Raghu Dhar of Zee TV speaks to CBS News Correspondent Bob Simon for a report that reveals how Enron – with the help of two U.S. administrations – pushed for and built the plant, even though it would quadruple Indian electricity bills while guaranteeing big profits at no risk to Enron. The report will air Sunday on 60 Minutes at 7 p.m. ET/PT
"Yes, of course [the job offer was to buy silence]," says Dhar, whose criticisms included pointing out that the deal called for Enron to be paid for all the power produced, whether or not it was needed or used. "These are the kinds of things which raised our eyebrows…Absolute arrogance. It was something I had not seen American companies do abroad, really," he says.
The plant would run on liquefied natural gas shipped by tanker from the Middle East, a prospect many considered odd because India has lots of coal, a much cheaper and common fuel it has traditionally used to generate electricity. It turns out Enron was going to buy the natural gas from one of its own subsidiaries. Moreover, the central Indian government would assume essentially all risks in the venture, assuring Enron a 25 percent return on its investment.
Enron has always maintained that the power plant would be beneficial to India.
The World Bank refused to invest in the project and issued a report, warning that the plant and the electricity were much too expensive, but the U.S. government backed Enron's plan.
According to Pradyumna Kaul, a management consultant evaluating the Enron project for the Indian government, "the Indian government in Delhi were told that they would have no alternative but to sign [Enron's deal]. That was the only condition for the U.S. government to continue to support India on the foreign exchange financial front," says Kaul.
When the project was halted by a local politician who was elected partly by promising to stop its construction, the American ambassador to India under President Clinton, Frank Wisner, came to Enron's aid. Wisner tells Simon the project was in the best interests of India's state and central governments.
Kaul says Wisner put pressure on government officials. "He would come up and explain that if India does not go along with Enron's proposal, then foreign investment and capital flows into the country would dry up. He said it not once, [but] a number of times." When asked if Wisner was just doing his job to get business for American companies, Kaul said there were other American companies doing business in India, "But the only company and the only project which Wisner supported was Enron," he says.
Wisner joined Enron as a director of one of its subsidiaries after leaving government service, a move he said was common. "There have been hundreds of government officials…who have joined private companies after leaving their offices," he tells Simon.
The project went through, but last year, the plant shut down as India's state electric company could no longer pay Enron's bills. Enron Chairman Kenneth Lay demanded a billion-dollar bailout from the central government in India, even getting the Bush administration to set up an Enron task force to push the issue.
Those efforts bogged down after the Sept.11 terrorist attacks, the war in Afghanistan and the financial collapse of Enron, but there is still pressure on India. The current ambassador to India, Robert Blackwill, publicly mentioned the debt two months ago.
Says Dhar, "To us, at the end of the day, it was one of the worst sides of American corporate culture we saw. We felt sad because we expected amazing standards."