Mo Jones on Bush + Argentina

Don't Cry for Bush, Argentina 
George W. may not recall the names of world leaders, but when it comes to
foreign affairs, he knows the value of his own family's name. 
by Louis Dubose and Carmen Coiro

Texans watched with interest last winter as Governor George W. Bush was
home-schooled on international affairs by former Secretary of State George
Shultz and other veterans of his father's foreign-policy team. Even Carl
Bildt, the former prime minister of Sweden, was brought in for a tutorial at
the governor's mansion, in the hope that his recent U.N. experience in the
Balkans could help Bush understand that Kosovars are not "Kosavarians" and
that Greeks are not "Grecians." 
But no one had to prepare a prompt card to remind him who stepped down as
president of Argentina in December. Shortly before Bush announced his own
campaign for president, he had received a visit from Carlos Saul Menem, the
right-wing leader of Argentina for the past decade. The two men retired to
an Austin country club, where they were joined by Bush's father. Governor
Bush had the flu, so he contented himself with riding along as the former
president and Menem played a round of golf. 
The capitol press corps trailed along, dutifully recording the governor's
cordial relationship with a visiting head of state. Unknown to the assembled
reporters, however, was the story of how Bush and his family became immersed
in Argentine politics. The little-known tale begins with George W. making a
phone call to secure a $300-million deal for a U.S. pipeline company -- a
deal that provoked a political firestorm in Argentina, drawing scrutiny from
legislators and a special prosecutor. The episode marked one of George W.'s
first ventures into foreign affairs, demonstrating the fundamental rule by
which the Texas governor and his family conduct business: Always know that
the Bush name is a marketable commodity. 
Bush first made his presence felt in Argentina in 1988, shortly after his
father was elected president. At the time, the junior Bush's political
career was just beginning -- and the political career of Raúl Alfonsín, who
was approaching the end of his term as president of Argentina, was ending.
Alfonsín had returned his country to civilian rule, prosecuted those
responsible for human rights abuses during Argentina's rule by a military
junta, and struggled to manage an economy that seemed to defy management.
Determined to complete one major private-sector industrial program, he
pushed for the development of a "gasoducto" that would connect Argentine gas
fields with domestic and foreign markets. And he appointed his minister of
public works, Rodolfo Terragno, to oversee the pipeline project. 
Unlike Bush, Terragno achieved political prominence the old-fashioned way:
through a life dedicated to public service. A noted journalist and public
official, he was forced into exile for 10 years after the military seized
power in Argentina in 1976. Only after Alfonsín restored civilian rule did
Terragno return to his homeland, where he went on to serve as minister of
public works, a member of congress, and most recently as cabinet chief to
the newly elected president, Fernando de la Rua. 
In 1988, Terragno was considering two proposals for the $300-million
pipeline, one from an Italian firm called Ente Nazionale Idrocarburi and the
other from Pérez Companc, an Argentine company working in partnership with
Dow Chemical. After a year of consideration, the minister was close to
making a decision when Enron, the largest pipeline company in the United
States, suddenly entered the bidding. 
At the time, the Houston-based Enron had no experience in Argentina. It had
formed a business relationship with Westfield, a small Argentine firm, but
Westfield wasn't much of a player either. El Boletín Oficial -- the
Argentine equivalent of the Federal Register -- reported that Westfield's
only asset in 1988 was $20, its corporate filing fee. Westfield was a
prestanombre, literally a "borrowed name" used to provide a domestic front
for a foreign firm. 
Terragno was concerned that a newly formed corporation with no resources was
attempting to land a contract that companies with proven track records had
been working on for a year. "I had a lot of reservations about Enron because
the company wasn't well established in Argentina," Terragno told Mother
Jones, providing details of the episode for the first time. 
The minister recalls that Enron sent him "a one-page outline" proposing a
price Terragno now describes as "laughable." Enron wanted to pay "something
like 20 percent of the international market price," he says. "It all seemed
so inadequate. Enron asked the country of Argentina to practically give them
the gas." 
Terragno was unenthusiastic about the pipeline bid, but Enron initiated a
full-scale campaign to pressure him. Pro-business newspapers attacked the
minister for blocking the proposal, and Terragno recalls that Ted Gildred,
the U.S. ambassador to Argentina, "called me and visited me constantly" to
push the deal. 
Terragno wasn't concerned about the ambassador's lobbying -- that was
politics as usual. "It was good that he was representing the interest of his
country's businesses," he says. But Terragno found that some of the politics
surrounding Enron's campaign were anything but usual. 
A few weeks after the U.S. presidential election in 1988, Terragno received
a phone call from a failed Texas oilman named George W. Bush, who happened
to be the son of the president-elect. "He told me he had recently returned
from a campaign tour with his father," the Argentine minister recalls. The
purpose of the call was clear: to push Terragno to accept the bid from
Enron. 
"He was taking a moment to call me because he knew that I was dealing with
this," says Terragno, adding that Bush told him that he "viewed with some
concern the slow pace of the Enron project." According to Terragno, the
president-elect's son noted that a deal with Enron "would be very favorable
for Argentina and its relations with the United States." 
