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Date: 1995/08/05
Covert action and political clout help Enron win contracts
By Pratap Chatterjee
WASHINGTON, Jul 31 (IPS) - What links Enron, the largest natural gas
company in the United States, the Central Intelligence Agency (CIA), the
Pentagon and the fast-growing energy markets of developing countries around
the world?
If you said covert intelligence operations to support Washington's
aggressive pursuit of emerging markets and a network of ''good
old boys'' who have long helped each other in and out of government,
you probably got it right.
Consider the facts. Houston-based Enron was the one of the first
companies to bag lucrative new deals to build private energy projects in
both the Philippines and India. One of the Filipino deals was to take over a
power plant from the Pentagon, the popular name for the U.S. Defence
Department. Enron also bagged two other projects to build power plants in
the country. The Indian deal was clinched with the help of the CIA which
provided Enron and U.S. government officials with key data on the
risks of the project and strategies of possible competitors, according to
published accounts.
''A number of U.S. government agencies worked on helping Enron in
the Department of Commerce's new advocacy centre. Several of them told me
that the CIA had helped them get information, but the Commerce people
themselves would not talk about it,'' David Sanger of the New York Times
told IPS.
Curiously enough, the most senior U.S. diplomat in both countries when the
deals were negotiated was the same, Frank G. Wisner. He served as
ambassador to the Philippines from 1991 well into 1992. He has presided
over the U.S. Embassy in New Delhi since last August. Enron agrees that the
ambassador helped it in the final stages of the Indian deal but says it had
no contact with him in Manila.
''Enron officials paid a courtesy call on the embassy in
Manila, but ...did not meet Wisner until his arrival in India. The
U.S.
government's assistance for the trip to India was to prepare for
(Commerce
Secretary) Ron Brown's trip. You must remember that we had been
negotiating
in India two years before Wisner or Brown arrived,'' says Diane
Bazelides,
Enron's chief spokesperson.
Enron struck a deal to manage a 28-megawatt power plant in Subic
Bay,
formerly the largest U.S. military base in the region, shortly after
Wisner
left Manila in July 1992. Enron took over the plant in January, 1993,
two
months after the last U.S. troops left the base.
''The U.S. embassy staff produced an excellent report on how U.S.
business could win contracts in the former base. They had an edge
because
they knew it so well,'' recalls a senior staffer at the Filipino
embassy in
Washington.
Wisner spent a lot of time after arriving in New Delhi last
year helping Enron win a 2.8-billion-dollar deal to build a 2,015-
megawatt
power plant near the southwestern coastal town of Dhabol, close to
Bombay.
The deal is now under heavy fire for being over-priced. Allegations of
bribery are rife.
''If anybody asked the CIA to help promote U.S. business in
India, it was probably Frank. That's his style - take action
rather than wait for somebody else to make a decision,'' a former
Wisner
staffer told IPS.
In recent weeks, newspaper reports have claimed that CIA
support for U.S. business abroad is now an official priority. On
Monday,
for example, the Los Angeles Times reported that the Clinton
administration
has issued a set of rules for the CIA to engage in ''economic
espionage'' in
keeping with the new, geo-economic mindset of U.S. foreign policy.
''The idea is that an ambasador can call on a chief of station
(the top
CIA official in a foreign country) to find out who will take the key
decisions on the bid, information on competitors, any possible
corruption on
the part of foreign companies,'' a former US ambassador told IPS.
Wisner is himself long acquainted with the CIA and its
capabilities. His father was one of its architects and served as a top
official there from just after its creation in 1947 until just before
his
suicide in 1965.
As such, he helped oversee the toppling of the Guatemalan
government of Jacobo Arbenz for United Fruit company, a family-owned
U.S.
business, in 1954. He also was involved in the 1953 overthrow of
Iranian
Prime Minister Mohammed Mossadeq who had threatened to nationalise
U.S. and
British oil interests, and in secret operations against Indonesian
President
Sukarno in the mid-1950s.
Wisner, Jr. has not been associated with anything quite so
dramatic, but he has gone out of his way to promote both U.S.
business and
military policy. Before his posting to New Delhi, Wisner held the
number
three position at the Pentagon. During his stint there, Washington
actively
courted the Indian military.
Help from such powerful sources in the elite and secret worlds of
this
city are commonplace for Kenneth Lay, the chief executive officer and
founder of Enron, who started the company soon after quitting the
Federal
Power Commission, a now defunct government agency here.
