Gaza plant typical of Enron's risky business

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"The name (bin Laden) The project is raised a red flag." 90 percent complete but still in jeopardy. Larry Spinelli Spokesman, Overseas Private BY JAMES V. GRIMALDI Investment Corp.

The Washington Post Enron Corp.'s foray into the seas Private Investment Corp., Middle East three years ago was but officials there became contypically brazen and risky. cerned about one of the PalesThe Houston-based global tine Electric Co.'s key investors, energy company wanted to build Mohammed Imran Sheik a 136-megawatt power plant in Bamieh, a prominent investor in and help the the Gaza Strip Saudi Binladin Group Palestinian Authority provide a Bamieh is a major shareholder stable and reliable source of in the Arab Palestinian Investelectricity for 136,000 households ment Co., one of the investors for the next decade. with Enron in the power plant.

That alone might have given "The name (bin Laden) raised pause to investors worried about a red flag," OPIC spokesman political instability, but the proLarry Spinelli said. jeet hit a further snag when U.S officials learned that a ker investor in the plant had links to Project's viability the Saudi Binladin Group, the The State Department, the construction Saudi Arabian CIA, the Treasury Department company founded by the father and other government agencies of the international terrorist, assured OPIC that U.S. money Osama bin Laden. tor the project would not go to The story behind the Gaza Osama bin Laden's al-Qaida ter power plant reflects Enron's rorist organization.

Bin Laden remarkable ability to overcome has been disowned by his familv political, diplomatic and finanin Saudi Arabia and the Saudi cial hurdles.

It also shows the Binladin Group denies any conconsequences of the company's nection with the terrorist. willingness to push foreign proWith Palestinian leader Yassjects that looked good on paper Enron er Arafat watching, but carried extraordinary risk. signed the deal with the Palestinian Energy Authority and went to work on the complicated Plant sits incomplete financing of what was to be the A year and a half after it was largest foreign investment in supposed to begin operation, Gaza and the West Bank. construction of the $140 million "We are confident of the propower plant just south of Gaza ject's success," said Joseph SutCity is stalled, yet another of ton, then chairman of Enron InEnron's numerous international ternational. gambles that have run out of Many at Enron downplayed luck.

Construction was virtually the risks. Dan Castagnola, chief halted in late 2000 when violence financial officer at Enron's Midflared, after conservative Israeli leader Ariel Sharon visited the dle East division, told Project Finance magazine in the fall of Temple Mount in Jerusalem's 2000: "Risk is a function of fundaOld City. Some work has since mentals.

Just like any complex resumed, but there is no target infrastructure project there is date for the plant to open. some element of risk. That's It is unclear what role the unavoidable.

But doing a project international projects played in in Gaza is no more risky than the company's decision to hide doing it elsewhere." debts in off-the-books transacWithin weeks of those comtions, a strategy that forced the construction ments, Enron's company to declare billions of dollars in losses and seek bankcompany, ABB, had pulled out of the project when violence eruptruptcy protection in December. ed after the Sharon visit.

Former executives said Enron "The contractor indicated they often ignored the risks in foreign were concerned about having projects and instead focused on their people in the area," Enron the potential for high returns in spokesman John Ambler said. part because their bonuses were ased on the anticipated rev The power plant, which is 90 percent complete, could end up enue over the life of the projects. being sold in the Enron bankrupt For the Clinton administracy.

Scott Stupay, president of tion, the power plant was a risk International Capital Advisors in worth taking.

The power plant McLean, Va., said he would conwould give autonomy to the sider investing in the project if Palestinian Authority, provide political troubles subside. desperately needed electricity to the West Bank and Gaza, and With energy demands expectfuel economic growth in the ed to escalate sharply in the region.

The region now relies on region, Stupay and others still Israel for power, and blackouts think the project is viable. "It hasn't gotten to the point are frequent in times of turmoil. Key to the deal was political where we have abandoned all risk insurance from the Over. hope," Enron's Ambler said.

Cite this item

"Gaza plant typical of Enron's risky business," Statesman Journal, 3 March 2002. Covering Palestine archive, CP-2002-036. https://coveringpalestine.org/archive/cp-2002-036