Enron and the Clinton Administration: Ties That Bind

July 7, 2008 - 8:28 PM

(Editor's Note: This is the first of a three part series detailing some of the Enron Corporation's ties to the Clinton Administration between 1992 and 2000.)

(CNSNews.com)
- 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.

The Seeds of a Relationship Sown

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 (CO2) 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 [Al] Gore has been an avid proponent of a strong global warming policy" that would lower greenhouse gas emissions, and the Enron communique noted that Clinton and Gore's support of restrictions on CO2 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 financial stake in numerous natural gas and wind power technologies, which produce little or no greenhouse gas emissions.

The company often described itself as "a major supplier of solar and wind renewable energy worldwide," and Enron also praised the newly elected Democrats for their "plans to aggressively convert government and other vehicles to alternate fuels, mainly natural gas."

The November 1992 newsletter also praised the Clinton campaign's economic policies, including its proposed 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 even praised Clinton for his proposed health care plan, which ultimately died in the Democratic-controlled Congress in 1994. "Anything the new administration can do to control health costs will be of tremendous value to Enron and the nation," the newsletter noted.

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 dollars to cover about 32 percent of the costs. Enron's ownership stake was 80 percent 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 dollars 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 aide 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 27th and blind copied to Clinton senior advisor Mack McLarty, Enron Vice President Joe Hillings and Enron Senior Vice President of Environmental & Government Relations Terry Thorn, 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."

After offering his opinions on how to limit federal spending, Lay ended by writing, "I believe the American public will look kindly upon your leadership to bring closure on this vital issue."

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 dollars during this time from USAID.

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 Thorn, 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. Joint implementation involves a wealthier "donor" country that invests in pollution reduction measures in a "host" country in exchange for "credits," which the donor nation may use to meet its own pollution reduction targets. The Palmisano memo was written following meetings in Washington, D.C. with Clinton administration officials.

Palmisano's memorandum indicated he had met with several representatives of Clinton's Environmental Protection Agency, the Department of Energy, the State Department and the Office of Management and Budget.

The memo continued, "there seems to be an opportunity to get Administration support, and maybe money, to identify natural gas related activities in China that link to climate change in general and joint implementation in particular. I was approached twice during last week on this issue."

Palmisano bluntly sought guidance from his colleagues at Enron when he asked, "Does anyone have a notion as to how I should follow up?"

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.

"I spoke with Jeff Seabright of the White House Climate Change Task Force today, who asked if Enron might become involved in supporting an initiative in the FY 2000 budget request on the subject of 'international energy collaboration.'"

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 be 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 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."

Tuesday: Enron fights for continued 'corporate welfare,' and courts the environmental movement to lobby for additional tax breaks that benefit the company.


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