Lay had worked in the Pentagon during the Vietnam war, when
Richard
Nixon
was president. An economics PhD, his work got him noticed at the
senior
echelons of the administration.
''Lay understands how government works. He knows who cuts the
deals and
he makes sure that he knows people in the right places,'' says a
Houston
journalist who asked not to be named.
Lay, whose posh River Oaks home in Houston is a few kms from the
Tanglewood residence of George Bush, is a close friend of the former
president. Although Bush himself has never been accused of doing
favours for
Lay, three of his sons have allegedly used their father's name to try
and
win contracts for Enron.
Neil and Marvin Bush were named in an article in the New Yorker
magazine
by investigative journalist Seymour Hersh as having tried to influence
Kuwaiti officials in favour of an Enron bid to rebuild Shuaiba North,
a
power plant destroyed in the Persian Gulf war. Enron abandoned the
bid a
year ago.
In 1988, George W. Bush, another of the Bush sons who is now
governor of
Texas, reportedly telephoned Rodolfo Terragno, Argentina's Public
Works
Minister, to ask him to award Enron a contract to build a pipeline
from
Chile to Argentina.
''He assumed that the fact he was the son of the president
would exert influence. I felt pressured. It was not proper for him to
make
that kind of call,'' Terragno recently told The Nation weekly
magazine.
Enron ultimately won the bid under the next government, headed up by
Carlos
Menem, another Bush friend.
In 1987, Neil Bush, a director of the failed Silverado Banking,
Savings
and Loan Association, which made millions of dollars in high-risk
loan,
created a subsidiary of his oil company to conduct business in
Argentina.
The activities of the two Bush children in Argentina prompted a
par-liamentary inquiry in that country.
''None of Bush's sons have worked for Enron. I don't know why
people
keep
bringing up these old stories,'' says Bazelides.
Two weeks ago, the head of Enron Development Corporation denied
at in a
press conference in Bombay an IPS report that Enron used political
clout to
swing deals. ''Enron's reputation is being attacked, and we do not do
business under the table,'' said Rebecca Mark.
But Enron officials acknowledge that the company used James
Baker,
Bush's
Secretary of State, and Robert Mosbacher, his Commerce Secretary as
consultants. Also on the Enron payroll is Thomas Kelly, director of
operations for the Pentagon during the Gulf War.
Another powerful Enron contact is Wendy Gramm, who joined Enron's
board
of directors in 1993 after resigning as chair of the Commodity Futures
Trading Commission (CFTC) here. Previously, she was a senior staffer
in the
White House for former President Ronald Reagan.
In late 1992 Gramm began proceedings to remove energy futures, a
highly
specialised financial instrument, from government regulation, based
on a
petition from Enron and other energy companies. She resigned her job
just
before the commission agreed to the petition. Today a tenth of Enron's
profits are derived from playing this financial market.
''Former associates say that Gramm would not be the first CFTC
member to
go through Washington's revolving door to work for a company that has
issues
before the agency,'' Jerry Knight, a Washington Post journalist who
tracks
these markets, told IPS.
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Spies help sell cars, energy, planes and save the rain forest
By Pratap Chatterjee
WASHINGTON, Jul 31 (IPS) - Raytheon, a U.S. company based in
Massachusetts, won a 1.4 billion dollar contract from Brazil last
July to set up a satellite surveillance system to monitor the
destruction of the rain forest.
The deal was clinched after President Bill Clinton made a special
appeal on behalf of the manufacturer to the Brazilian government.
U.S. officials also helpfully pointed out that Thompson CSF, a
French company and Raytheon's main rival in the bid, had bribed
local officials.
''Our agents were tipped off about the bribes. We don't think
that bribery is a fair way to do business, especially because our
laws don't allow us to do that,'' William Colby, a former Central
Intelligence Agency (CIA) chief, told IPS.
Earlier in the year the French were also outsmarted in their bid
to win a six-billion-dollar deal to modernise Saudia, the Saudia
Arabian airline, by the same combination -- CIA information on
French bribes followed up by a personal letter from Clinton.
In March 1994, the Saudi government awarded the contract to the
U.S. consortium of McDonnell Douglas and Boeing. The French-led
Airbus consortium was left out in the cold.
