DAM-L LS: CBS 60 Minutes on Enron, US and India (fwd)

["D. Murray" <dianne@sandelman.ottawa.on.ca>]

----- Forwarded message from owner-irn-narmada@netvista.net -----

Return-path: <owner-irn-narmada@netvista.net>
Received: from noxmail.sandelman.ottawa.on.ca (nox.sandelman.ottawa.on.ca [192.139.46.6])
	by lox.sandelman.ottawa.on.ca (8.8.7/8.8.8) with ESMTP id SAA13229
	for <dianne@pophost.sandelman.ottawa.on.ca>; Mon, 22 Apr 2002 18:52:42 -0400 (EDT)
From: owner-irn-narmada@netvista.net
Received: from DaVinci.NetVista.net (IDENT:mjdomo@davinci.netvista.net [206.170.46.10])
	by noxmail.sandelman.ottawa.on.ca (8.11.6/8.11.6) with ESMTP id g3MMqMi19503
	for <dianne@sandelman.ottawa.on.ca>; Mon, 22 Apr 2002 18:52:22 -0400 (EDT)
Received: [(from mjdomo@localhost)
	by DaVinci.NetVista.net (8.10.0/8.8.8) id g3MMjlX24845
	for irn-narmada-list; Mon, 22 Apr 2002 15:45:47 -0700 (PDT)
	(envelope-from owner-irn-narmada@netvista.net)]
Date: Mon, 22 Apr 2002 15:45:47 -0700 (PDT)
Message-ID: <200204222245.g3MMjlX24845@DaVinci.NetVista.net>
Subject: LS: CBS 60 Minutes on Enron, US and India
Sender: owner-irn-narmada@netvista.net
Precedence: bulk

Date: Mon, 22 Apr 2002 00:48:13 -0400 (EDT)
From: Sreenath Sreenivasan <ss221@columbia.edu>
Sender: ss221@columbia.edu
To: SAJA E-mail Discussion List <saja@lists.jrn.columbia.edu>
Subject: TRANSCRIPT: 60 Minutes on the India connection

Below is the transcript from a 60 Minutes story about the allegations of
an Indian journalist re: Enron. Below the transcript is a BBC report
following up on this.

sree@sree.net
http://www.sree.net

CBS News
60 Minutes
Sunday, April 14, 2002
Segment length: 12 minutes (transcript: 2,316 words)

Doing business with Enron; Indian government deals with high-priced power
plant built by Enron and payment of the bill, which the US government is
now trying to get from them

DOING BUSINESS WITH ENRON

BOB SIMON reporting:

Everyone was shocked when Enron collapsed last year, right? Not quite.
People in places like Nigeria, Indonesia and the Philippines weren't
shocked. Enron had been a scandal in those countries for most of the past
decade when the company had moved into some of the world's poorest and
most corrupt nations, pushing megapower deals, projects that invariably
came with huge price tags, allegations of bribery and the weight of the
United States government behind Enron. Nowhere was this more the case than
in India, where Enron came in 1992 with a plan to build a massive power
plant, bigger and more expensive than anywhere else--a project that turned
out to be a total disaster for both Enron and India.

(Footage of Bombay; aerial footage of landscape)

SIMON: (Voiceover) Enron's captains came to Bombay in June of '92. They
got in a helicopter and picked a site for their plant without ever
landing. Within five days, they'd signed a deal to sell electricity to the
Indian government. There had been no competitive bidding. How much did you
say the contract was worth?

Mr. PRADYUMNA KAUL: $60 billion over 20 years.

SIMON: $60 billion over 20 years.

(Footage of Kaul in his office)

SIMON: (Voiceover) Pradyumna Kaul is a management consultant who was
brought in by Indian officials to evaluate the project.

India signed this contract with no competitive bidding?

Mr. KAUL: With no competitive bidding. That's right. Absolutely.

SIMON: How do you explain that?

Mr. KAUL: The Indian government in Delhi, they were told that they would
have no--no alternative but to sign because that will--that was the
only--and the--condition for the US government to continue to support
India on the foreign exchange financial front.

(Footage of India's streets and citizens; lights; power pole; tangled
power lines)

SIMON: (Voiceover) And India needed that support back in '92. It was
strapped for cash. The Americans promised to help out. Condition? India
would have to open its economy to foreign investment and deregulate its
heavy industries. Deregulation--that was Enron's favorite word. It offered
to take India's tangled, overworked electric grid--there were brownouts in
Bombay all the time--and sort it out in a flash.

