Ian posted the article below about OPIC and Enron. But note:
Enron isn't the only company using OPIC (and the US military) to do its dirty work.
Mission Energy, a
subsidiary of Edison International, a new holding company arisen out of the electric
utility, Southern
California Edison, foisted an outrageous contract on Indonesia. This is a huge
coal-fired plant from
which Suharto's government agreed to buy kilowatt-hours at very, very high prices.
Prices that are in
dollars and were very, very high BEFORE the Indonesian currency meltdown. Much higher
now. Higher
prices in Indonesia than are charged in the US and which people earning Indonesian
wages in Indonesian
currency cannot possibly pay.
Mission/Edison International happens to have an ex-US Secretary of State, Warren
Christopher, on
its Board of Directors and on the job of forcing a settlement by the Indonesian
government. OPIC
loaned on this plant, which has General Electric as part owner.
General Electric is also part owner of the Enron plant at Dabhol, India
Mission/Edison International secured the contract by making an Indonesian with
family ties to
Suharto a partner in the project. He got 15% ownership without putting in any
money. His investment
would come out of the future profits. Suharto's family also got the coal supply
contract at what
appears to be a sweetheart price.
OPIC has financed dozens of power plants, gas and coal, around the world for US
sponsors.
Sometimes with loans or loan guarentees and other times by financially insuring the
project.
Of course when the deals sour or get shakey, the US govenment then moves in with
threats or
financial squeezes from other agencies to force complaince on countries that really
shouldn't honor
these one-sided deals. And/or uses it ties to the military in the other countries to
reinforce or
create a regime that will comply.
Gene Coyle
an Murray wrote:
> < http://www.atimes.com >
>
> Heat from Enron's meltdown hits credit agencies
> By Danielle Knight
>
> WASHINGTON - The scandal and crisis surrounding the collapse of energy giant Enron
>Corp have reached
> the doors of US government agencies that finance and facilitate private projects in
>developing
> countries. One of the biggest controversies involves the Dabhol power plant in
>India's Maharashtra
> state.
>
>
> Environmental and human-rights organizations say the Enron debacle highlights the
>need for closer
> supervision at the Overseas Private Investment Corp (OPIC) and the US Export-Import
>Bank (Ex-Im).
> Together, these agencies have provided or insured US$2.3 billion worth of financing
>for about a
> dozen Enron projects in Asia and Latin America, says Aaron Goldzimer, a social
>scientist with the
> Washington-based Environmental Defense, a national environmental group.
>
> At least a few of these ventures, activists argue, have been environmentally
>destructive and
> associated with human-rights abuses and never should have received Washington's
>financial support in
> the first place. Not only employees and stockholders have been swindled by the
>Houston-based
> company's shady schemes, says Goldzimer. "The taxpayers have been joint investors in
>boondoggles
> that profited Enron but harmed the environment and local communities," he says.
>
> Compared with other export-credit lending agencies in Japan and Europe, OPIC and
>Ex-Im are bound by
> environmental and social guidelines - including mandatory environmental assessments
>of proposed
> projects. But advocacy groups say that these standards have not been properly
>followed and
> government agencies still finance harmful business enterprises, including some of
>those owned by
> Enron.
>
> One controversial Enron project backed by the US government is the $2.8 billion
>gas-fired Dabhol
> power plant - described as the largest single foreign investment in India - that is
>designed to
> generate 2,015 megawatts of electricity. Enron was the majority owner of the
>project, a joint
> venture including General Electric, Bechtel, and the Maharashtra state government.
>The Dabhol plant
> received $640 million in financial support from OPIC and Ex-Im in the mid-1990s,
>including a $300
> million Ex-Im loan and a total of $340 million in loans and political risk insurance
>from OPIC.
>
> In 1999, Human Rights Watch (HRW), a New York-based advocacy group, charged Enron
>subsidiaries of
> paying local law enforcement to suppress local opposition to the power plant.
>
> "Enron is now being widely accused of arrogance and lack of transparency, but the
>people of Dabhol
> have known that all along," says Arvind Ganesan, director of the business and
>human-rights program
> at HRW. Enron, she says, has been complicit in human-rights abuses in India since
>1992, when local
> opposition ignited over concerns about corruption and the hasty negotiations over
>the terms of
> Enron's investment. Farmers complained that the power plant had unfairly acquired
>their land and had
> diverted scarce water resources. The rights group documented how contractors for the
>power plant
> harassed and attacked individuals opposed to the project. Police refused to
>investigate complaints,
> according to the report, and in several cases actually arrested the victims on false
>charges. In one
> instance in June 1997, Maharashtra police arbitrarily beat and arrested dozens of
>villagers who
> strongly opposed the project, which is now up for sale to other investors.
>
> "The US government bears special responsibility for the human-rights consequences of
>Enron's
> investment because of its aggressive lobbying on behalf of the three US-based
>companies developing
> the project," says Ganesan.
>
> Human-rights abuses aside, the project never should have been approved by OPIC and
>Ex-Im for purely
> financial reasons, say activists. The World Bank repeatedly refused to finance the
>project because
> it was not considered economically viable and its terms were seen as only beneficial
>to Enron.
>
> For several years, relations between Enron and the Maharashtra government have been
>at a rolling
> boil over the high cost of electricity generated by the plant. The state eventually
>canceled its
> original plan to purchase power from the plant. OPIC officials confirm that since
>Enron's
> bankruptcy, the company has filed a $180 million claim with OPIC in an attempt to
>recoup financial
> losses from the venture, arguing that the state government's decision amounts to
>expropriation.
>
> In another example, OPIC in 1999 approved $200 million worth of political-risk
>insurance for the
> Cuiaba gas pipeline, a joint venture between Enron and Shell Oil that aims to
>transport gas through
> eastern Bolivia to a power plant in Cuiaba, Brazil. Conservation groups, including
>the World
> Wildlife Fund and US-based Amazon Watch, strongly oppose the project. They say
>OPIC's backing of the
> project violates the agency's rules, developed during the administration of former
>US president Bill
> Clinton, that ban the funding of infrastructure projects in primary tropical forests.
> Environmentalists argue that the pipeline cuts through the world's largest intact
>dry tropical
> forest, known as the Chiquitano. New paths cut through the forest by the pipeline,
>they say, would
> pave the way for poaching, logging, hunting, farming and settlement.
>
> "The pipeline's 30-meter-wide, 200-kilometer access road will bisect and permanently
>scar one of the
> most pristine tropical forests on the planet and will accelerate deforestation,"
>says Atossa
> Soltani, director of Amazon Watch. Activists say that so far, the project has
>resulted in pollution
> damage to local water supplies, illegal hunting, and harmful construction impacts on
>local
> indigenous communities.
>
> Ganesan says US lawmakers need to make sure that such troubled projects are never
>approved for
> government assistance again and has urged Congress to establish a human-rights
>assessment office at
> Ex-Im that would report to the legislature. A provision to strengthen Ex-Im's
>human-rights oversight
> had been introduced in Congress last year but the administration of President George
>W Bush and many
> corporations opposed the proposal. It eventually died in a House of Representatives
>committee in
> November.