Last week the Los Angeles Times, quoting anonymous CIA sources,
announced that CIA help for U.S. business was now official policy.
This is in keeping with the priority the administration has
placed on helping U.S. business abroad. It also benefits the CIA
which has been trying to justify its post-Cold War existence.
Clinton, according to the Times article, was particularly pleased
with the role of the CIA in putting together a daily tip sheet
for the U.S. National Economic Council about the Japanese
negotiating position in the recent U.S.-Japan spat over cars.
Other examples have been reported although never confirmed. In
September 1993, Clinton reportedly asked the CIA to spy on
Japanese plans to build a zero-emission vehicle and provide its
intelligence to the Big Three U.S. car manufacturers -- Chrysler,
Ford and General Motors.
Unlike some of these companies, who probably welcome the CIA
help, the French are unhappy. They struck back in February when
five U.S. citizens were accused of trying to bribe French
government and corporate officials to obtain French technology and
trade secrets.
Pamela Harriman, the Washington's ambassador to France, was
summoned to the office of Charles Pasqua, the French interior
minister, to be reprimanded. Four of the suspects were asked to
leave the country. (The fifth had left already.)
But this has not deterred the CIA. The same month the New York
Times described how agency officers supplied information to the
Department of Commerce to help Enron, the largest natural gas
company in the United States, win a contract to build a power
plant in Dhabol, India.
Enron was not happy with this publicity. ''We cringed when we saw
the article that described the CIA's role. They never gave us any
information. For the most part, we have always had more
information than the U.S. government,'' says Joseph Hillings,
Enron's vice president for federal government affairs.
Enron may indeed have obtained more information, but the CIA is
anxious to toot its own horn.
At recent Congressional hearings, the agency claimed that it has
helped U.S. businesses win 30 billion dollars in contracts. This
figure is quoted by U.S. foreign service officers, who are
enthusiastic about the programme.
''The thinking now is that our ambassadors should be able to
request the local station chief to get information on key
contracts -- information about possible competitors, about any
illegal activities such as bribery,'' a State Department source
told IPS.
Old CIA hands are not quite so enthusiastic. ''I'm not sure that
it's such a good idea. What if two U.S. companies are bidding for
the same project? Whom do you favour?'' argues Colby, who now
advises large multinational corporations.
McDonnell Douglas and Raytheon are very close to the U.S.
government. The two companies are the second and seventh largest
recipients of federal contracts. They won a total of 18.1 billion
dollars worth of business from the government in 1993.
Both companies have also always had close ties to the CIA and the
U.S. military because of the very nature of their business --
more than half of their sales are for war-related activities. Many
of their senior officials have worked for either the Pentagon or
the CIA at some point in their careers.
But the argument that these companies are decent, law-abiding
citizens that need help in competing against unfair foreign
business practices is questionable.
In October 1993, Raytheon agreed to pay 3.7 million dollars to
the Pentagon to settle charges that it had overcharged the
government for Patriot missiles.
In August 1992, Raytheon paid out 2.75 million dollars for
overcharging on test equipment for Sparrow, Seasparrow and
Sidewinder missiles, and in March 1990 it paid a million dollars
for illegal trading in confidential Pentagon documents.
Proponents of CIA cooperation with companies cite the use of
foreign intelligence services to help their business.
For example, the French used their intelligence services in the
1970s to obtain U.S. and Soviet plans to sell fighter aircraft to
India. Armed with this information, Mirage of France, won a huge
contract from India.
The CIA's role in helping U.S. business is not new. In 1954 the
CIA orchestrated the overthrow of the democratically elected
government led by Jacobo Arbenz to help United Fruit, a family-
owned U.S. business, protect its interests in the Central American
nation.
In 1953, it moved successfully against Iranian Prime Minister
Mohammed Mossadeq when he threatened to nationalise British and
U.S. oil investments.
It also worked unsuccessfully with telecommunications giant ITT
to try to prevent the election of Chilean President Salvador
Allende Gossens in 1970.
U.S. companies have also assisted the CIA in the past, sometimes
by permitting it to plant agents among its personnel abroad and
volunteering briefings to the CIA's National Collection Division
on information collected overseas.
The Paris-based Le Monde newspaper claim that the CIA has 30 of
the 80 CIA agents in France operate under ''non-official cover.''
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Alex Constantine's Political Conspiracy Research Bin:
http://alexconstantine.50megs.com/
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