ustxtxb_obs_2001_04_13_50_00011-00000_000.pdf

which had a captive market of Colombian electricity users on the Atlantic coast. In 1996, amidst popping corks and firecrackers, a new energy company was born: Rio Inc. Who, you might ask, owned Rio Inc? Electranta, with a 49-percent interest, Coenergia with 49 percent, Mr. Tarut with 1 percent, and Mr. Tarut’s friend, Ivan Lewis, with 1 percent. Because Mr. Tarut controlled Coenergia, together with Sithe, and he and Mr. Lewis effectively controlled 51 percent of Rio Inc., or the supply and the market for electricity on the Atlantic Coast of Colombia. This was not bad for someone who started out without much more than 600 acres of unattractive real estate, and who, in the intervening four years, never actually made or sold anything of any use to anyone. Unhappily, this transaction was visibly crooked, so our boys bribed the appropriate Minister, Rodrigo Villamizar. The Minister needed money; he had just been obliged to resign from the government of Ernesto Samper \(Remember him? He bought the Colombian presipublic radio frequencies and keeping all the money. So Mr. Minister collected a consulting contract from Rio Inc. for an undisclosed sum to explore the viability of finding gas in Venezuela. Rio Inc. then split into TermoRio to produce electricity, and Rio Gen to sell it, forpraise the Lordlegal reasons. Nevertheless, both companies were owned by the same consortium and by Mr. Tarut. In 1997, one year after the IDB lent $25 million to the Colombian government to teach it how to avoid this sort of thing, the general manager of Electranta, a Mr. Antonio Holguin, awarded an exclusive 20 year and 6 month contract to TermoRio to supply Electranta with electricity. Mr. Holguin, whom Colombian newspapers describe as “flamboyant,” is now a fugitive from justice, such as it is, for another unrelated matter, which we cannot possibly go into here. Although his grasp of the law in general seemed sketchy, he was well enough informedor else well-enough advisedto write an airtight contract for TermoRio. When the Finance Minister saw the deal, he called Mr. Holguin expressly to say he was not authorized to sign such contracts. Unfortunately, a judge on the Atlantic Supreme Court ruled that the Government of Colombia, in not honoring the contract, was legally liable to the TermoRio energy consortium for the amount of $65 million. TermoRio is including in its judgment request the amount. it paid to bribe the Minister. Somehow, this doesn’t seem quite fair. Of course, TermoRio probably bribed the judge who found in its favor, too, but at least it didn’t include this amount as an identifiable line item in its calculated damages. In recent developments, evidence has surfaced suggesting that TermoRio also suborned the legal team representing the interests of Colombia to provide a less than zealous defense in the court case; this, too, was probably expensive. All in all, this whole transaction has cost the Government of Colombia a lot of money, when you figure in what has already been paid to TermoRio, the amount of the judgment, plus the amount of the loan to be paid back to the IDB for teaching everyone how to establish a regulatory framework to prevent deals like this. Somewhere in the neighborhood of $90 million.When the Finance Minister asked Mr. Holguin how he could have signed such a monster contract withessentiallyMr. Tarut and his nested companies, Mr. Holguin explained that he missed the classes on privatization and the capitalization of public enterprises. Our question: For $25 million, weren’t the Banks taking attendance? Apparently not, because this sort of leveraging scheme should not be that difficult to spot, especially if you’ve got help from the crack international experts we’ve come to associate with the Banks. After all, there are two common threads between Rio Gen, TermoRio, Rio Inc, and Coenergia: the same owners and the same office. All are headquartered in a single suite with a lovely conference room and two secretaries in a luxury office building in Barranquilla. Nevertheless, the IDB and the World Bank missed it. We don’t mean to pry, but we can’t help wondering what the experts were really doing. According to their loan agreement, they were designing “models of the contracts that would be subsequently awarded.” So maybe the idea for a 20-year-plus exclusive electricity-providing contract to two secretaries and a conference room was the IDB’s idea. The IDB and World Bank management team was also responsible for “support for separation of energy generation from transmission and distribution functions in the CorporaciOn Electrica de la Costa in regional generators.” Once this was efficiently accomplished, the consultants could turn to the “Development of new contractual instruments for wholesale marketing of energy, criteria for uncertainty and risk coverage, operating regulations for the energy exchange, and future markets.” God help us all. You could buy quite a lot of electrical stuff for $90 million. You could get your shack wired up so you didn’t have to boil water to wash your clothes; for example. Too bad. If you’re Colombian, your public funds will go for that huge legal judgment to a made-up company that probably doesn’t know its amps from third base. Meanwhile, the IDB is industriously planning more financial assistance for your benefit. The Sectoral Program for Fiscal Reform is coming soon for unspecified millions. According to the IDB, the loan will “promote a culture of fiscal responsibility.” This sounds like a marketing niche for Responsables, Inc., and possibly for Cultura Moral, both wholly-owned subsidiaries of RioCorrupto, prudently headquartered on a late model Chris Craft somewhere off the Caribbean coast. Gabriela Bocagrande paid attention during the classes on privatization and the capitalization of public enterprises. 4/13/01 THE TEXAS OBSERVER 11 ?”