AES, Tom Tribone, Enron and Eletropaulo
In 2003 a Financial Times story alleged collusion between AES and Enron in the bidding for Eletropaulo in 1998. According to the Financial Times reporter that made the accusation, a conversation occurred between Tom Tribone, the head of AES in Brazil, and Rebecca Mark, Enron International's chief executive, on the day preceding a pivotal Eletropaulo auction in Brazil in 1998, resulting in an allegation of collusion. However, based on the evidence brought up in investigations by both CADE (Brazil's anti-trust regulator) and the leading officials from Brazil's privatization program, no further review or investigation was warranted, and the accusation has been dismissed.
From Dow Jones Newswire
In 2003, Mauro Arce confirmed that AES's 1998 purchase of Eletropaulo Metropolitana was done legally and within the established framework of Brazil's privatization program. At the time of the Eletropaulo auction in 1998, Mauro Arce served as the energy secretary of Brazil's Sao Paulo state, in addition to serving as a member of Brazil's privatization committee. On the issue of the alleged collusion between AES Corp. and Enron in the 1998, $1.78 billion purchase of Eletropaulo, Arce affirmed that the transaction presented no need for further review.
The Dow Jones Newswire published Arce's confirmation in May of 2003, in an article entitled "Brazil's Govt: AES Buy of Eletropaulo Legally OK." In the article, (Copyright (c) 2003, Dow Jones & Company, Inc.) Mauro Arce attested that there was "no need to review Eletropaulo's privatization process because there was never a prohibition of agreements among the bidders."
Any agreement to be had between Enron and AES regarding the purchase of Eletropaulo would have been in line with governmental regulations, Arce reported to journalists. Expounding on the nature of privatization auctions, Mauro Arce divulged to the news media that, typically, an auction like that which surrounded Eletropaulo might feature as many as 20 potentially interested bidders, but that this original list would often finds itself whittled down to one or two participants who would actually place a bid on the asset. For this reason, according to the Dow Jones article, the Brazilian government's main point of interest in the 1998 auction was the establishment of a fair minimum price for the purchase of Eletropaulo, in the case that only one bidder would actively bid in the auction.
From Bear Stearns
According to Bear Stearns' emerging markets equity research publication (Plugged In: A Weekly Summary of Latin/EMEA Utility Investment Information) issued February 8, 2007, CADE has formally dismissed fraud charges against AES Corp. The accusation of collusion between Enron and AES Corp. during the privatization of Brazilian utility Eletropaulo in April of 1998 first went under investigation in 2003, and in 2007 the charges were dropped on the basis that there was no evidence that any unlawful agreement took place prior to the Eletropaulo auction. Furthermore, as the accusation against Enron and AES alleged an agreement that Enron would build a power plant and sell power at a reduced rate to the energy distributor, the fact that Enron never build a power plant further foments the decision to dismiss the 2003 allegation against AES and Enron.