Mr. RAGHU DHAR: They said, 'Listen, we are going to generate electricity
for you, OK? Now we are going to do it, so you don't get into this.' Then
we said...

SIMON: Arrogance?

Mr. DHAR: Yes, absolute arrogance. It was something which we--I had not
seen American companies do abroad, really.

(Footage of Dhar and Simon; television studio; power lines)

SIMON: (Voiceover) Raghu Dhar is an investigative reporter and the
business editor of the largest television network in India. What bothered
him about the deal was that Enron had gotten the state electric company to
agree to pay for the electricity Enron would produce, whether it needed it
or used it or not.

Mr. DHAR: You see, these are the kind of things which raised our eyebrows.
These are the flags which are going up, dong, dong, you know? Each one of
them.

(Footage of World Bank building; power pole; Enron sign)

SIMON: (Voiceover) Even the World Bank was raising red flags. It refused
to invest in the project and issued a report warning that the plant would
be too big, the electricity too expensive, a bad deal for India; a great
deal for Enron.

Enron was going to get a 25-percent rate of return from the project,
guaranteed.

Professor LOU WELLS: Correct.

SIMON: Is that unusual?

Prof. WELLS: I think it's unusual for a project with essentially no
commercial risk.

(Footage of Wells in his office; power lines)

SIMON: (Voiceover) Professor Lou Wells of the Harvard Business School
points out that Enron had persuaded the Indian government to guarantee
payment of Enron's bills. That meant that even if the state electric
company fell behind, Enron would always get its money.

Prof. WELLS: A normal foreign investor producing light bulbs in a country
takes a number of risks. How much can you sell the light bulbs for? How
many light bulbs will you sell? What happens to the exchange rate? And
none of these risks was being incurred by Enron.

SIMON: So En--Enron got, if I understand you correctly, one hell of a
contract?

Prof. WELLS: I would say so.

(Footage of Mark with Indian officials)

SIMON: (Voiceover) And Enron had one hell of a negotiator: Rebecca Mark,
the CEO of Enron International.

Mr. DHAR: She was amazing. She could charm your pants off, you know?

(Footage of Mark)

SIMON: (Voiceover) You think Rebecca Mark wowed them?

Mr. DHAR: I had this--you know, a small group of people calling me and
almost breathlessly say, 'Rebecca, Rebecca.'

(Footage of Mark)

Mr. DHAR: (Voiceover) Oh, my God, it was amazing sight. All these people
who I thought were very sensible.

Hard goal, hard-boiled charmers themselves.

SIMON: Did she manage to charm you?

Mr. DHAR: Unfortunately not, because I was looking at the electricity. I
wasn't looking at...

(Footage of power lines; train; storage facility)

SIMON: (Voiceover) And looking at the electricity, something very basic
didn't make sense. India has a lot of coal. It had always used coal to
generate its electricity. But Enron was planning to import liquefied
natural gas from the Persian Gulf.

This is the jetty Enron built, more than a mile long. It's where the
tankers were going to dock; tankers filled with liquefied natural gas for
the power plant. Why bring expensive natural gas into a country that has
lots of cheap coal? Well, one of the reasons is that Enron planned to buy
the gas from Enron.

(Aerial footage of jetty)

SIMON: (Voiceover) And the price would be determined in negotiations
between Enron India and Enron's Persian Gulf division in Qatar, which was
trading in natural gas.

Must have been a tough negotiation.

Ms. SUCHETA DALAL: That--that's right.

(Footage of Dalal and Simon; Indian city; aerial footage of Mauritius)

SIMON: (Voiceover) Sucheta Dalal is a financial analyst and a trustee of
India's largest consumer organization. She says her suspicions were raised
years ago when she discovered that while Enron had offices in India, it
was registered in an offshore tax haven, the island of Mauritius. She says
that, in effect, Enron took India for a ride.

Sounds to me from the way you're painting is the Indians were suckers?

Ms. DALAL: I don't think we were just suckers. I think there's definitely
a great deal of corruption.

SIMON: You believe that politicians and bureaucrats were bribed by Enron?

Ms. DALAL: Absolutely. Yes. I'm sure money was paid outside the country.

SIMON: But you can't prove it?

Ms. DALAL: Can't prove it, yeah.

(Footage of Dhar and Simon)

SIMON: (Voiceover) Enron didn't offer editor Raghu Dhar a bribe as such.
He says Enron offered him a job as its corporate communications chief.
Salary: $1 million a year.

