Enron Amigos

Mexican millionaire Carlos Gottfried Joy is well known to international circles as a butterfly enthusiast. According to the BBC, Gottfried recently met with Prince Charles to discuss the Mexican life of the Monarch butterfly.

However, in 1997 Gottfried had a serious legal problem at home.

According to newly released documents from the U.S. Commerce Department, Gottfried's close relationship with both Enron and the Clinton administration got him out of jail. The documents were obtained using the Freedom of Information Act.

On Dec. 17, 1997, Enron Wind CEO Ken Karas wrote Charles Brayshaw, the charge d'affairs of the U.S. Embassy in Mexico, a letter. In this letter Karas addressed his concerns about some legal problems with Enron's business partner Carlos Gottfried Joy.

"We are writing this letter to bring to your attention, and seek your assistance in connection with, what we believe to be the unjustified treatment of Mr. Carlos F. Gottfried Joy, whose company is the majority investor in a Mexican wind energy company in which we own an interest, by the state and municipal authorities of Zacatecas," wrote Karas.

"Since the early 1990's, we have endeavored to develop commercial wind power plants in Mexico and in fact own a minority interest in Fuerza-Eolica, a Mexican wind energy company. Mr. Gottfried's company, Grupo Fuerza, S.A., owns the majority interest in Fuerza-Eolica," noted Karas.

"Fuerza-Eolica is, and has been for some time, engaged in a commercial dispute with the State and Municipality of Zacatecas over a small, pilot wind energy project. The Municipality of Zacatecas commissioned the project in 1992, entered into a supply contract with Fuerza-Eolica and, in fact, made a down payment to Fuerza-Eolica of approximately US $1.5 million for the initial phase of the project," wrote Karas.

"Unfortunately, before turbines were shipped or other construction activities commenced in Zacatecas, the local government changed and the new administration summarily canceled the project," noted Karas.

"Some five years later and after several attempts by Fuerza-Eolica to work with Zacatecas to complete the project, Zacatecas has sued Fuerza-Eolica, demanding that it repay the loans owing to Banobras. We believe the demands are without merit and that the project would have been completed but for Zacatecas' decision to cancel it. To pressure Fuerza-Eolica, Zacatecas took the extraordinary step of arresting Mr. Gottfried, claiming that he defrauded Zacatecas. Mr. Gottfried is now out of jail on bail, set not coincidentally in the amount of the Banobras loan obligation,' wrote Karas.

"We have reviewed the activities of Fuerza-Eolica and have no reason to believe that Mr. Gottfried has engaged in any fraudulent conduct. At the same time, we find the conduct of Zacatecas, using its criminal powers to influence a commercial settlement, excessive. While of course we can not fully convey to you in this letter all of the facts surrounding this dispute, we would ask for an opportunity to more completely brief you on these events," noted Karas.

"We would also ask for your help in arranging a meeting with the appropriate Mexican authorities to address these issues and, importantly, to impress upon them that this is a commercial dispute and as such, the use of criminal process to influence the commercial outcome is not tolerable. With that assistance we are hopeful that the employees of Fuerza Eolica will not be subject to the type of criminal actions which has been used against Mr. Gottfried," concluded Karas.

Gottfried's criminal charges raised such concern to Enron officials that Adam Umanoff, Enron's senior VP and general counsel, forwarded a copy of Karas' letter to Jill Hinson at the U.S. Embassy in Mexico City.

"Attached is a letter to Mr. Brayshaw from Ken Karas, my company's president, describing our recent unfortunate experience on a commercial matter in Mexico. I appreciate your offer to pass this letter on to the appropriate officials in our embassy. Please let the appropriate people know to contact me directly to discuss this matter," wrote Umanoff.

It is not unusual for U.S. Embassy staff to contact foreign authorities when charges are filed in another nation against U.S. citizens. Enron, however, was asking the U.S. government to lobby Mexican officials on behalf of a Mexican citizen charged with illegal activity.

The problem of U.S. intervention in a Mexican criminal matter did not escape American Embassy officers. Scribbled on top of the Enron fax cover page was a handwritten comment by an unnamed U.S. Embassy official.

"I am meeting with Gottfried tomorrow. Would a letter such as is being requested represent 'pol[itical] pressure or interference'?" noted the U.S. Embassy official.

Enron did not want pressure or interference. Enron wanted the Mexican contract to be paid. Thus, Enron's legal counsel Umanoff would go further. On March 4, 1998, he wrote a long letter to Andrew Wylegala, commercial attaché at the U.S. Embassy.

