Enron Sought Lenient Treatment From US Marine Administration

Washington, May 30: | Updated: May 31 2002, 05:30am hrs
Facing possible default on US-backed loan guarantees, Enron Corp repeatedly sought lenient treatment from the Maritime Administration after a project it helped finance in the Dominican Republic ran into financial trouble.

The US Maritime Administration (MARAD), which is part of the transportation department, provided a total of $173 million in loan guarantees to Enron affiliates for power projects in the Dominican Republic, Nicaragua and Guatemala between 1996 and 2000.

In a letter to the Senate Finance Committee, which is investigating Enrons collapse, acting deputy Maritime Administrator Bruce Carlton said all three projects were in technical default because of the bankruptcy filing.

While some principal has been paid off, he estimated the administrations current liabilities at $135 million.

Enron, a major financial backer of President George W Bushs campaigns, was the worlds biggest energy trader before it collapsed amid revelations of losses from off-the-books partnerships.

In his letter, dated May 22, Mr Carlton said the power projects in Nicaragua and Guatemala appear to be in good financial health from a debt perspective.

In contrast, Mr Carlton said the project in the Dominican Republic has been marred by significant operational, profitability and debt service problems.

Approved in 1996, the Maritime Administration provided $50million in loan guarantees to Smith Enron, an affiliate of Enron, to build barge-mounted power plants near Puerto Plata in the Dominican Republic. The total cost of the project, including shore-side facilities, was $204 million.

But Mr Carlton said financial difficulties soon arose, Chief among them power plant defects and the unreliable payment history of the government-owned utility in the Dominican Republic.

In turn, these circumstances led to near constant surveillance by the creditors (including MARAD) and to frequent requests from Enron that MARAD grant it lenient treatment by delaying action in the event of a payment default, Mr Carlton told the finance committee.

MARAD has uniformly and firmly rejected these requests, Mr Carlton added.

Enron attorneys were not immediately available forcomment. The finance committee is investigating Enrons financial dealings with the Maritime Administration as well as other US government lending agencies, including the Export-Import Bank and the Overseas Private Investment Corporation.