Do you think that one of Enron's motives may have been to silence your
criticism?

Mr. DHAR: Yes, of course.

(Footage of Dhar; Capitol)

SIMON: (Voiceover) It was an offer he could refuse. But others must have
been less stubborn. In 1995, Enron acknowledged to a congressional
committee that it spent $20 million educating Indians about the power
plant, an expenditure that was never explained and which apparently didn't
work. At least not entirely.

(Footage of protest; Gophinath Munde)

SIMON: (Voiceover) By the mid-1990s, a popular movement against the
project was taking to the streets. In the vanguard, charging that Enron
was bribing its way through India was this man, Gophinath Munde. It's a
charge Enron has denied, but Munde promised voters of the state where the
plant was being built that if elected, he would throw Enron into the
Arabian Sea.

Enron was a big issue in your election campaign. You were against Enron.

Mr. GOPHINATH MUNDE: Definitely.

(Footage of elections; aerial footage of plant; footage of Mark and Lay;
press conference; Wisner)

SIMON: (Voiceover) Munde won the election, and he was good to his word. As
soon as he took office, he halted construction of the plant, which put
Enron in such a panic, that Rebecca Mark and Enron chairman, Kenneth Lay,
screamed back to India to pile on the pressure. The American ambassador,
Frank Wisner, pitched in. His role, as he saw it...

Former Ambassador FRANK WISNER: ...was to try to convince the central
government to back a resumption of the project, and to convince the state
government that it was in its best interests to put the project back on
track.

Mr. KAUL: He would come up and plead that if India does not go along with
Enron's proposal, then foreign investment and capital flows into the
countries would dry up completely. He said it not once--a number of times.

SIMON: Isn't it an American ambassador's job to drum up business for
American corporations?

Mr. KAUL: Yeah. But that's not what Wisner did. There were other American
corporations which were coming into India, but the only company and the
only project which Wisner supported was Enron.

(Photos of Mark and Munde; Wisner)

SIMON: (Voiceover) Frank Wisner and Rebecca Mark succeeded. They convinced
Munde to un-cancel the project. Rebecca Mark's reward? A
multimillion-dollar bonus. Wisner? Soon after he retired from government
service in 1997, he took a job as director of an Enron subsidiary.

Prof. WELLS: When someone comes from business into government and goes
back into business, that can hardly be a surprise. When someone has a
career in government and then suddenly go--goes into business where that
business was closely related to his career, I think people's eyebrows
inevitably get raised.

SIMON: Were there any raised eyebrows when this happened?

Mr. WISNER: Mr. Simon, I really take exception and disagree with the
premise of the question. There have been hundreds of government officials,
including presidents and secretaries of State, who've joined private
companies after leaving their offices.

(Photo of Munde and Mark)

SIMON: (Voiceover) But the question remains: How did Wisner and Rebecca
Mark convince Gophinath Munde, the man who'd promised to throw Enron into
the sea, to change his mind?

Did anyone from Enron ever try to bribe you, sir?

Mr. MUNDE: No.

SIMON: Do you think Enron was bribing Indian officials?

Mr. MUNDE: No.

SIMON: So you now say that you don't think Indian politicians took bribes.
But when you were running for office, you made a point of saying that the
previous government was taking bribes.

Mr. MUNDE: (Foreign language spoken)

SIMON: 'I--I said that, and I said that we should cancel the project. And
I canceled it. Then because I canceled it, it was renegotiated.'

(Photo of Munde and Mark; aerial footage of plant)

SIMON: (Voiceover) Renegotiated? Not only did Munde agree to resume
building the plant, he agreed to triple its size. The Indians were now
contractually bound to buy three times more power; again, whether they
needed it or used it or not. Enron had always admitted that their
electricity would cost a little more, but in 1999, when the giant plant
came online...

Ms. DALAL: The first electricity bill was approximately four times what we
were paying for our power. How can it be four times more? If we had it
right and we had it right long ago, then that obviously means that Enron
was lying all along.

(Footage of power plant; Lay; newspaper headline)

SIMON: (Voiceover) Last year, India's state electric company simply
couldn't afford to pay Enron's bills anymore. The Enron plant shut down.
With Enron's share price tumbling, Kenneth Lay became desperate. He
demanded a billion-dollar bailout from India's central government and
threatened US economic sanctions, a total cutoff of American aid and
assistance to India.

