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LAS AMERICAS H ere in the middle class, most of us grew up with our brains full of folksy wisdom about money. “A penny saved is a penny earned,” and “Neither a borrower nor a lender be.” Orless poeticallyif for some ill-advised reason, you have to a borrower be, you are going to have to pay back all the money you got, plus a bit more. It turns out these pithy fiscal guidelines are not strictly true. Not for rich people who borrow from the World Bank and the Inter-American make poor people pay the money back, plus a lot more, to other rich people like themselves. The World Bank and the IDBbecause they are banksactually encourage rich people who run poor countries to be borrowers. The jumbo loans from the jumbo banks help explain why there are such rich people in such poor countries. In Colombia, for example, the World Bank and the IDB lent the government $25 million to, as they put it, support the privatization process and regulate concessions to operate services in the energy, transport, telecommunications, and water and sanitation sectors. Specifically their money would “consolidate the applicable regulatory framework in each of these sectors, improve public sector capacity for administering concessions and private operations… and identify and promote specific projects that will help to facilitate and expand this process in the future.” Do what now? Among the sectors and enterprises to be assisted by the Banks was the the power company on Colombia’s Atlantic coast. Along came William Tarut, a U.S.-educated engineer from Barranquilla who, he told the Bogota daily paper El Tiempo, wanted to make some money. In 1992, he had intended to make money more or less conventionally by building a generating plant to supply Electranta. Colombia had just come through an energy-rationing crisis that made California’s current problems look like not much more than a spent fuse. Enterprisingly, Tarut created Electrotar, cleverly named for electricity and himself, bought about 600 acres next to Electranta, and started to look for capital. Executives from Electranta bought in and so did the King Ranch. Months passed and the plan lost its appeal. The ranch people withdrew from the scheme. Corelca, another generating compahy with a real plant, plugs, wires and everything, began to oppose Tarut’s plans. Making money was turning out to be harder than he thought, so like able small businessmen everywhere, Mr. Tarut found himself some big businessmen. He contacted Sithe Energy, one of the world’s larger energy companies, which tells clients that “the energy business today demands new abilities, talent and resources,” The talent and abilities required, it seems, have more to do with political power generation than with electrical. his being the case, Mr. Tarut looked up his old friend from Club El Country in Barranquilla, David Name, brother of the Senator from the Atlantic coast, Jaime Name. Brother Jaime at the time was usefully situated on the Fifth Senate Commission in Colombia, responsible for electrical affairs. Tarut has now admitted that he paid David Name’s company, Development Consultants, about $25,000, but, he never requested any help from Brother Jaime. “I know him very little,” he told El Tiempo. “I’m not a political man.” his is a fact. Mr. Tarut is strictly THomo economicus. But Brother Jaime helped pass Law No. 142, the Public Service Law, in 1994, breathing new life into Mr. Tarut’s faltering enterprise. Article 18 allowed companies providing public services such as Corelcato participate as partners with private companies providing these same services, such as Electrotar. Public companies were also now permitted to join with other national and international interests to form consortia for privatization purposes. In approving the law’s passage, Jaime Name told the Colombian Senate that he and his colleagues on the Fifth Commission had passed an energy law introducing social guarantees to protect residential users and increase coverage. With this encouraging development, Mr. Tarut compulsively formed another company, Co-energia, made up of himself, and Electrotar, also made up of himself, now with a couple of other partners, including Sithe Energy. These two provided capital to buy into Corelca, a partner in Electranta. All together now, Mr. Tarut owned Electrotar, which owned Coenergia Corelca, which owned Electranta, Loan Sharks and at Cats Bankrupt Colombia BY GABRIELA BOCAGRANDE 10 THE TEXAS OBSERVER 4/13/01