Enron and the Clinton Administration: Ties that bind

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.

Palmisano's memorandum indicated he had met with several representatives of Clinton's Environmental Protection Agency (EPA), the Department of Energy, the State Department and the Office of Management and Budget (OMB). Enron also entertained requests on helping the Clinton Administration move its climate change agenda on the domestic front. A Feb. 7, 2000, memo from Jeffrey Keeler, Enron's Director of Environmental Strategies, to various Enron executives recalled another attempt to secure the company's help.

Keeler noted how the proposal could benefit Enron because it "provides $100 million, spread across various agencies [Dept. of Energy], USAID, Commerce Dept. [Export-Import Bank], [U.S. Trade and Development Agency] for collaboration on energy technologies . . ."

Climate change in general and the Kyoto Protocol on climate change specifically were the target of criticism in some quarters of Congress, and Keeler's memo explained one way in which some of the objections to Kyoto could he decreased or eliminated.

"The White House would be interested in our assistance in building support for such `international' support," wrote Keeler, while also cautioning against the use of the word "Kyoto" when referring to climate change initiatives.

"This proposal avoids direct mention of 'Kyoto'-in fact is more in line with the [Alaska Republican Sen. Frank] Murkowski, [Idaho Republican Senator Larry] Craig, [Nebraska Republican Sen. Chuck] hagel [sic] approach to climate change-supporting R&D for energy technologies," the Keeler memo stated.

Conversely, Keeler, a strong proponent of climate change initiatives, was not happy with President Bush's decision in 2001 to oppose any new laws that set mandatory reductions on carbon dioxide emission from electric power plants.

In 2001, he told the environmental group Natural Resources Defense Council's Amicus Journal, "You can do something meaningful on carbon without collapsing the economy or causing an energy crisis. We believed that before the Bush announcement. We believe it now." Keeler viewed this decision as a broken Bush campaign promise and dubbed it "carbongate."

Courting Clinton and the Environmentalists

While congressional Democrats have tried to fink the now-bankrupt corporation with the Bush Administration and the Republican Party, there is evidence that Enron actually aligned itself with the environmental lobby, which put the company squarely at odds with most of the GOP on climate change issues.

While touting its relationship with militant environmental groups including Greenpeace, Enron worked to strengthen and preserve certain funding programs that helped finance hundreds of billions of dollars in Enron projects around the world during the years Bill Clinton was in the White House, documents show.

In fact in 1997, Enron joined forces with the Clinton Administration to defend OPIC from budget cuts in Congress. The agency had provided Enron with both funding and, in 1996, $200 million in "political risk insurance" for Enron's Dabhol Power plant in India, which had also been funded in large part by OPIC.

In efforts to save the agency from cuts, OPIC President Ruth R. Harkin announced the Clinton Administration was solidly behind the agency and would not allow it to be the victim of budget cuts, according to the March 19, 1997, edition of The Oil Daily, an industry publication.

Enron Senior Vice President for Global Affairs Linda F. Powers warned that if OPIC did not receive sufficient funding, the U.S. economy would suffer, according to The Oil Daily.

Kyoto Protocol is Good for Enron

The Kyoto Protocol on climate change represented an opportunity for Enron to make a profit, because the carbon dioxide requirements of the treaty dovetailed with numerous corporate projects that emitted less CO^sub 2^ and other greenhouse gasses.

Vice President Al Gore championed the Kyoto Protocol, which would have required 40 industrialized nations to drastically reduce greenhouse gas emissions by the year 2012.

Toward realizing that opportunity, Enron Chairman Kenneth Lay applauded Clinton's support for the Kyoto Protocol in an Oct. 22, 1997, corporate statement, calling it "a comprehensive, yet realistic, program that starts to move the United States and the world toward minimizing carbon dioxide emissions." Lay liked the emission targets and incentives to develop new energy and environmental technology as well as the "carbon dioxide trading program."

Enron invested in both natural gas energy alternatives and wind power technologies, both of which fit the profile of what the Kyoto Protocol demanded. The company needed little prodding when it came time to support the global warming treaty.

John Palmisano, senior director for environmental policy and compliance at Enron, wrote in a Dec. 12, 1997, internal memo regarding Kyoto, that "if implemented, this agreement will do more to promote Enron's business than will almost any other regulatory initiative outside of restructuring of the energy and natural gas industries in Europe and the United States."

In the memo, Palmisano also promoted the carbon emissions trading provisions in the Kyoto treaty.

