When Enron asked about U.S. loans for its international ventures, the government’s foreign-investment agency answered – with promises of more than $ 1 billion.
The Overseas Private Investment Corp. granted initial approval to every energy project the company submitted for development loans or political risk insurance, according to interviews and records released on Wednesday.
The total, plus hundreds of millions more promised for projects that never proceeded, made Enron, which has filed for bankruptcy protection, one of the federal agency’s top beneficiaries. Agency spokesman Lawrence Spinelli says Enron enjoyed an unblemished funding record because its energy projects fit the agency’s mission of promoting foreign economic development. And they survived careful financial scrutiny, he says.
But some critics say Enron’s hefty Washington campaign contributions and lobbying also appeared to play a role. “This green-lighting of everything Enron brought in the door seems a little odd,” says Jon Sohn, an international policy analyst for Friends of the Earth, an environmental group that has often criticized the firm’s projects.
Sen. Charles Grassley, R-Iowa, ranking minority member of the Senate Finance Committee, says the panel plans to review the records the agency provided as part of a broader review of the Houston-based firm. “These projects obviously were a tremendous benefit to Enron’s operation,” Grassley says.
Indeed, Enron administered several of the projects through partnerships that enabled the firm to keep debt off its bottom line. The partnerships played a central role in Enron’s financial meltdown and are the focus of criminal regulatory and congressional investigations.
The dozen projects involved range from a controversial India power plant stalled by an international dispute to gas pipelines, power plants or other energy facilities in Guatemala, the Philippines, Argentina, Venezuela and Gaza.
Although the Overseas Private Investment Corp. approved financing for each project, Spinelli says a portion of the promised funding was not disbursed because Enron failed to meet some requirements as development progressed. The agency last week also canceled approval of $ 390 million earmarked for Enron projects in Brazil and Bolivia, Spinelli says.
The agency’s funding represents only a portion of Washington’s financial underwriting of Enron-related projects. Two other federal agencies, the Export-Import Bank and the Trade and Development Agency, approved more than $ 700 million in combined funding for the company’s international projects.
Enron’s bankruptcy won’t cause a financial loss for the Overseas Private Investment Corp. – or taxpayers – because the agency recoups loan funds from revenue produced by the company’s international plants, Spinelli says. However, Senate Finance Committee staffers say the panel would check repayment records.
“Whether there’s taxpayer liability remains to be seen,” Grassley says.