When a brief report on the attempt to influence the Argentine deal appeared
in The Nation and the Texas Observer years later, the Bush team reacted
angrily. His staff produced a copy of his day planner to show that Bush
never placed the phone call, and a top-level adviser personally called
reporters to dismiss the story as a fantasy by "some guy in Argentina."
Bush's staff continues to deny his involvement, and no other media outlet
ever reported on the episode, despite the high-ranking source. 
More than a decade later, Terragno still recalls details of the phone call
clearly -- as well as his outrage. "It looked bad and it surprised me," he
says. "There was this political endorsement, apparently from the White
House. I don't know if George Bush the father was aware of it, or if it was
only a business contact by his son, who hoped that his family name would
have some influence." 
George W. wasn't the only Bush plying the family name in Argentina. His
brother Neil had tried to funnel $900,000 in loans from Silverado Savings
and Loan, where he served as a director, into a failed attempt to drill for
oil in Argentina. The S&L eventually collapsed, costing taxpayers nearly $1
billion to bail out, and federal regulators banned Neil from certain banking
activities. 
But Terragno was unimpressed by the family connections. He told George W.
the pipeline concession would be awarded according to Argentine law. It
hardly mattered -- Argentine law was about to change. Time had run out for
Raúl Alfonsín. His party lost the election, and he left office four months
early to make way for his successor, Carlos Menem. 
Enron, for its part, couldn't have appointed an Argentine president more
favorable to its interests. A right-wing follower of Juan Peron, Menem was
eager to open his country to American enterprise -- and his own lavish
spending. He took to traveling with a huge entourage aboard Tango-01, his
$66- million presidential jet. The Bushes took an immediate liking to him.
The day after the 1989 election, Neil Bush arrived in Buenos Aires for a
tennis match with the president-elect. The following year, President Bush
made the first of eight trips to see Menem, becoming the first U.S. chief
executive since Eisenhower to visit Argentina. 
Several days after the president's trip in 1990, Bush's ambassador to
Argentina, Terence Todman, wrote a stern letter to Menem's minister of the
economy to follow up on issues that Bush had "intended to address, but
failed to do so for lack of time." Todman went on to imply that eight U.S.
companies would walk away from their investment plans unless Argentina
stopped favoring domestic corporations. The first company on the list was
Enron, which the ambassador described as being "poised to invest $250
million" -- as soon as the Argentine government met its demands for tax
breaks. Todman closed his letter by warning that the Enron decision was
"extremely urgent," as the gas company would make a final decision on its
investment in less than a month. 
Todman prevailed: Menem agreed to the company's terms, signing a
presidential decree that included Enron in a national program freeing it
from tariffs and valued-added taxes. 
Reports of the Enron deal outraged Argentines, who had supported Alfonsín's
struggle to create a democracy out of what remained after 10 years of
military dictatorship. Lawmakers demanded a congressional inquiry, and a
special prosecutor launched an investigation. Menem dealt with the scandal
in a forthright manner: Since his own justice department was looking into
the tax giveaway, he simply fired the investigator. 
Enron ultimately abandoned the project when gas prices fell, but an Enron
subsidiary later bought into the pipeline and now owns almost a third of the
gasoducto. Among the subsidiary's board members is Brent Scowcroft, national
security advisor to former President George Bush. 
George W. has certainly benefited from his association with Enron. Kenneth
Lay, the company's chief executive, has personally contributed $100,000 to
Bush's two gubernatorial campaigns. When Bush announced in 1999 that he was
running for president, executives and political action committees connected
to Enron contributed $89,650 to his campaign in the first three months. Lay
signed on as a "Bush Pioneer," pledging to raise $100,000. 
The involvement of George W. and Neil in Argentina has become something of
an m.o. for the Bush brothers in foreign affairs. The sons of the former
president have certainly not been shy about using their family name to
enrich themselves and their friends. Jeb sold $74 million worth of water
pumps to the Nigerian government in 1988. Marvin tried to sell electronic
fences to the defense ministry of Kuwait two years after the Gulf War, while
Neil sought contracts to provide oil-field antipollution equipment. And
George W. lent his name to tiny Harken Energy to help secure a huge offshore
drilling contract in Bahrain (see "Slick W.," page 48). 
Undoubtedly, the family name will continue to open doors internationally if
George W. is elected. Last November, an airplane with Houston registry
numbers landed in Buenos Aires; on board was former President Bush, who had
arrived to spend the night with his friend, President Menem, 10 days before
the end of Menem's final term. The two men attended a dinner at the home of
Argentine banker José Rohm, where they were joined by the vice president of
Chase Manhattan Bank, the director of Credit Suisse First Boston, the
president-elect of Argentina and the former president of Uruguay. 
What was the purpose of President Bush's visit? "Fishing," says Michael
Dannenhauer, a Bush spokesman. But when the Buenos Aires daily, Pagina 12,
asked several of the dinner guests why the president was in town, they
smiled and quietly replied, "Business." Bush's "real interest," they added,
was to learn how the new government would deal with CEI, an Argentine media
company whose former chief had fled the country under investigation for
fraud. One of CEI's principal investors, the paper noted, is Tom Hicks, "one
of the funders of the presidential campaign of Bush's son, George, the
governor of Texas."