joint implementation" projects in developing countries, although a provision authorizing such projects in former Soviet bloc states was included in the treaty.
"This means that Enron projects in Russia, Bulgaria, Romania or other Eastern countries can be monitized in part by capturing carbon reductions for sale back in the U.S. or other Western countries," Mr. Palmer said in a December 1997 memo trumpeting the Kyoto treaty as a "victory" for Enron that would drive up its stock price.
"This agreement will do more to promote Enron's business than will almost any other regulatory initiative" because of the premium the treaty places on projects involving natural gas and renewable energies like wind power another area of expansion for Enron, Mr. Palmisano wrote. "Enron has immediate business opportunities which derive directly from this agreement."
Enron saw the potential to work with Mr. Clinton from the day he was elected, noting in a November 1992 company newsletter that Mr. Clinton's energy and environmental policies would aggressively expand the use of natural gas because it emits only half as much carbon as coal. The newsletter also notes that Al Gore, Mr. Clinton's vice president, was one of the strongest proponents of a global-warming treaty.
By the end of the decade, Enron built on its success by winning Mr. Clinton's approval for its proposal on energy services trade. Enron had evolved from a producer of physical infrastructure like pipelines and power plants into the leading international energy trader, earning most of its money buying and selling intangible financial assets.
Enron got considerable help along the way from Clinton Treasury Secretary Lawrence H. Summers and other top officials by winning regulatory exemptions for its domestic activities.
It hoped to amplify those gains by pushing for the same kind of deregulated markets overseas.
Mr. Lay made a pitch for Enron's vision of a deregulated, global energy market to delegates at the ill-fated world trade talks in Seattle in December 1999. But although those negotiations fell apart amid anti-globalization street protests, Enron's dream of beginning a round of trade talks on energy services survived when talks resumed the next spring.
While Enron's lobbying achievements at times were sublime, the company was no shirker of details when money was involved. It sought and received help from the Treasury Department to gain more favorable tax treatment of its overseas energy projects. Enron complained that its efforts to expand overseas were being undermined by obscure provisions of U.S. tax law, and it lobbied both the Clinton and Bush administrations to remove the impediments.
Enron didn't shy away from inserting itself into even the most arcane matters that stood in the way of business.
Documents show that company lawyers provided the Clinton Treasury Department with line-by-line legislative language to be included in the bankruptcy-reform bill to ensure the quick settlement of energy derivative contracts in the event of bankruptcy.
Ironically, the bankruptcy provision never became law, and Enron was unable to take advantage of the procedures when it filed for Chapter 11 bankruptcy protection Dec. 2. (Source: The Washington Times, April 8, 2002; "Clinton agencies assisted Enron rise")
Clinton 'sweetheart' deal sped up Enron's collapse
After investing $1 billion in India plant, Lay couldn't get state utility board to pay
WASHINGTON - A so-called "sweetheart" deal between Enron Corp. and India brokered with the help of Clinton administration officials during controversial trade junkets in the mid-'90s ultimately soured and sped the energy giant's collapse, analysts say.
After investing more than $1 billion to help build a huge power plant near Bombay, Enron had problems last year getting paid for power generated by the plant even after sources say former President Clinton lobbied Indian officials on Enron's behalf during his April visit to India.
Desperate, Enron chairman Kenneth L. Lay on Sept. 14 fired off a letter to Indian Prime Minister Atal Bihari Vajpayee threatening legal action to recover claims of up to $5 billion related to the Dabhol Power Co.
A month later, on Oct. 15, Lay called Commerce Secretary Don Evans, pleading for help with the nightmarish project.
The next day, Enron stunned Wall Street by announcing its first loss in more than four years. In the third quarter, the Houston-based company hemorrhaged $618 million.
Enron's once-high-flying stock nose-dived, robbing many of its workers of their retirement nest eggs, and the company filed the biggest bankruptcy in U.S. history.
The gas-fired Dabhol project, which stopped production and construction in May, had been a black mark on Enron's books from the start, analysts say.
"No doubt about it, it was always the trouble child," said Carl Kirst, an analyst with Merrill Lynch Global Securities in Houston.
He says the Indian deal was "one of many factors" that hurt Enron.
"But clearly it was one of the better-known pressure points on the stock," Kirst said in an interview with WorldNetDaily.
Wall Street didn't think much of the deal when it was announced in 1995 by the late Commerce Secretary Ron Brown and Lay during a trade mission to India. The more than $3 billion power-plant project was the single-largest foreign investment ever made in India, which was just opening up its economy to outsiders.
