An Enron Corp.-backed project to expand a Bolivian gas pipeline may get as
much as $170 million from the Inter-American Development Bank, 10 months
after the company’s bankruptcy triggered U.S. government investigations.
The loan, under review by the IDB’s credit committee, would be a boon for
Enron because the company is considering selling its one-quarter share in
the Bolivian pipeline company, Transredes SA, to help pay its creditors.
Enron defended the financing.
“While there may be some financial interest for the estate of Enron, there
is also a tremendous public interest for Bolivia” in getting aid to expand
the gas pipelines, said John Ambler, an Enron spokesman. The investment
will aid one of Latin America’s poorest nations, where per capita income is
$990. Critics say the funding is the latest example of Enron’s ability to
tap public money for its overseas projects. The company got $6 billion in
government-backed loans and guarantees in the past decade for investments
in countries from India to Argentina.
“It’s outrageous,” said Nadia Martinez, a researcher at the Institute for
Policy Studies who co-wrote a report in March on Enron’s access to money
from government-backed lenders.
The Bolivia project also links the Washington-based IDB, which is 30
percent controlled by the U.S. government, to a company under investigation
for defrauding investors.
No Direct Help
Jean Marc Aboussouan, the IDB staff member responsible for the natural-gas
pipeline project, said Enron’s minority stake in Transredes means the
lender isn’t directly helping the company. Royal Dutch Petroleum Co.,
pension funds and private investors own the rest of Transredes.
Enron, which declared bankruptcy in December, said last month it’s
considering selling its stake in the company if it gets an offer
“consistent with its value,” Ambler said.
A spokesman for Royal Dutch Petroleum, which owns 60 percent of Europe’s
largest oil company, Royal Dutch/Shell Group, says the company has started
a review of “all commercial options”
regarding its stake in Transredes.
Enron was once one of the heaviest users of public support for its gas and
electricity projects, getting financing from lenders such as the World Bank
and U.S. Overseas Private Investment Corp.
Most of that support has evaporated since the company filed for bankruptcy
on Dec. 2, setting off investigations by the Securities and Exchange
Commission, the U.S. Department of Justice and more than a dozen
congressional committees.
Seeking to Sue
OPIC, which has lent or guaranteed $2 billion for the company, canceled
another Enron-backed project in Bolivia and has asked the Justice
Department to determine if it can sue the company to cancel the insurance
provided to the project.
Aboussouan said even if the expansion of the project is approved as
scheduled by the IDB’s board next month, construction won’t begin this year
as originally planned.
That’s because the main market for the gas – Brazil – isn’t as hungry for
energy as it was last year when the country had to ration electricity.
“At first it was an emergency program,” he said in an interview. “We are
now looking at 2003 or 2004.”
The U.S. Treasury, which controls the U.S. position on the IDB’s board and
much of the lender’s agenda, declined to say whether it will support the
project. The office of the U.S. representative to the IDB said it is
waiting to receive the formal proposal from the lender’s staff.
‘Due Diligence’
The Andean Development Corp., another government-backed lender for the
region, has agreed to provide a $50 million loan for the project.
The IDB would provide a $75 million loan of its own funds and then
syndicate a $95 million loan to commercial lenders, using its status a
government-affiliated lender to help protect the loan from government
interference, Aboussouan said.
Both lenders say they’ve taken steps to ensure that none of the information
they were provided by Enron and Transredes was fraudulent.
“We did our own legal due diligence and found that everything was done
right,” said Sergio Bracho, a staff member at the Andean development bank.
“We value so much the idea of supporting foreign investment that we are
willing to take these risks,” Bracho said. “If it wasn’t risky there would
be no need for us to be involved.”