"It was a pleasure meeting you on February 20. I especially appreciate your offer of assistance in connection with the difficulties being experienced by Fuerza Eclica and Carlos and Gustevo Gottfried. As a follow up to that meeting, I would like to request your specific assistance in connection with certain legal proceedings in Mexico. If the judges in these proceedings do in fact rule in accordance with law, we are optimistic that the 'criminal' complaints brought against various individuals will be set aside and the Zacatecas dispute can be properly resolved as a commercial dispute. As you know, one of our primary objectives in this dispute is to have it resolved in a commercial, not criminal, forum," wrote Umanoff.

"To give you some additional details, and as we discussed generally in our meeting, the Municipality of Zacatecas continues to pursue criminal proceedings against both Carlos and Gustavo Gottfried. Counsel for the Gottfrieds has initiated federal habeas corpus actions on behalf of the Gottfrieds which, as I understand it, are designed to protect the constitutional liberties of each of the Gottfrieds (in essence, to protect them from wrongful criminal prosecution). The habeas corpus action against Gustavo has been heard by Mrs. Avalina Merales Guzman, Second District Federal Criminal Judge in Mexico City. She is expected to rule on the action within the next week to ten days," noted Enron's Umanoff.

"The habeas corpus action for Carlos Gottfried is not scheduled to be heard until April and will be before Mr. Jose Rejugio Estrada Araujo, a Federal Judge in Zacatecas. The Gottfried's criminal counsel believes that if the federal judges hearing these actions rule on the merits and are not subject to any political pressure or interference they should find in the Gottfrieds' favor. Such a finding could result in the dismissal of the criminal case in Zacatecas," wrote Umanoff.

"Therefore, we would request the Embassy take whatever steps are allowed to encourage these judges to consider the cases in accordance with law. The Gottfrieds' counsel advises us that perhaps the most appropriate course would be for the Embassy to contact the Minister of the Interior, Lic. Francisco Labastida Ochoa to request his intervention with Minister Jose Vicente Aguinaco Aleman, the President of both the Supreme Court of Justice and the Judicature Counsel, as well as with Arturo Roman Gutierrez, the sitting Governor of Zacatecas, to request that the cases be ruled upon in strict accordance with law," noted Umanoff.

"Of course, as you mentioned in our meeting, there may be other appropriate avenues of communication between our Embassy and the Mexican authorities and we of course would appreciate whatever steps you might take to assist us in this matter," wrote Umanoff.

However, the best-laid plans of Key Lay often go Enron. In April 1998, the U.S. Embassy and Enron's attempt to influence the Mexican courts leaked out to the public. Enron's legal beagle Adam Umanoff wrote a letter to Andrew Wylegala at the U.S. Embassy, trying to explain the leak.

"Thank you for your letter of March 30. It is encouraging that you have gotten a commitment from Mexican officials to look into the Zacatecas matter," noted Umanoff.

"I share, however, your frustration and concern over the apparent leak of Embassy correspondence to journalists in Mexico. As requested, we have looked further into the matter and have discovered the following. Ken Karas' December 17, 1997 letter to the Charge d'Affaires was in fact publicly disclosed by Carlos Gottfried's lawyers at a court hearing in Zacatecas. A copy of Carlos' March 31 fax to me describing the circumstance of this disclosure is attached. We were not aware of this disclosure until receiving Carlos' March 31 fax. This disclosure directly contravenes our working understanding with Carlos Gottfried and Fuerza Eolice concerning the confidentiality of our communications. Nevertheless, on behalf of our company, I apologize that this disclosure occurred," wrote Umanoff.

"As to the disclosure of the Charge's letter, we have not been able to identify the source of the 'leak.' It is apparent to me that we may never know how that letter became public," concluded Umanoff.

In the end, despite the leaks, the Clinton administration "interference" on behalf of Enron would succeed. In a final May 28, 1998, letter to Andy Wylegala at the U.S. Embassy, Enron's legal top dog Adam Umanoff would write his thanks.

"With the recent positive news concerning the criminal proceedings in Zacatecas, we do not feel it appropriate to elevate any further the Zacatecas dispute," wrote Umanoff.

"Once again, thank you for your continued assistance in support of our activities in Mexico," concluded Umanoff.

RADIO AND TV SCHEDULE

Charles Smith will be on:

The Jeff Rense show Talk Radio Network on Wednesday, 5/21/03, at 10 p.m. Eastern time.

The American Freedom Network with NewsMax contributor Dr. James Hirsen on Friday, 5/23/03, at 11 a.m. Eastern time. Show information at http://www.amerifree.com.

The Jerry Hughes show on Friday, 5/23/03, at 3 p.m. Eastern time. Show information at http://www.cilamerica.com.

The Phil Paleologos "American Breakfast" show on Tuesday, 5/27/03, the Langer Broadcast Network, at 8 a.m. Eastern time. Show information at www.dinershow.com.