WASHINGTON -- A bipartisan Senate Finance Committee investigation has found that Enron Corp., no paragon of free-market deregulation, gorged itself on corporate welfare. The Clinton administration gave more than $650 million in Export-Import Bank loans to Enron-related companies. While the Senate now probes whether the bankrupt energy company falsified loan requests, the bigger question is why Enron was subsidized at all.
Export-Import officials early this year, expressing confidence in the accuracy of information provided by Enron in its loan applications, were not interested in an investigation. However, Ex-Im Vice Chairman Eduardo Aguirre sang a different tune in his April 23 letter to Sen. Chuck Grassley of Iowa, the Finance Committee's senior Republican. "Please let me assure you that Ex-Im Bank takes very seriously potential violations of law . . . and works very closely with the Department of Justice," wrote Aguirre.
Finance staffers have found that Ex-Im, as well as the Overseas Private Investment Corp. (OPIC), in a Democratic administration routinely approved loan requests from a supposedly Republican company. Lavish bipartisan political contributions may have helped, as well as a top Enron executive sitting on Ex-Im's Advisory Committee.
Actually, one official of the agency informed a Senate investigator that all Ex-Im really monitors is loan repayment. Ironically, it is unclear whether Enron loans will be defaulted at American taxpayer expense. While the rationale for the Export-Import Bank's existence is to give U.S. businesses a level playing field against government-subsidized foreign competition, the Enron loans merely buttressed questionable projects where the company often was both producer and exporter.
The classic case is a September 1994 Ex-Im direct loan of $302 million ($175 million of which remains unpaid) to Dabhol Power Co. in India, then 80 percent owned by Enron. In this deal, Enron was the "foreign" company, and its allies, Bechtel Group and General Electric, were the exporters. With an Indian utility that could not pay its bills (and was pressured by the Bush administration to do so) as its only customer, Dabhol went bankrupt even before Enron.
A less publicized loan scrutinized by Senate investigators provided $135 million (only $4 million of which has been repaid) to the Accroven partnership for a natural gas plant in Venezuela. Nearly half the company's stock was owned by Enron while Enron also was the exporter. Thus, the U.S. taxpayer was paying Enron money so that Enron could buy gas from Enron.
Enron's loan application for the Accroven project included the company's 1998 annual report, which the company has admitted was falsified. "I'm troubled by the Ex-Im's seeming lack of interest in this matter," Grassley wrote Aguirre on April 2.
Ex-Im loaned $250 million to Trakya Elektrik of Turkey, owned 50 percent by Enron, which was buying goods and services from Enron. Ex-Im insured a $3.6 million Citibank loan to Promigas in Colombia, owned 42.3 percent by Enron. Whether or not these loans were based on misleading information, it is difficult see how any of these deals fulfills the Export-Import Bank's avowed purpose of promoting American competition against the world.
While Democratic Sen. Ernest F. Hollings delivered his memorable judgment that Enron benefited from the Bush presidency on a cash-and-carry basis, the symbiosis between big business and the purveyors of corporate welfare is bipartisan. Just as Enron gave to both parties, Bechtel has contributed $820,000 to Republicans and $730,000 to Democrats since the 1992 elections. Rebecca A. McDonald, CEO of Enron Global Assets, was on Ex-Im's Advisory Committee under President Clinton in 2000 and remained there under President Bush in 2001. How can it be that a major recipient of government largesse is advising the agency handing it out?
Except for a fitful effort to trim it down in the early months of the Reagan administration in 1981 and some restraint by the current Bush administration, the Export-Import Bank has sailed through governments of both parties -- hardly noticed and never critically examined. Sen. Max Baucus of Montana, the Finance Committee's Democratic chairman, and Sen. Grassley in a Jan. 31 letter to Ex-Im questioned whether the American taxpayer "ultimately" would be stuck with the bill for Enron. A broader scrutiny of the agency's global pursuits is still wanting.