Enron-Linked Bush Official Gets Another Chance to Restore Funds
July 7, 2008 - 7:29 PM
(CNSNews.com) - A prominent Democratic donor currently serving as the Bush administration's manager of a $350 million development project in Africa and who is one of several former Enron officials being sued by the U.S. Department of Labor for "failing to protect [Enron] workers" was granted another in a series of fundraising extensions on the Africa Millennium Fund.
Frank Savage, the managing general partner of the Fund, which is conducted under the auspices of the federal Overseas Private Investment Corporation (OPIC), has repeatedly failed to raise the required $122.5 million in private investments necessary to trigger the $227.5 million contribution from U.S. taxpayers and make the fund operational. Savage's deadline of Sept. 30 to raise the private money has been extended until the end of the year.
One of the Fund's consortium members also released a bleak financial report earlier this month, which could further shake investor confidence in the project.
"The deadline on the [Africa Millennium Fund] has been extended to the end of December," said OPIC spokesman Tim Harwood in an interview with CNSNews.com.
When asked whether OPIC President Peter Watson made the decision to extend Savage's deadline, Harwood replied: "Yeah, I am going to say the front office of OPIC." Harwood did not offer any more information on Savage's latest extension.
"Nothing more to report there. Hopefully, we will have something positive to say by [the end of the year], but otherwise, that is all I can really say right now," Harwood said.
But Savage's critics had plenty to say.
"When is Mr. Savage going to be held accountable for what his charge is?" asked Niger Innis of the Congress of Racial Equality (CORE), a conservative African American civil rights group. Savage is also African American.
"We really need to at some point follow the money here and find out who is protecting Frank Savage," Innis told CNSNews.com.
Innis, who has called Savage a "Bush hater," for his past donations to Democratic candidates like former presidential candidate Al Gore and New York Sen. Hillary Clinton, would like to see a change in the fund's leadership.
"If [Savage] still continues not to do his job, at some point the Bush administration is going to have to step up, step on some egg shells and get rid of this guy," Innis said.
Savage's deadline for raising money for the Fund has repeatedly been extended since he took over the project in August 2001. Innis called Savage's failure to come up with the private investments "a terrible disappointment" for President Bush during his trip to Africa earlier this year.
Under terms of the project, designed to pay for energy, telecommunications and transportation projects in Sub-Saharan Africa, American taxpayers are to pay $227.5 million, and private investors are to come up with $122.5 million, for a total of $350 million.
In the latest development, Cycad Financial Holdings, one of the members of the Fund's consortium, reported a loss of 40.7 million South African Rand (approximately $5.9 million) in October, according to Business Report. That loss followed the previous year's loss of 64.8 million South African Rand (approximately $9.4 million) for the private equity investment company. South Africa's Business Report stated that although Cycad "showed signs of recovery," it "continued to be hit badly by the downturn in technology markets."
Savage has also had his share of bad news, most notably when he was named as a defendant in a lawsuit filed by the U.S. Department of Labor on June 26 for his role as a former director of the failed energy firm Enron.
"Today, the Department of Labor is filing suit in federal district court in Houston, Tex., to recover losses that Enron employees suffered due to the mismanagement of two of Enron's pension plans," said Secretary of Labor Elaine Chao in a June 26 statement.
The 46-page complaint is seeking a "court order requiring the defendants to restore to the [Enron employee retirement] plans all losses with interest, forfeit their right to benefits from the plans and permanently bar them from serving as fiduciaries to any plan governed by the ERISA (Employee Retirement Income Security Act.)"
A Labor Department source told CNSNews.com on Wednesday that the case is proceeding and that the federal agency was encouraged by a recent decision by Judge Melinda Harmon to reject the defendants' motion to dismiss class action lawsuits against Enron. According to the Labor Department source, Judge Harmon's decision was a "positive sign" because she essentially agreed with many of the legal arguments the Labor Department has made.
Savage's method of raising money for the Africa Millenium Fund has also raised some eyebrows in the Bush administration, according to an administration official speaking under condition of anonymity. The official told CNSNews.com that any money pledged to the fund so far might be violating OPIC guidelines.
"The U.S. is leveraging its own money. They have talked about raising money from individual African countries, but these countries say they will only invest if the money is put back into their particular country, and that would be against OPIC policy," the Bush administration official said.
The official also cited Savage's history with Enron as one of the prime reasons the Africa Millennium Fund has thus far failed to meet its financial goals.
"The inability of Savage to raise money with a government guarantee speaks volumes for the lack of confidence that institutional investors feel toward him," the official said in July after Savage was granted a previous fundraising extension.
Savage's role in the Bush administration has irked some Republican partisans because of his Democratic Party ties. Time magazine, in a Jan. 14, 2002, article, called Savage "a major Democratic donor" who had given at least $100,000 to Democrats since 1999. In addition to helping Gore and Hillary Clinton, Savage contributed to the campaign of New York Sen. Charles Schumer, according to Time.
But it's Savage's past as an Enron board member that has raised the most controversy.
Journalist Joshua Green, who also edits Washington Monthly magazine, wrote in a June 2002 article published by the American Prospect that "Savage's record is appalling, even by the standards of Enron board members."
Savage "serve[s] as a reminder of the need for corporate responsibility," Green wrote.
Savage also served as chairman of Alliance Capital Management International, which Florida state officials sued for negligence in May 2002. In addition to his role at OPIC, Savage currently serves as the chief executive of Savage Holdings, LLC.
Savage would not respond to several attempts for comment for this article. However, he did defend his reputation in an April 2002 Wall Street Journal article, telling the newspaper that he had a "track record of integrity and honesty."
Savage has also been targeted by the AFL-CIO as part of the union's effort to remove former Enron board members from current corporate boards.
"In light of his unexplained role on Enron's board ... we believe Mr. Savage is unfit to serve as a Lockheed Martin director," said AFL-CIO Secretary Treasurer Richard Trumka in an April 9 statement. Trumka was opposing Savage's re-election to the defense contractor's board of directors.
Savage was re-elected by Lockheed Martin shareholders on April 24, despite the AFL-CIO's opposition.
See Earlier Story:
Enron-Linked Bush Official Named in Labor Dept Lawsuit (July 17, 2003)
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