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The Republic, in Kutch Climb every crane The School Is The      Insult I cannot see the dignity Careful what you close

You keep the company you keep

The CEO resigns. A vice-chairman or some such shoots himself. A major consulting firm is badly tainted for its role in whitewashing misdeeds -- or maybe we can simply call it cooking the books -- to the point that the consulting firm is losing business. A state governor and the chief justice of its supreme court are hopping about trying to explain dubious appointments and obvious bribes. That chief justice even argues that the true impropriety would be to return the money he took; which surely must qualify as the very pinnacle of creative illogic. The questions reach out to touch not only the president and vice-president of the country - the White House even faces a lawsuit from the US's own General Accounting Office -- they also cross an ocean to dog a prime minister of another country.

It's Enron, of course, going belly-up in spectacular fashion. Who could have predicted such a swift and complete disintegration even six months ago? One month ago?

The Times of India front-pages a photograph of a former Enron employee in Houston and captions it with a gloating 'Weren't You Warned of the Company You Keep?' (get it? 'Company'? Wink-wink, nudge-nudge, heh-heh and all that?).

Fine, let's all snicker at the red-haired babe from Texas. But what about the men right here in India, who kept company very consciously with this company?

Yes, if it is threatening disgrace for some prominent names on that other side of the world -- Blair, Bush and Cheney among them -- that hardly means prominent Enron-touched names here in India are facing anything similar. In fact, they are facing nothing at all, these men who who saddled us with a far-too-expensive, far-too-shady deal with this far-too-slippery firm.

Men who carry names like Pawar, Munde, Joshi, Thackeray, Advani, and more.

Indeed, nobody is asking any questions of them today. No, they all continue with their political careers as if nothing had happened, as if they had not even heard the word Enron.

And as always, the rest of us -- those who revere these men leading the way -- are left holding the barf-bag. Already, we are paying electricity bills that have inflated speedily since Enron's Dabhol Power Company plant began supplying its expensive power. And now we have to figure out what to do with that plant on the Konkan coast, gone belly-up as well.

Still, as we do that, maybe we can also ask some questions -- much as a certain central minister by name Shourie taught us to do when he edited the The Indian Express two decades ago. So, out of many that come to mind, here are five questions I chose pretty much at random.

1. As early as September 1992, the then chairman of the Maharashtra State Electricity Board wrote to the Government of India about the possibility of Enron coming to India. He observed that "public and judicial scrutiny of business policy and decisions as per the [Companies] Act will not be acceptable by a company like DPC."

   Question: Why was this company that wanted to work in India, but did not think it wanted to follow Indian law, allowed into India in the first place? And given this attitude right from the start, why did Sharad Pawar's government in Maharashtra sign a power purchase agreement (PPA) with Enron, thus allowing it to begin building its plant?

2. Running for election to the Maharashtra assembly in early 1995, Gopinath Munde made Pawar's Enron deal a major plank in his and his BJP-Shiv Sena alliance's campaign. He visited the Enron plant site during that election and famously shrieked: "[We will] throw the project into the Arabian Sea. I promise you that I am not going to remain in the background of this fight against Enron, but will be fighting along with you till the time Enron is removed from this land."

   He won the election, and his Shiv Sena-BJP alliance formed the government, installing Munde as deputy chief minister. Within weeks, they repudiated the PPA with Enron. But even before that year came to a close, the alliance government had handed a "renegotiated" PPA to Enron. Among other things, that PPA allowed DPC to go ahead with phase II of the project where Pawar's PPA had not. Thus the Sena-BJP alliance committed Maharashtra to the purchase of even more expensive power -- phase II was to generate twice the amount of electricity that phase I did -- than Pawar's PPA had.

   Question: Why did Munde, far from throwing Enron into the Arabian Sea, allow it to actually inflate itself three-fold?

3. When DPC began supplying power, there was much outrage at the price it was charging. From between Rs 3 and Rs 4.25 a unit in mid-1999 (The Hindustan Times, July 8, 1999) -- already high -- it rose to Rs 7.80 a unit by the end of 2000 [see for example Sucheta Dalal's column in The Indian Express, December 3, 2000). This, at a time when Tata's plants had power available for Rs 2.20 a unit. (Various news reports in late 2000 commented on this discrepancy -- see my earlier column Hungry for Power on December 6 for details).

   This situation had been foreseen. In September 1996, the Pune-based NGO Prayas did a detailed analysis of the project and concluded that the most "likely" scenario was that 'the tariff [for DPC power would start] at Rs 3.45 at the [plant]. According to the chief minister [Manohar Joshi of the Shiv Sena], the end user has to pay about double the [plant] tariff'.

   By my calculations, double Rs 3.45 is Rs 6.90. DPC power was actually selling at nearly a whole rupee more than that by the end of 2000.

   Question: What persuaded Chief Minister Manohar Joshi of the Shiv Sena to agree to a deal that forces Maharashtrian sons-of-the-soil to pay over three times more than they need to for electricity?

4. That renegotiation. On November 3, 1995, Enron's Rebecca Mark visited the Shiv Sena's Bal Thackeray in Bombay to discuss the stalled Enron project. They must have had an electrifying conversation indeed, because five days later, the Government of Maharashtra had constituted a "renegotiation committee" (RC). Eleven days later, it had "renegotiated" the PPA.

   The RC claimed that the DPC power would be Rs 2.22 a unit in 2000 and would go up to Rs 2.32 a unit in 2019 (Table 3, RC report). One assumption it made to arrive at these figures was that the US dollar was worth Rs 32 and would remain so for the next 20 years. (This was intrinsic to the figures because the price of DPC power is tied to the dollar, not to the rupee). Not only was the dollar already at about Rs 35 when the committee was "renegotiating", it is now nearing Rs 50. Which is one reason DPC power was at Rs 7.80 a unit -- not Rs 2.22 -- in 2000.

   Asked, in the light of all this, about the Sena's "anti-Enron tirade" of 1995, Thackeray shot back (The Times of India, August 3, 1999): "Why do you want to dig up the past?"

   Question: Whether it's digging up the past or not, just what did Rebecca Mark say in November 1995 that was so persuasive that Thackeray and his remote-controlled state government agreed to this absurd contract?

5. In July 1995, after the Shiv Sena-BJP government decided to terminate the Pawar government's PPA with Enron, L K Advani issued a congratulatory statement. It was, he wrote, "the first step against the prevailing culture of corruption in high places." What's more, "the entire country feels proud that the Maharashtra Government firmly stood up to arm-twisting and pressurising ... [It] has made it clear [that] it has no objection to foreign investment [but] it is not prepared to suffer any abridgement of the country's economic sovereignty." (Quoted in Abhay Mehta, "Power Play".)

   Question: Pride in July 1995 is one thing. But how did you feel only four months later, Mr Advani, when that very same Sena-BJP Maharashtra government "renegotiated" an even more absurd PPA? What did you have to say then, Mr Advani, about "the prevailing culture of corruption in high places" and the "abridgement of the country's economic sovereignty"? How do you feel today, Mr Advani?

   For that matter, how do you feel today, Mr Shourie?

   Dilip D'Souza