"In the mid-'90s, not many people were venturing into the international-development market like this, certainly not in India," Kirst said. "So there was a good deal of risk built in."
Of the four investors in the project, which is the largest gas-fired plant in the world, Enron put up the biggest stake "north of $1 billion," Kirst said.
Phase 1 of the project yielded an anemic 7-percent return on investment, he says, contributing roughly under a nickel a year to Enron's earnings per share.
That was bad enough.
But by the time Phase 2, twice as big as Phase 1, was nearly completed, the local Indian electricity board reneged on payments, claiming the power bills were too high. If Phase 2 had come on line, the board would have owed a projected $1 billion-plus a year starting this year. Enron inked a 20-year contract with the state board.
"So here at a net investment of well over $1 billion, Enron almost had Phase 2 completed, but they never got anything for it," Kirst said.
And the poor returns from Phase 1 weren't covering the cost of developing Phase 2, he adds.
In short, Enron had a costly boondoggle on its hands, one that was starting to punish its financial statement.
"You can't have over $1 billion of investment on your books and continue to earn only 7 percent, at best, and not open yourself up to write-downs," Kirst said.
The best thing Enron could have done is unload the project, he says.
But Lay couldn't find suitors.
"Enron hoped, ideally, that someone would buy them out at their book value roughly $1 billion," Kirst said. "That is, shall we say, optimistic at this point."
There have been rumors of buyout offers of between $600 million and $800 million circulating since September, he says. Possible buyers mentioned in the past include Reliance, one of India's largest industrial concerns, and China Light and Power Co.
But nothing has panned out.
It shouldn't come as much of a surprise. The huge project was never popular.
Even back in 1993 when Indian officials first proposed the idea of converting to gas as a main power source for Maharashtra, one of India's most industrialized states and home to Bombay, the country's financial center economists were skeptical.
The World Bank, for example, concluded such a project was "not economically viable," warning that the plants would produce power too costly for the state.
The New York Times, moreover, quoted a senior Indian official who said anyone who invested in such a project was "bankrupting yourself knowingly, willingly, deliberately."
So why did Lay press ahead? Political opportunism.
On May 19, 1994, Clinton met here with former Indian Prime Minister P.V. Rao. Rao told Clinton that India was interested in opening its centrally controlled economy up to American corporate investors.
Clinton, in turn, instructed then-Energy Secretary Hazel O'Leary to lead a delegation of corporate executives to India on a trade mission.
"The mission marked the first official visit to India by a U.S. cabinet secretary in many years," Energy's internal trip report states.
Enron executives joined O'Leary on the July 1994 junket, whereupon they planted the seeds of the ill-fated Dabhol deal.
Then in January 1995, Lay accompanied Brown on the Commerce trade mission that helped seal the deal.
The Clinton administration got two federal export-finance agencies the Export-Import Bank and the Overseas Private Investment Corp. to help underwrite the project by kicking in nearly $400 million in loans.
During the final negotiations, Clinton aide Thomas "Mack" McLarty rode herd on the project in Washington for Lay, his old energy-industry buddy.
He tracked the progress of Clinton's ambassador to India, Frank Wisner, who was helping speed the deal along.
Even Clinton pitched in to help his golfing partner, Lay, by sending McLarty memos and articles on the project.
(The ex-president's lobbying for the Enron deal even continued into the Bush administration, sources close to the Dabhol project say, when he visited Indian officials in Mumbai, India, in April. At the time, Enron was fighting the state electricity board for back payments.)
In June 1996, India gave final OK to Lay's project. Four days before the approval, Enron gave $100,000 to Clinton's party.
McLarty and Wisner were not forgotten. Lay snatched up McLarty for Enron when he left the White House. And Wisner got a seat on the board of an Enron subsidiary when he stepped down as ambassador in 1997.
Lay and McLarty have denied the Democratic Party gifts were tied to the Indian deal. And Wisner called "foolishness" any suggestion his board seat was payback for helping Enron close the deal in India.
But in India, local foes of the Dabhol project regarded it as a "sweetheart deal" from the start, and even charged that Enron bribed Indian officials. The charge, which Enron has denied, was never proved.
For his part, Lay blames the recession, not any bad deals he made, for his company's collapse.
Ironically, for all the talk of Lay's cronyism with President Bush, this administration has been relatively hands-off, at least when it comes to aiding Enron in its overseas deals.
No Enron executives got seats on last year's sole Bush administration trade mission, which was to Russia.
And in March, Bush, who held no Enron stock directly in his 1999 financial disclosure, proposed slashing the next fiscal year's budget of the Ex-Im Bank by 25 percent. What's more, he proposed cutting the subsidies of the Overseas Private Investment Corp.