Enron Trumpets Inroads With Greens

Besides enjoying a close relationship with the Clinton Administration, Enron also cultivated friends in the environmental movement. Palmisano, in the Dec. 12, 1997, memo, boasted that because of its support for climate change treaties, "Enron now has excellent credentials with many 'green' interests including Greenpeace, [World Wildlife Fund], [Natural Resources Defense Council], German Watch, the U.S. Climate Action Network, the European Climate Action Network, Ozone Action, WRI, and Worldwatch."

Enron also used its "excellent credentials" with environmental groups to help lobby the Clinton Administration for tax breaks on development of wind energy technologies. A Nov. 3, 1999, Enron statement boasted that the environmental group "National Audubon Society today praised Enron Wind Corp." for an agreement to re-locate a wind-powered generating facility to accommodate an endangered species.

According to the statement, "the agreement directly benefits the California condor recovery effort while facilitating a wind power project that would provide green energy to the Los Angeles area." But the Audubon Society did not only publicly praise Enron. It also engaged in lobbying for tax breaks to benefit the company.

Enron Capitalizes on Clinton Alternative Energy Plans

In 1994, the Department of Energy awarded $1 million to a company called the Central and South West Services, Inc. for a wind turbine plant near Fort Davis, Texas. Central and South West Services then hired a California firm, Zond Systems, Inc., to install the 12 wind turbines, which it did in 1996. Enron benefited indirectly from the deal when it acquired Zond Systems, Inc. in 1997.

Enron became a more direct beneficiary of the administration's alternative energy program and the tax money funding it. The Enron Wind Corp., located near Lake Benton, Minn., developed wind turbines in cooperation with the Department of Energy (DOE) during the Clinton Administration.

Then-Secretary of Energy Bill Richardson announced in a Sept. 24, 1998, statement on the dedication of the Minnesota facility that the administration was "excited that Enron developed this technology with technical contributions made by the department, and we look forward to continuing our collaboration with Enron for the development of their next-generation wind turbine."

The DOE statement also pointed out that its wind power program "has played a key role in supporting Enron Wind Corp. as they have become the premier wind turbine company in the United States."

That year, the Energy Department also touted its work with Enron "to develop a 1,000 (kilowatt) wind turbine, which will greatly enhance the competitiveness of wind energy and open up large markets in the Midwest," supporting the company's research and development efforts.

The following year, Zond Energy Systems partnered with the DOE to develop a wind power technology facility in Storm Lake, Iowa. A Sept. 17, 1999, press release by the DOE boasts of the "public-private partnership" between Zond and the department.

Richardson said at the time, "The turbines at Storm Lake will allow us to better utilize the vast resource of wind power." The secretary also praised the collaboration by noting that it was "producing tangible results that will support continued development of wind technologies"...

The Department of Energy's website noted on Nov. 3, 2000, that this single federal agency's "contributions to the programs that supported Zond's 750-kW turbine since 1994 total nearly $12 million."

Award-Winning Enron 'Protects' Shareholders

In 1998, Enron received the U.S. Environmental Protection Agency's Climate Protection Award. In a letter to Terry Thorn, Enron's Senior Vice President of Environmental and Government Relations, Virginia Lee, the EPA's Director of Climate Protection Awards, wrote that the honor was "in recognition of exemplary efforts and achievements in protecting global climate."

A year later, the government agreed to give the award-winning Enron $200 million worth of loan guarantees to fund a natural gas pipeline from Bolivia to Brazil, The funding through the federal Overseas Private Investment Corporation (OPIC) was part of the $570 million project that included a 480megawatt power plant in Cuiaba, Brazil.

A Parting Shot

The relationship between Enron and the Clinton Administration was not limited to corporate lobbyists and government bureaucrats and functionaries.

In a personal letter from Clinton to Enron chief Kenneth Lay dated Feb. 25, 2000, Clinton wrote how he was "pleased you were able to attend the reception following my address to the World Economic Forum in Davos." Clinton took the opportunity to explain to Lay that he believed "that open markets and rules-based trade are the best ways to lift living standards, reduce environmental destruction, and build shared prosperity."

The former President also shared with Lay his views on globalization and ways to lift living standards. Clinton's letter began with the typewritten salutation "Dear Kenneth," which was crossed out and the shorter moniker "Ken" handwritten over the type. It concluded simply, "Sincerely, Bill."

Mr. Morano is a senior staffwriter for CNSNews.com.

Copyright Human Events Publishing, Inc. Jun 3, 2002
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