Latin America: Enron Fallout is a Hot Issue

The implications of Enron's dramatic fall extend far beyond US borders. The once-mighty energy giant's murky dealings in Latin America have emerged as a hot political issue throughout the region, where politicians in some countries are using it as an election tool or to take attention away from their own economic or political woes.

Enron played a major role in the privatization wave that pervaded much of Latin America in the 1990s. The now-bankrupt corporation brought -- or promised to bring -- badly needed investment to the region. Now many of its assets there are up for grabs, though companies are reluctant to buy anything while investigations are ongoing.

Enron's presence was felt in Brazil, Bolivia, Venezuela, Colombia, and Argentina and in most cases, it entered the local market by creating the same off-balance-sheet special-purpose entities (SPEs) that are currently the subject of exhaustive probes in the US Congress, due to Enron allegedly using these vehicles to hide losses.

Many of these Enron-backed projects in Latin America never amounted to much, prompting accusations that they too were used as tools for Enron's shadowy accounting practices.

"They abused the mechanism [of setting up SPEs] to hide debt, generate income, and pay commissions that were not always ethical," alleged one source involved with Enron's project negotiations in Colombia and Venezuela.