"No Enron executives got seats on last year's sole Bush administration trade mission, which was to Russia."
Under the Clinton administration, Enron had benefited famously from both agencies, which support corporate investments abroad. (Source: World Net Daily, January 18, 2002; "Clinton 'sweetheart' deal sped up Enron's collapse")
Clinton-Gore sales team eased Enron's path to success
WASHINGTON - "Humpty Dumpty sat on a wall, Humpty Dumpty had a great fall."
This week, this old nursery rhyme has taken control of this column. From Washington to Pittsburgh by way of New York City and Los Angeles with important detours to China, Japan, India, Mozambique, Croatia, England, Germany and elsewhere in the world, we have been watching and reading about the great fall of Enron.
What a fall and from what a great wall! The Enron Corporation's 50-story building had always cast a shadow on Houston's South Street, and it glittered in the sunlight as Enron began to fall and stockholders scrambled to dump their shares. And Enron's shares were dumped - the value of company shares fell $22 billion (yes, that's a "B"!) in the past six weeks!
"All the King's horses and all the King's men couldn't put Humpty together again." As in the nursery rhyme, so in fact.
Enron, the Texas-based international energy giant now seeking escape from bankruptcy, faces huge problems with even attempting to put its mirror-like combine back together again. And, despite the "King's men" having help with the heavy lifting from the White House, Congress, the courts and hundreds of faceless bankers and bean counters, this Dumpty just won't fit together anymore.
Even the new name of Dumpty reflects on a stricken giant. Shares valued at $90 each this August are selling for 10 to 26 cents. These once wonder-shares have been degraded to "junk" as thousands of investors rapidly dumped 173.6 million shares. Dumpty Enron, facing losses worldwide that add up to more than $5 billion, now is a monster under stress - and it is a monster that is both shameless and insatiable.
Dumpty is sniffing around its key creditors (J.P Morgan, Chase and Citigroup) for what is called "debtor-in-possession" loans of more than $1 billion. This shows the truth behind the adage that if you owe a bank enough (Enron owes some $3 billion), you own the bank.
The geniuses of the 21st-century marketplace will now learn a sobering and exceedingly painful truth. The kindly, gentle and truly awful socialist pediatrician, Dr. Benjamin Spock, was effectively responsible for Dumpty Enron's collapse and for much else that is wrong with our Republic today.
Because of the genial old doctor, generations of decent American babies developed into troll-like kids ready to stamp and scream until they got what they wanted. Undisciplined, and having forfeited love for abhorrence, they became gargoyle-like adults, liberally laced with Prozac, whose creed was, "If you get away with it, it's cool. Getting caught is bad, so be more careful next time." Dumpty Enron got caught!
The so-called "popular press," in its usual searches for the clay feet with which they invest every well-known person, will now try to link Enron's present woes to the White House. Too bad, guys, you should have started investigating Enron's ties (ties not links) in 1993 and onward to the sales team of Bill Clinton, Al Gore and Ron Brown.
Congress is to initiate hearings as to what went wrong with Enron. It's a safe bet to assume that a major part of the investigation will center on Enron's 5,000 Houston employees who may be jobless within a few days. Jobless and learning that their pension plan was based on company stock that has lost 99 percent of its value. As they live on their unemployment and Social Security pittances, these unfortunate thousands can think about how their employer and its accountants, Arthur Anderson (paid at $1 million a week), inflated profits on paper and scaled down the company's debts. To get away with that kind of "little illegality," a close-mouthed loyal staff is vital. Already prosecutors from the Securities and Exchange Commission, Internal Revenue Service, San Francisco, Los Angeles, New York City and Houston are finding voluble and knowledgeable witnesses eager to cooperate. Subpoenas for individuals and records are now being served.
Yet with so many politicians from both political parties being the recipients of Enron's political donations in both hard and soft money, objective justice may not be easy. Moreover, Enron was generous to the last cent of other people money! Its corporate leaders funded business schools and scholarships, and gave and gave to the United Way! Even Houston's giant sports arena, home to the Astros baseball team, carries the name "Enron Field," a little vanity that cost a mere $100 million for a 30-year deal.
Enron had the best brains that money could buy, but gave the word "ethics" a whole new meaning. The cowboys of Dumpty Enron talked up a storm about ethics; but only a few at the top realized that "ethics" was an acronym for "Enron thinks how income can (be) stolen."
That's a stretch; but look at their 1994 sales team - Clinton, Gore and the late Ron Brown - a trio unlimited and uncontrolled in their cunning and greed.
