Enron and the Clinton Administration: Ties that bind

Human Events, Jun 3, 2002 by Morano, Marc

While Capitol Hill Democrats have been trying with limited success to tie the Bush Administration to the energy conglomerate Enron Corporation, the now-bankrupt firm actively cultivated a long-term relationship with the Clinton Administration, according to documents obtained by CNSNews.com and authenticated by the company.

The seeds of the relationship were planted even before Bill Clinton was sworn in as President, and lasted until the final months of his administration. The documents also show the company and the Clinton Administration sought to use each other to promote their respective agendas, both in Congress and abroad.

While the documentation gives no indication of any illegal activities, it does paint a picture of an American corporate giant seeking to influence an administration and exploit its policies, while entertaining the prospect of using its corporate clout to advance Clinton Administration initiatives.

Sowing The Seeds of a Relationship

Enron Corporation saw the opportunity to exploit the newly minted Clinton Administration even before Clinton was sworn into office, and saw 1992 campaign issues including investment tax credits and restrictions on carbon dioxide (CO^sub 2^) as beneficial to the company.

According to the November 1992 edition of the Enron corporate newsletter, To The Point, the company looked forward to dealing with the upcoming Clinton administration. The newsletter noted, "Senator [All Gore has been an avid proponent of a strong global warming policy" that would lower greenhouse gas emissions. The Enron communique noted that Clinton and Gore's support of restrictions on CO^sub 2^ emissions "should provide a real opportunity for natural gas."

Enron stood to benefit from any government restrictions on greenhouse gas emissions because the company had ownership or a financial stake in numerous natural gas and wind power technologies, which produce little or no greenhouse gas emissions.

Enron praised the Clinton Administration for its proposed health care plan, economic policies, and investment tax credit, which the newsletter stated "would be beneficial to Enron and the natural gas industry," by facilitating lower costs for future Enron projects.

Enron Feeds at Government Trough

Enron's ability to harness feelings of goodwill with Clinton's new team bore fruit in short order.

By 1995, Enron was able to successfully secure financing for the Dabhol Power plant in India with loans from the U.S. Export-Import Bank totaling $298 million to cover about 32% of the costs. Enron's ownership stake was 80% in the Indian power plant.

Enron was able to secure another $100 million in investment money from the U.S. federal agency, Overseas Private Investment Corporation (OPIC). In 1996, the investment corporation provided another $200 million in "political risk insurance" for the India project, according to OPIC documents.

But Enron's relationship with the Clinton Administration was not a one-way street, and top corporate officials lent their aid to the President. Former Enron Chairman and CEO Kenneth Lay wrote a personal letter to Clinton in 1995, supporting the President's budget proposal in Congress.

The letter, dated June 27, and blind copied to Clinton senior advisor Mack McLarty, Enron Vice President Joe Hillings and Enron Senior Vice President of Environmental and Government Relations Terry Thom, was sent at the height of the budget battle with the newly elected Republican-controlled 104th Congress.

"I applaud your political courage and leadership in supporting a balanced federal budget," Lay wrote. "The debate should be about budget priorities and timing, not whether a commitment should be made to fiscal responsibility."

Later that year, Clinton Administration officials helped Enron during the company's negotiations over a natural gas project in Mozambique. The top negotiator on the gas project for Mozambique was Minister of Mineral Resources John Kachamila, who complained of "outright threats to withhold development funds if we didn't sign" with Enron. Kachamila said U.S. diplomats, "especially [U.S. Embassy Deputy Chief of Mission] Mike McKinley, pressured me to sign a deal that was not good for Mozambique. He was not a neutral diplomat," according to the Houston Chronicle.

The Clinton Administration's U.S. Agency for International Development (USAID) was also reportedly involved in the pressuring of Mozambique to sign the deal with Enron. USAID is especially powerful because of the volume of money it pumps into the developing world. Mozambique was receiving over $40 million during this time from USAID over 21% of its GNP.

Enron Entertains Favors for Clinton Administration

In an Oct. 15, 1996, memo from John Palmisano, senior director for environmental policy and compliance at Enron, it was noted that the Clinton Administration sought the company's help in gaining support from China and India for proposed climate change regulations.

Palmisano's memo, which was sent to Thom, Hillings and a variety of other Enron corporate officials and lobbyists, noted, "the administration is concerned about getting China and India into the family of nations committed to both carbon emissions trading concepts. "We have been asked how we can help in this regard and how natural gas might be part of [joint implementation] activities in China," Palmisano wrote in the memo.