Enron Used World Bank to Avoid Taxes; IRS Tipped SEC in ‘99

NEW YORK -- Enron Corp. used World Bank and U.S. government agency funds to make at least $17 million in “questionable'' payments to a group of Guatemalan businessmen who helped win approval for the first power plant in Central America for what became the world's biggest energy trader, a U.S. Senate investigation found, according to Bloomberg News.

Enron disguised the payments, made from 1992 to 1995, as fuel costs to reduce the company's U.S. and Guatemalan tax liability, the Senate Finance Committee says in a 506-page report obtained by Bloomberg News.

The report shows how Enron avoided scrutiny of its overseas investments by U.S. officials and government-backed financing agencies in Washington. The Guatemala project came years before Enron went bankrupt in 2001 after admitting it hid $1.2 billion in losses through hundreds of off-the-books partnerships. Senators who commissioned the report said it illustrated that more corporate oversight is needed.

“Enron benefited from taxpayer support and multilateral organization support to extend its international reach, including the Guatemalan power project with its questionable payments,'' the report said.

The Securities and Exchange Commission failed to respond to a 1999 request by the Internal Revenue Service to investigate, the report said. Enron executives, including David Haug, Rebecca Mark and Thomas White, later named Army secretary by President George W. Bush, were eligible to get bonuses for lining up financing for projects whether they were completed or not, the report said.

-- NYSSCPA.org News Staff

Posted on 7/29/03