Enron Case: When Chidambaram ensured that Vajpayee Gov paid $300M to corrupt Multinationals as fine

The Life of P Chidambaram has been mired with controversies; one such case is the Dabhol Power Company case or what is dubbed as the Enron case in popular media stories.

In 1992, Enron proposed to setup 2,184 MW LNF powered plant at Dabhol, Ratnagiri. As per the contract, LNG for the project would be imported from Qatar and produced electricity will be purchased by Maharashtra government for 20 years. American companies namely Enron, GE and Bechtel were majority shareholders in the company which got ‘sovereign guarantee’ for the project by bribing ministers and government officials. The Shard Pawar led government agreed to buy electricity from the Dabhol Power plant and provide state guarantee to the project.

But in 1995, Shiv Sena BJP alliance government came to power and the project was found to be inefficient. The government refused to buy electricity from the company as the agreed rates were very high. The company took the case to court and P Chidambaram became legal advisor to Enron. But given the ‘sovereign guarantee’ given by Congress government ensured that the state has to pay for maintenance of the plant even if it does purchase power. Chidambaram was paid a ‘hefty fee’ in return to advice to the company which was fighting against the government. Enron was a controversial company and had an abysmal global reputation for corruption. The company was to eventually go bankrupt. But Chidambaram continued to advice the company in exchange of a fat wad of money.

As per Vanderbilt Journal of Transnational Law, “there were allegations that India’s Commerce Minister P. Chidambaram had “strongly supported Enron’s Dabhol power project in public forums in India and abroad without disclosing the fact that he had given a paid legal opinion to Enron,” and that “Enron had paid Mr. Chidambaram a ‘substantial fee’ when he was practicing law in between holding two Cabinet posts.”

Enron took the case to International Court of Justice in 2002 when Atal Bihari Vajpayee was in power and the government appointed Harish Salve as Indian representative.

But UPA government came to power in 2004 and Chidambaram was appointed as the Finance minister. Chidambaram left the case before being appointed as finance minister but a Pakistani origin lawyer named Khawar Qureshi who was to become Pakistan’s counsel in Kulbhushan Jadhav case was appointed to present Indian side at ICJ.

Qureshi was appointed in 2004 and he took less than a year to lose the case. India was made to pay millions of dollars to foreign multinationals. The government had to pay 160 million dollars to Bechtel and 145 million dollars to General Electric. These companies had bought 65 percent stake of Enron in 2004 after the company went bankrupt.

Salve who represented India from 2002-2004 said, “I thought we had a pretty good defence. But again, I am talking about 2002-04. So, I thought it was a pretty good case. But, memory fades and then there was change of lawyer, then I have absolutely no idea of what happened.”

P Chidambaram is in the first finance minister of India to face probe in financial irregularity by any investigation agencies. He certainly comes across as a disgrace to the sanctity to the post of finance minister. There could not be anything worse than a country’s finance minister to be involved in a finance related crime. He is also involved in many other illegalities including changing the affidavit in the Ishrat Jahan encounter, creating the myth of saffron terror, Aircel Maxis scam, and 2G scam.