In what seems to be eons ago, before Gov. Bill Clinton became president, the late, much loved and little lamented Ron Brown was Clinton's good friend and a power broker in the National Democratic Party. Ron Brown had a friend, a congressman from Houston, the late Mickey Leland, who died in 1989. Until his passing, Leland was a shining light in the Congressional Black Caucus and a dedicated socialist, who was one of the Institute for Policy Studies' delights.
From 1984, when Enron was conceived, Brown and Leland were there snapping up unconsidered trifles of money for use in their campaigns against the free market. Mickey was able to ease a lot of Enron's early problems through the Houston City Council by playing his "equal opportunity card." He had also become an African expert who initially took the Enron message to that continent, a chore that was taken on by Ron Brown, Clinton's secretary of commerce, before the latter met his untimely death in a highly controversial plane crash in Croatia. (Untimely, because had Secretary Brown lived, he would have faced multiple criminal indictments that could have precipitated an even earlier fall for Bill Clinton and his gang.)
Now we get to that old puzzle about chickens and eggs, and what came first! Ron Brown, Al Gore and Bill Clinton introduced Enron to market managers in Russia, China, Indonesia and India. In India, Enron quickly became involved in one of that country's most massive corruption investigations, contracts were canceled and Enron was out.
On the other hand, Enron introduced the Clinton team to Lippo Industries and thence to China's People's Liberation Army (a wonderful source of political cash), to John Huang, another good provider and to nameless, numberless Arabs who never arrived with empty pockets. If we look at a list of those attending coffee klatches at the White House, we can learn why a storm of doubtful deals enabled Enron to quickly control one-quarter of the world's electricity and natural gas. But, that wasn't enough. The ever-so-greedy Dumpty moved in to water deals in Massachusetts and Europe, paper mills in Canada, gas pipe lines throughout the world, fiber optics, television, mutual funds and information gathering. In turn, that led to risk analysis, a name that those clever Texans quickly changed to "reward realization!"
The rewards were good! Enron, with sales assistance from Tony Lake, then Clinton's national security adviser, persuaded the impoverished, war-torn country of Mozambique to sign a $770 million electric power contract. Mozambique signed because Tony's salesmanship was persuasive. If the Mozambicans didn't sign, he indicated that their congressionally approved $44 million U.S. aid payment would never be made.
And there was the Croatian caper. In the days when Franjo Tudjman was Croatia's dictator and pretending to be both a reformed communist and best friend of America in the Balkans, poor Franjo had a problem. He and some of his very best friends were wanted as war criminals by the Hague's International Court of Justice. Enron wanted a power contract with Croatia. Enron offered a deal to Tudjman. Sign up with us and we will use our gang in Washington to make sure you and your friends don't go to jail.
Tudjman signed. Enron made a heap of money. Nobody went to jail. Everyone was happy - until Tudjman died of cancer. Then the lid was off, his Croatian Democratic Union was defeated and the new boys in power in Zagreb could not believe how much of their budget went to pay the electricity bills from Enron.
Somebody - probably another Dr. Spock child eager to tell on his peers - prattled! Under quiet pressure from the Croats, another deal was made and a couple of guys were charged as war criminals. Electricity costs went down (but not to the consumers) and as a part of the deal nobody talked, except about the wonderful vacations that they were enjoying in the Caribbean.
This could be called a "cautionary tale." There are two cautions. The first: Beware of the Spock babies now that they are nearing retirement and losing whatever sense they had. The second: Investigators all, beware, as you look into the depths and shallows of Enron you may, if you are truly unlucky, find the truth. And, if you do, these truths won't make you free, just well informed.
Since Sept. 11 and the anthrax outrage, some government departments have expanded and dispersed around the Washington region. One department, identified by the usual alphabet soup of letters and much concerned with gathering and processing intelligence and information from all over the world, now finds itself in a building where, a few floors below its official quarters, there is a restaurant and bar.
The deputy director of this government enterprise is a gentleman with a liver like the soles of an old boot. He sits in the bar from 10 a.m. until noon. Then he leaves for lunch; but he resumes his bar watch at 2.30 p.m. and leaves with his car pool at 5 p.m.
Our poster boy does not waste his day. Throughout his vigils, colleagues from other agencies visit him with their reports and requests. Information is exchanged and even one or two job applicants have been interviewed. And, of course, every day and every hour, his flatterers and flunkies, who make sure that his check is paid, surround the deputy director.
With cold weather forecast, the prospects of stories from warm, comfortable quarters, while appealing, are canceled out by a hereditary need for cups of strong tea! (Source: The Tribune Review, December 9, 2001; "Clinton-Gore sales team eased Enron's path to success")