ENRON: MOTHER OF ALL SCANDALS - A.Dakshi
SCANDAL NO.1
ENRON has hit the headlines again, this time the entire world over. In 1995-96 and onwards ENRON had hit Indian media for everything that happened surrounding the Dabhol power plant in Maharashtra, The way the project was granted, the politicians and media people were bribed, the 13 days Vajpayee Govt. gave the counter-guarantee to ensure its profits, shocked every patriotic Indian. But the bribed media people and politicians showcased that ENRON was the result of liberalisation that ushered in an era of growth as foreign investors were heading for India.
The CITU was a lone fighter, which, in order to stem a prospective disaster, went door to door to stop it. Maharashtra State Committee of CITU filed a writ petition in Bombay High Court, pleading to stop swindling of the country. Bombay High Court agreed and noted: "This (ENRON) case has highlighted to the people as to how even after 50 years of independence, political considerations outweigh the public interest and the interest of the State and to what extent the Govt can go to justify its actions, not only before the public but also before the Courts of law". But the Bombay High Court did not pass any orders to cancel the ENRON deal.
Maharashtra State Committee of CITU filed a Special Leave Petition in the Supreme Court in March '97 to contain the damage and save the country. But, Supreme Court refused to go into 'Economic Matters". So ENRON went on to establish their 695 MW Plant in 1st phase and on to 2184 MW plant in its 2nd phase.
WHY CITU OPPOSED?
Dabhol project is a fraud on the Indian people. Sharad Pawar and his Government had flouted all national laws, all statutory obligations, all techno-economic evaluation processes and worse, signed the deal secretly to dupe the Indian people while granting the first phase of the project. One question remains - how did Enron manage to get it done by Sharad Pawar & Co.? The answer is clear. ENRON admitted that it had spent 20 million dollars (about 100 crores of rupees now) to 'educate Indians."
L K Advani, then an opposition leader shouted in Parliament: "I want to see some of those Graduates educated by ENRON". During the subsequent election campaign in Maharashtra, Advani, Vajpayee, Bal Thackeray - all of them shouted that ENRON agreement would be thrown into Arabian sea if they came to power. Sharad Pawar lost the election. BJP-Shiv Sena came to power in Maharashtra.
The ENRON started another round of 'education' of Indians. Rebecca Mark, the chief of ENRON in India visited Bal Thackerey's house and, wonder of wonders, Shiv Sena-BJP leaders became "Post Graduates", a bit too soon. ENRON was not thrown into Arabian Sea, but was granted permission to expand from 695 MW to 2184. MW capacity, after this eventful meeting.
But in between, the same Shiv Sena-BJP Govt of Maharashtra had submitted in Bombay High Court in their affidavit in CITU's case that "the original Power Purchase Agreement (PPA) was induced by misrepresentation, fraud and bribery"; but soon afterwards, they revised their stand and justified not only the first but also the second stage of Dabhol.
CITU opposed it because Central Electricity Authority (CEA) did not approve the project; there was no tendering; the project cost was too high; the contract was to be guided by U.S. Laws not Indian laws; the cost of power would be more than double or three times than what is charged by other producers; all these were unacceptable to any Indian. Even World Bank opposed it and said: "Our analysis based on the parameters provided to us indicates that the LNG (Liquefied Natural Gas) based project as presently formulated is not economically viable, and thus could not be financed by the Bank (World Bank)."
CITU opposed Dabhol because the Maharashtra Govt. would be bound to close down its own power plants generating power at less than Re 1 per unit in order to buy the entire power generated by Dabhol at the cost of Rs 5/- per unit (which later on went up to Rs 7/- per unit). We opposed it because the price of power was fixed in terms of dollar (0.073 dollar/unit) and the counter guarantee given by Govt of India to pay to ENRON about Rs 1300 crores per month, whether we buy power or not - an amount of Rs 2 lakh crores in 20 years. These are not CITU's calculations but are stated in the letter by Finance Ministry to Power Ministry of Govt. of India.
But, ENRON is ENRON. Then they were bold enough to declare that Dabhol would not give out their secrets and technical details, they refused their accounts and expenditures to be audited even subject themselves to a judicial scrutiny. About World Bank report and media criticism, ENRON Vice President wrote: …"I feel that World Bank opinion can be changed. We will engage a PR firm during the next trip and hopefully manage the media from here on" (28.6.1993). It was audacity unlimited. ENRON, it seems is above our laws, our Government, our country.
SCANDAL NO.2
Everything stated in the CITU affidavit before the Supreme Court in 1997 came true soon after. Worse, the cost of power shot up beyond all projections between Rs 5 per unit to as high as Rs 7.80 per unit. MSEB turned bankrupt and was in a spot and refused to buy power from Dabhol. It was a scandalous situation that the MSEB and State Govt refused to abide by the contract signed by them. Dabhol plant had to be closed down and still it is down. The ENRON management, the US Ambassador to India, the Vice President of US, have already reminded the Govt. of India about the counter-guarantee, though softly, diplomatically. They would have held the Govt. of India by the neck by this time had there been not a dramatic development in the ENRON headquarters in United States, which has shaken the world of capitalism and corporate structure at its very roots.
SCANDAL No.3
ENRON has collapsed. Backed by the US Govt. ENRON had dictated terms to Govt. of India and got whatever they wanted in Dabhol. It wielded enormous power to dictate even to the US Govt. From a small company managing pipelines and supplying natural gas, it grew into a richest and most powerful company.
And suddenly came the end. By September-October 2001, it became clear that ENRON was bankrupt. Its accounts showing huge profits were all fabricated; in fact it had huge debts that were kept out of the balance sheet. In August 2001, its stocks sold at 90 dollars per share, in October it came down to 40 dollars; in December to 3 dollars and in January the share certificates became cheaper than its paper, barely 30 cents or so. ENRON applied to the US Govt. for bankruptcy. Everyday new information is pouring in how 3 or 4 people, with the help of entire political leadership including US President, have cheated the people, the country and the entire system of law and governance.
ENRON heavily bribed the entire political leadership of the US. One top-ranking cartoonist has sketched that only the doorkeeper and the plumber of Senate house can carry out an impartial inquiry, because all others were on the pay-roll of ENRON. When it was clear that the company had gone bust, the top brass of the company placed their own shares worth millions of dollars to some fictitious companies. Those shell companies got huge loans from banks and that money was transferred to ENRON. This was shown as ENRON's profit. The share prices soared. Then they sold their own shares at high prices making huge personal gains. The loan taken by those companies were not shown in ENRON's accounts.
We called ENRON as fraud. Now we can call these people cheats, swindlers, gamblers, hypocrites, bullies and, out and out criminals. They advised their 20000 employees to buy ENRON shares with their pension fund. The employees have lost their 2 billion dollar fund; they lost their jobs; they will have no pension, because the company has declared itself insolvent.
Vajpayee signed the counter-guarantee during his 13-day Ministry. When he had no authority even Vajpayee has to prove that he is not one of those Indians "educated or graduated" by ENRON!
