IT was the biggest piece of inward investment India had ever seen, a $2.9 billion bonanza, but for the Texas-based Enron it was also one of the reasons why the multinational corporation has just become one of the biggest ever corporate losses in the history of capitalism.
One of the authors of that collapse is best-selling novelist Arundhati Roy whose Booker Prize winner, The God Of Small Things, catapulted her into international literary stardom. Not that her head has been turned by fame. When Hollywood came looking to film her work she told her agent to spin out the negotiations, make them grovel and then turn them down.
In her book, the Hollywood agents are in the same league as multinationals such as Enron, which wanted to turn her native India into one big franchise. 'Is globalization about the eradication of world poverty or is it a mutant variety of colonialism, remote controlled and digitally operated?' she asked in the wake of Enron's recent fall from financial grace.
Roy is an unlikely rebel. A drop-out architectural student and a one-time aerobics instructor, she comes from a middle-class family in the southern state of Kerala. She enjoys a global reputation for her fiction yet she is now a committed activist who has campaigned against nuclear testing, the war in Afghanistan and the construction of the controversial Sardar Sarovar dam in the Narmada valley in central India.
And in taking on Enron, whose Dabhol Power Corporation produced one of the biggest corruption scandals in Indian history, she showed that she was not afraid of standing up to the might of international big business backed by international power politics.
The story of Enron's involvement in India is one of double-dealing, corruption, violence and violation of human rights. It began in 1993 when the company signed a deal to provide much-needed electricity in a state that was desperate for power to fuel its new high-tech industries and to propel the country on its new free-market economy.
Even though the World Bank said that the project was too expensive and that other forms of power would be cheaper, Enron bulldoze d ahead. There were no competitive tenders, politicians were bought off with bribes estimated to run to $20 million and local police and thugs were hired to terrorize the opposition into silence. By 1997 Enron had been listed by the New York-based Human Rights Watch organization as guilty of being 'complicit in human rights violations' in the state of Maharashtra.
The scandal attracted the attention of Roy, who was already campaigning against the construction of dams on the Narmada river -- moves that would have displaced 400,000 people. When Roy agreed to head the protest movements, she was accused of inciting violence and tried at the Supreme Court -- an action that she countered by writing her own affidavit and publishing it in a mass-circulation magazine.
From the dams it was a short stroll to Enron, which by 1999 was deeply in trouble. That year DBC began supplying electricity to Maharashtra at a price pegged to world oil prices, the state could not afford the $1.4bn bill -- seven times higher than other electricity costs in India -- and stopped paying it. The cost was, after all, equivalent to the state's annual expenditure on education.
As the stand-off continued, the US put pressure on India to settle the problem -- the ambassador Frank Wisner went on to become a director of Enron -- but the state government of Maharashtra dug in and refused to cough up. The workers downed tools, Enron was left waiting for $50m and gave notice that it would pull out of India unless it was paid.
For Roy, India's leading critic of globalization and arch-enemy of Enron, this was all too typical of a company that had come to India not to help people get cheaper electricity but to line its own pockets. It was corporate imperialism at its worst.
Roy went on to write Power Politics, a coruscating essay about Enron's involvement in Indian politics. The firm's office was in a gleaming high-tech building in Bombay within reach of some of the city's worst slums, and that seemed to exemplify their attitudes. The Indians were left with little option but to honor the deal on pain of Enron pulling out and leaving millions of people destitute. For Roy this was the classical locus of globalization -- 'a process of barbaric dispossession which has few parallels in history'.
Last June, DBC's plant closed down, work halted on the second phase of the development and all the employees were sacked. With Enron's collapse, DBC is likely to be sold off at a bargain basement price, the most likely purchaser being the Indian-based Tata Power.
On Friday, the White House defended US encouragement for the Enron project in India, and vice-president Dick Cheney's support for Enron's attempts to collect a $64m debt from the country. It insisted that this had nothing to do with Enron contributions to the Bush campaign.
©2001 smg sunday newspapers ltd