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The Enron Scandal - Veep Tried to Aid Enron - Key role in India debt row

New York Daily News
Published on Friday, January 18, 2002 in the New York Daily News
The Enron Scandal
Veep Tried to Aid Enron
Key role in India debt row
by Timothy J. Burger

Vice President Cheney tried to help Enron collect a $64 million
debt from a giant energy project in India, government documents
obtained by the Daily News show.
"Good news is that the veep mentioned Enron in his meeting with
[Indian opposition leader] Sonia Gandhi yesterday," a National
Security Council aide wrote in a June 28 e-mail.

Two other e-mails indicate that President Bush was to bring the
subject up with Indian Prime Minister Atal Bihari Vajpayee, but
the idea was scrapped before they met.

The documents are the latest indication that there were contacts
between the Bush administration and Enron on issues directly
related to the company's business. The White House maintains Enron
enjoyed no special favors from the White House or Cheney.

Treasury Secretary Paul O'Neill and Commerce Secretary Donald
Evans have conceded that they spoke with Enron chief Kenneth Lay
last fall about the energy giant's impending failure, but they
insist they refused to help.

The new documents, obtained under the Freedom of Information Act,
indicate Cheney took a key role in pushing the Maharashtra State
Electricity Board to make good on the huge debt claimed by Enron
for a power plant it built in Dabhol, India.

Cheney spokeswoman Mary Matalin denied yesterday that Enron
officials prodded Cheney to raise the issue with Gandhi, widow of
slain Prime Minister Rajiv Gandhi and daughter-in-law of
assassinated Prime Minister Indira Gandhi.

"This is not our issue," Matalin said. "It was in the briefing
papers, so he asked the question. The vice president didn't
remember that topic at all. I asked him directly."

White House and other top officials were interested in the Dabhol
project partly because the taxpayer-backed Overseas Private
Investment Corp. provided insurance against losses resulting from
political problems in India. Overseas could face exposure as high
as $300 million.

The $3 billion Dabhol project was started in 1992 and built amid
political wrangling in India that included allegations of bribery.
The plant eventually was completed, but it has never been used. It
involved at least 40 international finance institutions, including
Overseas, and Enron's partners included General Electric and the
Bechtel Corp.

The e-mails indicate the State and Treasury departments also were
deeply involved in making Enron's case.

The highest-level contact they verify was Cheney's June 27 meeting
with Gandhi, president of the opposition Congress Party.

Other e-mails indicate Lay was expected in Washington around that
time, but they do not say whether he was in contact with Cheney's

Lay — whom Bush used to call "Kenny Boy" — has given more than
$600,000 to support Bush's political career.

Matalin said Lay and Cheney never discussed the Indian debt or
Enron's financial condition.

The documents obtained by The News showed that the National
Security Council had given the Overseas Private Investment Corp.
high hopes that Bush would raise the issue with Vajpayee in a Nov.
9 meeting.

The investment corporation had sent the White House "talking
points on Dabhol prepared for the President's meeting with Prime
Minister Vajpayee," according to a Nov. 1 e-mail.

But a Nov. 8 e-mail, whose sender and recipient are blacked out,
warned, "President Bush cannot talk about Dabhol."

White House economic adviser Lawrence Lindsey, who was previously
paid $50,000 a year as an Enron adviser, also "was advised that he
could not discuss Dabhol."

National security adviser Condoleezza Rice, however, was still
expected to raise the issue — but did not, another e-mail says.

Copyright 2002 New York Daily News



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