Ms. DALAL: I don't know if any o--any country where a corporate house can
threaten sanctions against a sovereign nation.

(Footage of White House; President Bush and Vice President Cheney; e-mail;
Enron employees leaving building; US Embassy)

SIMON: (Voiceover) But Lay had always found solid support from Washington,
and it was no different now. The Bush administration set up an Enron task
force. Objective: Make those Indians pay their bill. Vice President Cheney
did his part, as recorded last June in this task force e-mail. 'Good
news,' it reads. 'The Veep mentioned Enron in his meeting with Sonia
Gandhi,' the Indian opposition leader. But then, a few months later, Enron
lay bankrupt and disgraced, and the administration was in the midst of its
war on terror. India was a key player there, so one would have thought
that US officials would stop trying to squeeze the Indians on Enron. But
just listen to what US Ambassador Robert Blackwill said just two months
ago.

Ambassador ROBERT BLACKWILL: I hear a frequent buzz from the United States
that the sanctity of contract here may now be in doubt, a concern that can
spell death to potential investments.

Ms. DALAL: Why should the problems of this one power project in India be
so important that, in the middle--you know, it's post-September 11th, in
the middle of a war with Afghanistan, and, you know, India is discussing
terrorism. And in the middle of that, the slipping in this little bit
about trying to give Enron its billion dollars?

Mr. DHAR: To us, at the end of the day, it was one of the worst sides of
American corporate culture we saw.

SIMON: America let you down?

Mr. DHAR: Yes, and it was sad, to be very honest. To be very honest, we
felt sad because we expected amazing standards.

SIMON: Rebecca Mark, who was Enron's CEO in India, left the company in
2000, selling her shares for $79 million. She's back in Houston now, and
she declined to speak with us.

(Announcements)

o o o o o

BBC
Wednesday, 17 April, 2002, 14:25 GMT 15:25 UK
http://news.bbc.co.uk/hi/english/business/newsid_1932000/1932988.stm

Indian journalist alleges Enron bribe

An Indian journalist has alleged that failed US energy giant Enron attempted
to bribe him after he criticised its operations in his country.

"They'd offered me a job as a corporate communications, corporate strategist
not only in India but the whole of the region," Raghu Dhar, the business
editor at India's Zee TV told the BBC's World Business Report. "Because of
I'm a journalist, I generally view this kind of offer to keep me off track
because at that time I was really going after them," he said, adding that
other journalists were also approached.

The allegation was first made on the US television programme '60 Minutes'
last weekend but has been denied by Enron. "It's rather an incredible
statement and I am not aware of anything remotely like that having
occurred," Enron spokesman John Ambler told WBR.

"Obviously we don't have all the people associated with the project still
with the company, but one would think that if something like this had
occurred it would have been brought up by one of (nearly 30) public interest
lawsuits," he said.

Enron, once the seventh biggest US firm, sought Chapter 11 protection in
December last year in the largest ever US bankruptcy.

The Dabhol project
Mr Dhar is known in India as one of the most fervent critics of the Dabhol
power plant, that an Enron-led international consortium built in India's
western Maharashtra state. The 2,184-megawatt, liquid gas powered facility -
one of the largest of its kind in the world - was built in the 1990s for a
staggering price of $2.9bn.

"Before the (Dabhol) project got off the ground, a colleague and I had
already begun a series of articles against them," Mr Dhar said. "Even before
Enron became fashionable, we had already begun to writing its obituary."

The Dabhol plant went into receivership earlier this month, after a
Mauritius-registered subsidiary of Enron that owns that plant filed for
bankruptcy in New York.

Ownership dispute
Dabhol is one of Enron's few remaining major assets still up for grabs, but
the company has reportedly refused to sign a cooperation agreement to enable
the sale.

"The terms and conditions that were being put forward were 'heads I win,
tails you lose', so I had no other option but not to side with something
that would destroy our infrastructure, which happened ultimately," said Mr
Dhar of deal to build Dabhol.

Lead financier Industrial Development Bank of India and other Indian
financial institutions, who provided the bulk of the $1.9bn in loans
outstanding to the Dabhol Power, are keen to sell the 85% of foreign owned
equity in the project.

The power plant has been taken over by receivers to ensure it is maintained
after it began to rust.


-------------------------------------------------------------------------------------
To unsubscribe from this list, send a message to majordomo@netvista.net
with no subject and the following text in the body of the message
"unsubscribe irn-narmada".

----- End of forwarded message from owner-irn-narmada@netvista.net -----