Dick Cheney, the US vice-president, spoke
to Indian government officials last June in an effort to help Enron recoup
large debts on an investment in an Indian power plant, the White House
said on Friday.
Ari Fleischer, spokesman for President George W. Bush, said Mr Cheney
raised the issue of the plant in Dabhol because of US taxpayer exposure
to losses in the investment. The project had been insured by the Overseas
Private Investment Corporation (OPIC), a taxpayer-funded government agency
that provides political risk insurance to American companies investing
in developing countries.
"The United States taxpayers have an exposure to risk and loss through
OPIC," Mr Fleischer said. "It's not uncommon for [companies]
to have exposures which do require contacts between American officials
and government officials in other countries to minimise those risks to
taxpayers."
The discussions occurred on June 27 when Mr Cheney raised the subject
with Indian opposition leader Sonia Gandhi, according to e-mails obtained
by the New York Daily News. Two other e-mails indicate Mr Bush was also
to raise the subject with Atal Bihari Vajpayee, but the plans were scrapped,
the Daily News reported.
Last month, Enron and its fellow US investors in the plant, General Electric
and Bechtel, sought to recoup roughly $200m of their investment in the
plant by filing a claim with OPIC. They argued the Indian government expropriated
the plant after Enron invested more than $1bn in the $2.9bn project.
Enron pulled out of the project after the Maharashtra State Electricity
Board in western India ceased drawing power from the plant in May, saying
it could not afford the electricity tariff, and stopped payment of bills.
Maharashtra had agreed to be the sole buyer of electricity from the plant.
Mary Matalin, a spokeswoman for Mr Cheney, told the Daily News that Enron
had not asked the vice-president to raise the issue, saying he asked Ms
Gandhi about the status of the plant because the item was including in
briefing papers. She said Mr Cheney did not remember the conversation.
In a separate development, leading accounting firms gave a cautious welcome
to the Securities and Exchange Commission's proposals for stricter regulation
of breaches of professional ethics that fell short of criminality.
"We think that the proposals are leading in the right direction,"
Ernst & Young said in a statement. "They should serve to strengthen
the profession's quality monitoring and disciplinary processes in ways
pretty much unprecedented in the profession's 100 year history."
KPMG, which was one of three Big Five firms that fought hard against the
SEC's plans to tighten auditor independence rules in 2000, also said it
supported "the aims of the proposal".
Accounting professionals said they are encouraged Mr Pitt said nothing
about alleged conflicts of interest involved in doing consulting work
for audit clients. Leading firms attacked Arthur Levitt, Mr Pitt's predecessor,
for his insistence that firms' desires to gain and retain lucrative consulting
contracts risked jeopardising the independence of audits.
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