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Enron and Shell in Bolivia : Corruption Case

In early May 2002, the Washington Post carried a report of how Enron won USA government support to build a 390-mile pipeline from Bolivia to Brazil through the Chiquitano Dry Tropical Forest - South America's largest remaining undeveloped dry tropical forest, a region rich with endangered wildlife and plants - in exchange for flexing its political muscle in Congress.

"It shouldn't have been done," said Mike Colby, a former Treasury Department senior environmental adviser and now a corporate consultant. "The forest had already been declared by the World Bank . . . one of the two most valuable forests in Latin America. And OPIC chose to ignore that. They were so driven to reach these unsupportable conclusions because they wanted to finance the project at all costs."

While Enron was seeking billions in OPIC loans and insurance, the company lobbied Congress on behalf of OPIC to save it from extinction.

According to the Washington Post report, Enron needed OPIC's backing for Cuiab� because no commercial bank would finance it. Germany offered $165 million in loans, but the support was contingent on OPIC's pledge.

"We had to have that OPIC board vote before we could actually start the construction," said Enron Vice President John Hardy Jr..

Enron also included Cuiab� in a transaction to inflate company revenue and hide debts and losses and enrich several top Enron executives. Enron bookkeepers recorded a $65 million profit from the project before the pipeline had delivered any gas. But the real figures show that Cuiab� came in three years late and more than 50 percent over budget, increasing from $475 million to $750 million.

OPIC is now reviewing its handling of Cuiab� and has asked the U.S. Justice Department to examine all of its dealings with Enron for possible fraud. Separately, OPIC's new president, Peter Watson, wants to overhaul how the agency decides which forests are protected under agency rules, spokesman Larry Spinelli said.

In the end Enron actually lost its loan money after missing key funding deadlines. Whilst OPIC did not pay in the end, it is clear that the project would not have gone ahead without its pledge of support.

The following lists all references contained in our database that are relevant to this briefing
Washington Post [5/6/2002] 'Enron Pipeline Leaves Scar on South America: Lobbying, U.S. Loans Put Project on Damaging Path' by James V. Grimaldi [Source ID = 6666]

MARKETPLACE [12/20/2002] 'Christmas wish to become Enron' by NADIA MARTINEZ [Source ID = 8875]

Latin Trade [] 'Enron's Pipeline Pain' by Jimmy Langman: [Source ID = 8877]

The Baltimore Sun [6/13/2002] 'Bankrolling Enron's global exploitation' by Nadia Martinez and Mark Engler: [Source ID = 8878]

United Press International [4/4/2002] 'Enron deals under scrutiny in Bolivia' by GONZALO BAEZA: [Source ID = 8879]

Inter Press Service [12/12/2002] 'ENRON'S FLAMES SINGE EXPORT CREDIT AGENCIES' by Danielle Knight: [Source ID = 8880]

Environment News Service [3/28/2000] 'NGOS: NO FUNDS TO LATIN AMERICA FOR DESTRUCTIVE DEVELOPMENT' : [Source ID = 8881]

Amazon Watch [] 'Bolivia Enron / Shell Cuiaba Gas Pipeline' : [Source ID = 8916]


UNICORN is a Global Unions Anti-corruption Network. It is supported by the international trade union bodies: the TUAC (Trade Union Advisory Committee to the OECD); Public Services International (PSI); and the International Confederation of Free Trade Unions (ICFTU).

UNICORN is financed by the Foundation Open Society Institute