Enron-Linked Bush Official Named in Labor Dept Lawsuit
July 7, 2008 - 8:29 PM
(CNSNews.com) - A prominent Democratic donor currently serving as the Bush administration's manager of a $350 million development project in Africa is one of several former Enron officials being sued by the U.S. Department of Labor for "failing to protect [Enron] workers."
Frank Savage, the managing general partner of the federal Overseas Private Investment Corporation's (OPIC) Africa Millennium Fund, has also failed to raise the required $122.5 million from the private sector in order to make the fund operational.
The Bush administration has extended Savage's deadline on the funding several times since he took over the project in 2001. However, one prominent conservative told CNSNews.com that Savage's failure was "a terrible disappointment" for President Bush during his recent trip to Africa.
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.
Savage's latest setback happened on June 26, when he was named as a defendant in a lawsuit filed by the U.S. Department of Labor for his role as a former Enron director.
"Today, the Department of Labor is filing suit in federal district court in Houston, Texas, 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 (Employ Retirement Income Security Act.)"
Savage's role in the Bush administration has raised eyebrows 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. Among the beneficiaries of Savage's contributions were presidential candidate Al Gore and New York senators Hillary Clinton and Charles Schumer.
But it's Savage's past as an Enron board member that has raised the most controversy.
Journalist Joshua Green, who also edits the 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 called 'a Bush hater'
The recent lawsuit by the Labor Department is compounding the trouble for Savage, who is already targeted by GOP conservatives for his extensive Democratic Party ties and by labor unions because of his connections to Enron.
Niger Innis of the Congress of Racial Equality (CORE), a conservative African American civil rights group, called Savage, who is also African American, "a Bush hater." Innis said Savage's contract should not be renewed by OPIC if he fails to raise the requisite funds by his latest extended deadline of Sept. 30. Savage was chosen to head the Africa Millennium Fund by an OPIC board still dominated by Clinton appointees in August 2001.
"When the extension in September is up, they should not give him another extension. I am suggesting that the president and [senior advisor] Karl Rove take the Africa Millennium Fund as seriously as they do judicial appointments," Innis told CNSNews.com.
The decision to terminate Savage should be easier now that he's been named in the lawsuit filed by the Labor Department, Innis said.
"To find out that [Savage] is being sued by another branch of the administration, the Labor Department, for his misdoings in Enron means that the Bush administration is asking for a black eye, begging for a black eye, a self-inflicted black eye," Innis explained.
Savage defends personal track record
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."
OPIC spokesman Tim Harwood confirmed that Savage's most recent fundraising deadline would expire on Sept. 30.
Asked if the Millennium Fund was close to reaching its financial goals, Harwood told CNSNews.com: "They are actively trying to raise funds. I don't have any figures for you, but they are trying to raise monies for the fund."
Harwood refused to answer questions about the Department of Labor's lawsuit against Enron and Savage.
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.
"We call on all Lockheed Martin shareholders to stand up for a truly independent and responsible board and withhold their votes from Mr. Savage," Trumka said.
However, Savage was re-elected by Lockheed Martin shareholders on April 24 despite the lobbying of the AFL-CIO and the recommendation of the Institutional Shareholder Service, Inc., an independent proxy advisory board, to remove him.
Noting that 37 percent of the shareholders either opposed Savage or withheld their vote, the AFL-CIO declared a partial victory.
"I don't think you can find an example of a public company (Lockheed Martin) where shareholders have withheld such a large percent from a director," Michael Garland of the AFL-CIO's Office of Investment told the Daily Record of Baltimore, Md.
Extension was a 'regular, routine thing'
Savage's Enron ties are the reason for his failure to raise the money for the Africa Millennium Fund, according to a Bush administration source who spoke on the condition of anonymity.
"Savage has been virtually shut out by American investors because of the Enron fallout. No American entity has agreed to invest so far," according to the Bush administration source.
Another OPIC spokesman, Larry Spinelli, last year defended the first fundraising extension granted to Savage. Spinelli cited a weak economy for the failure to raise money for the Africa Millennium Fund and called the extension "a very regular, routine thing" in order to give Savage "some extra time to raise money."
However, according to the Bush administration official speaking under condition of anonymity, "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 source also mentioned that the Congressional Black Caucus has rallied to Savage's defense, threatening to pull its support for OPIC's congressional reauthorization if Savage was not allowed to stay on as manager of the fund.
Several calls to the Congressional Black Caucus for comment were not returned.
'Playing footsy' with Jesse Jackson?
Innis believes the Bush administration should rethink some aspects of its policies involving Africa.
The administration's affiliation with Savage is part of its policy of "relying on folks like [former Atlanta Democratic mayor] Andrew Young to run Africa policy," Innis said.
"They have a disproportionate amount of power in the Bush administration. Guys like Frank Savage have been playing footsy with Jesse Jackson vis-a-vis Africa for years. It's time for a new paradigm, a new policy shift," he added.
Innis also believes Savage's failure to raise the money for the Millennium Fund dampened President Bush's recent multi-nation trip to Africa.
"It was a terrible disappointment. It would have been powerful for the president to say he had the Millennium Fund underwritten by American investors during his trip. I think that would have been extraordinarily powerful and would have added to a positive and informative message," Innis said.
See Earlier Story:
Bush Official With Enron Ties Flops in Africa Funding Project (Oct. 21, 2002)
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