Charles R. Smith
Tuesday, Aug. 13, 2002

Energy CEO Invited to 2001 Space Conference

Much has been written about Enron's supposed connections to the Bush administration. Instead of engaging in speculation, this reporter sought out the facts and I have uncovered the black gold of journalism, real documentation linking Enron to corrupt deals.

In response to a 2001 Freedom of Information request, the U.S. Commerce Department indicated that it might have as many as 10,000 pages of documentation covering its years of contact with Enron executives.

Commerce has released the first batch of these documents, dated from 2001 to 2002, covering the early months of the Bush administration.

For example, Ken Lay wrote a personal letter of thanks to Commerce Secretary Donald Evans for attending a February 2001 Business Council meeting. The letter is signed simply "Ken."

"Dear Don," wrote Lay, "Your remarks struck a real chord with our members and provided us with insightful observations about the new administration's priorities."

2001 Commerce Department Space Workshop

One such Bush priority was to get Ken Lay to speak at an event sponsored by the Commerce Department. In a Sept. 7, 2001, memo from Bruce Mehlman, assistant secretary for technology policy, Commerce Secretary Donald Evans was urged to deliver the opening remarks for a Commerce Department "space" workshop scheduled for November 2001.

At the top of the list of "potential speakers" for the space workshop is "Kenneth L. Lay, Chairman and CEO, Enron Corp." Ironically, the proposed list of speakers also includes James Cameron, "film producer/director ('Titanic,' 'Alien')."

"The workshop, titled 'Market Opportunities in Space: The Near Term Roadmap,' is intended to expand the scope of U.S. space commerce beyond the traditional realm of launch services, satellite communications, navigation, and imaging," notes Mehlman's memo to Secretary Evans.

"Potentially lucrative future markets such as supersonic package delivery, space advertising, solar power generation, and space tourism will be assessed from a DEMAND SIDE perspective, as opposed to the technology-driven supply side that has led recent commercial space ventures into financial peril (e.g., Iridium)," states the Commerce memo.

Clearly, the Commerce Department's Sept. 7 plans for a November 2001 space conference should have changed on Sept. 11.

Enron CEO Lay and Space-Based Power

Alas, the show must go on, and Commerce pressed ahead with the invite to Enron CEO Ken Lay. The department needed someone to speak on space-based power generation to the conference, and that someone was Ken Lay.

According to a Sept. 21 memo from Mike Snow to the Commerce official Paul Eckert, the selection of Ken Lay for a speaker on space-based power generation was done to meet some very unusual criteria.

"Experts in satellite solar power are not preferable," noted the memo. "A goal of the workshop is to bring unbiased business perspective to each panel."

Clearly, Ken Lay qualified as not being an expert on "satellite solar power." Just as clearly, Mr. Lay has since shown himself to not be an expert on running a major energy corporation.

Commerce Department Lost in Space

While the 2001 "space" conference with Ken Lay may not be impressive, it is an indication of exactly how important the Enron CEO was to the Commerce Department's astro-effort to waste taxpayer monies. It also illustrates how far out of touch the Commerce Department is with reality.

Space-based power generation, space tourism and supersonic package delivery are all really neat ideas – for a Star Trek convention, not a U.S. government–sponsored workshop on market opportunities in space.

Yet, overlooked in the slim Bush-Enron connections are eight solid years of documented Clinton administration contacts with the bankrupt company and its leadership – eight years that include Clinton administration advocacy for corrupt deals abroad using taxpayer monies.

Enron Linked to Indonesian Corruption

One such corrupt Enron deal pushed by the Clinton White House was an exclusive power plant project with the son of Indonesian dictator Suharto, Bambang Trihatmodjo.

Starting in 1994, Enron invested $25 million in a deal for the first natural gas–fired power plant in Pasuruan, East Java. According to Commerce Department documents, Enron's partner in the planned $525 million project was Bambang Trihatmodjo. Enron reportedly paid Suharto's son Bambang the $25 million in order to lay the groundwork for the project.

Ron Brown personally sought approval for the Enron electric power plant. According to a letter directed to the Indonesian minister for trade and industry, Brown endorsed Enron deals for two gas-fired power plants with the corrupt Suharto regime.

"Enron power, a world renowned private power developer, is in the final stages of negotiating two combined cycle, gas turbine power projects," wrote Brown in his 1995 letter.

"The first, a 500 MW plant in East Java, should begin commercial power generation by the end of 1997 if it can promptly negotiate a gas supply Memorandum of Understanding with Pertamina. The other project, a smaller plant in East Kalimantan, also awaits a gas supply agreement.

"I urge you to give full consideration to the proposals," concluded Brown to the Indonesian minister.

In October 1995, Brown wrote another letter, this time to Hartarto Sastrosurarto, Indonesia's coordinating minister for trade and industry, pressing him to conclude Enron's power plant deal.

"I would like to bring to your attention a number of projects involving American companies which seem to be stalled, including several independent power projects. These projects include the Tarahan power project, which involves Southern Electric; the gas powered projects in East Java and East Kalimantan, which involves Enron," wrote Brown.

"Your support for prompt resolution of the remaining issues associated with each of these projects would be most appreciated," concluded Brown.

Deal With Suharto's Son Falls Apart

By 1997, Enron announced the Indonesian power deal was nearly complete. According to Enron, it had signed an agreement to acquire natural gas for its 500-megawatt power plant under development in East Java, Indonesia. The 20-year supply agreement was signed with Pertamina, Indonesia's state-owned oil and gas company.

However, by the end of 1997 the Indonesian economy had collapsed and Suharto was overthrown. The Enron power project was suspended in September 1997, after the power purchase agreement had been signed and the gas contract was completed with the state-owned gas supplier, Pertamina.

The U.S. government paid off Enron, using insurance money obtained through the World Bank Multilateral Investment Guarantee Agency. Discussions on the payout took more than a year, and the amount represented compensation for Enron's $25 million preparatory work done on the project, which was canceled before construction began.

"In June of this year, MIGA paid $15 million to Enron Java Power Co. for its investment in P.T. East Java Power Corporation in Indonesia," states the 2000 official public release from the World Bank.

"The venture was one of many suspended by the presidential decree of September 20, 1997, issued in response to the country's economic crisis," noted MIGA officials.

Clinton Administration Aware of Enron Corruption

According to documents obtained from the U.S. Commerce Department, the Clinton administration was keenly aware that Suharto's son was being cut in on various U.S.-backed power deals, including Enron's gas plant. In fact, the warnings of corruption came directly from the U.S. ambassador in Jakarta.

"Java Power Company has obtained a USD 1.7 billion financing package for its 2 X 610 coal fired Paiton Swasta II power plant," states a 1996 cable from then-U.S. Ambassador Robert Barry.

"Java Power Company is 50 percent owned by Siemens Power, 35 percent Powergen PLC of the UK and 15 percent by PT Bumiperitwi Tatapradipta. The latter is a subsidiary of the Bimantara Group controlled by Bambang Trihatmodjo, President Soeharto's second son."

In 1992, Enron was one of the most popular contributors to Bill Clinton and the DNC. Enron was right next to Bill Clinton from his first days in the White House. In 1992, Enron donated $100,000 to Clinton's inauguration.

How the mighty have fallen. In 2002, Enron is in Chapter 11 status and the Department of Justice has an ongoing investigation into corrupt deals that may have cost taxpayers billions of dollars.

The liberal mass media happily joined the Democrat political agenda in an effort to paint the current administration as close to the failed energy giant. The evidence shows otherwise.

If the Department of Justice wants to start investigating Enron corruption, then I suggest they contact Bambang Trihatmodjo and Bill Clinton.

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