FT: AES Colluded with Enron to Rig Auction

WASHINGTON -- U.S. energy group AES and Enron Corp. colluded to rig the auction for the largest electric distribution company in Latin America, a Financial Times investigation has found.

In April 1998 Enron and the Light consortium, of which AES was a shareholder, were among three bidders for Brazilian group Eletropaulo Metropolitana. Hours before the auction, AES and Enron hammered out a deal in which Enron agreed not to bid for the utility, which was being privatized by the Sao Paulo government, the Times reported.

In return, AES -- which claimed to be acting on behalf of Light -- guaranteed Enron lucrative contracts to supply gas to a power plant AES and Enron would build together to generate electricity for Eletropaulo.

The Sao Paulo government received only the minimum bid, $1.78 billion, for the utility. It had been advised that Eletropaulo could fetch several hundred million dollars more.

AES has launched an internal investigation, the Times reported.

-- NYSSCPA.org News Staff

Posted on 05/21/03