MOZAMBIQUE-FINANCE: Enron may ask World Bank Help

By Pratap Chatterjee Reprint | | Print |

Pratap Chatterjee

WASHINGTON, Nov 12 1995 (IPS) - A World Bank affiliate is considering lending money to Enron, a Texas-based energy multinational, for a 500-million-dollar deal in Mozambique that has come under fire because of alleged political pressure from top U.S. officials.

The deal is an example of Washington’s high-powered commercial diplomacy — a major feature of the foreign policy of President Bill Clinton.

Sources told IPS that Enron expects to sign a deal Monday to develop the Pande gas field, in southern Mozambique, which has an estimated two trillion cubic feet of natural gas reserves. Enron beat Sasol, the South African state petroleum processing company, for the bid.

An official of the International Finance Corporation — the Bank affiliate which supports private sector activities in developing countries — told IPS that Enron has applied for a loan to finance the deal. The amount of money requested was not disclosed.

Last week, the Houston Chronicle carried a detailed report alleging that Anthony Lake, President Bill Clinton’s National Security Adviser, the U.S. Agency for International Development (USAID), and the U.S. Embassy in Maputo, have pressed the Mozambican government to sign with Enron.

This is not the first time Enron has been in the spotlight for using political pressure to win contracts. In August, Enron, lost a 2.8-billion-dollar contract with the Indian state government to build a power plant near Bombay. Senior U.S. government officials played a key role in putting the deal together.

Earlier this year, Indian officials alleged corruption in the clinching of the deal. They also said that the price of the plant was too high. Last week, however, government officials and Enron agreed to renegotiate the deal.

Argentinian and Kuwaiti offficials have also accused the company in the past of using political pressure to land contracts. Three sons of former President George Bush were allegedly involved in helping Enron in those two countries.

Enron also has well-connected former government figures working directly for the company. James Baker and Robert Mosbacher, former secretaries of state and commerce, respectively, under Bush, advise the company, as does retired Gen. Thomas Kelly, former chief of operations of the U.S. effort during the 1990 Gulf War.

Separately, Filipino officials have accused Enron of overcharging on contracts, although a 1993 investigation cleared the company of liability.

In Mozambique, Enron appears to have decided to ignore the allegations of political arm-twisting. But at least one government official has decided to speak out.

“There were outright threats to withhold development funds if we didn’t sign, and sign soon,” John Kachamila, Mozambique’s natural resources minister and the leader in the negotiations, told the Chronicle.

“Their diplomats, especially Mike McKinley (deputy chief of the U.S. Embassy), pressured me to sign a deal that was not good for Mozambique. He was not a neutral diplomat. It was as if he was working for Enron,” said Kachamila.

“We got calls from American senators threatening us with this and that if we didn’t sign. Anthony Lake even called to tell us to sign,” he added.

Dennis Jett, U.S. ambassador to Mozambique, did not deny that he has helped Enron. “When asked about his time spent on helping to bring off the Enron deal, Jett simply pointed to a 2-foot-high stack of files on his desk,” according to John Fleming, the Chronicle reporter.

“Jett said he spent endless hours talking to Mozambican officials on Enron’s behalf and taking Enron representatives for meetings with the prime minister and other top ministers,” says Fleming.

Mozambique officials say that they faced an uphill battle against the U.S. embassy because the country is very dependent on foreign aid, and Washington is its biggest bilateral donor.

Some 1.1 billion dollars of the southern African country’s 1.5 billion dollar budget comes from outside the country, including 40 million dollars from USAID.

“Enron was forever playing games with us and the embassy forever threatening to withdraw aid. Everyone was saying that we would not sign the deal because I wanted a percentage, when all I wanted was a better deal for the state,” said Kachamila.

“So Enron caved in to our demands, especially after the World Bank commissioned a study that found many of our concerns were warranted. Now let me ask you: Who is corrupt here? To me, it is Enron for trying to shove this rotten deal down our throats,” he said.

“This isn’t a business negotiation anymore: this has turned into a political issue,” says Carlos Cardoso, the editor of Mozambique’s influential daily, MediaFax.

The political fall-out from Enron’s win over Sasol may prove fatal to the deal because the potential buyers for the gas are South African companies who may shun the U.S. company.

“We have nothing to say about the deal. Yes, we are negotiating a deal in Mozambique, but I cannot tell you any details. I do expect to be able to give you more information early next week though,” said Enron spokeswoman Deborah Witmer.