|"Many energy companies have invested in closed or repressive countries -- arguing that their investment would help develop the local economy and thereby improve the human rights situation. But in this case, Enron has invested in a democratic country -- and human rights abuses there have increased. Enron hasn't made things better for human rights; it has made things worse."||
II. Background: New Delhi and Bombay
Table of Contents
V. Ratnagiri: Violations of Human Rights 1997
Appendix A: Correspondence Between Human Rights Watch and the Export-Import Bank of the United States
Appendix D: Correspondence Between the Government of India and the World Bank
The CITU Lawsuit
The drastic change in the governments position was not lost on the Indian public, and on April 8, 1996, the Center for Indian Trade Unions (CITU) and an energy analyst, Abhay Mehta, filed a public interest litigation against the government and the company.54 The petition alleged that the reported clearances required for the project were not obtained; that since the project had been renegotiated, it had to obtain new licenses and clearances; and that having charged the Dabhol Power Company and Enron with fraud, misrepresentation, corruption and bribery, it was not open to the Government of Maharashtra to negotiate and purport to contract with the said DPC/Enron.55 Vivek Monteiro, a representative of the CITU, told Human Rights Watch the justification for the writ petition:
The CITU/Abhay Mehta petition in the Bombay High Court challenged the project on economic issues. Namely that it was unsustainable, violated laws in many ways, obtained government clearances by submitting unfeasible or fraudulent documents. It is a complextechnical matter. CITU was concerned about the high cost of power associated with the project.56
The petitioners first problem was an inability to obtain counsel for the petition. According to Monteiro, It was hard to find a lawyer because Enron had retained or briefed every major lawyer in Bombay.57 Representing the plaintiffs would thus be a conflict of interest. Finally, the petitioners obtained the services of Sunip Sen, a commercial lawyer practicing in the Bombay High Court. Sen told us:
I got involved because they found me. Apparently Enron placed all the leading lawyers in Delhi and Bombay on retainer, so the petitioners could not find representation. I am a commercial lawyer and did not really do public interest litigation. I like to stay neutral and do not want to be seen by the court as just a public interest lawyer.58
After five days of oral arguments, the case was accepted on April 26, 1996 by Justice B.N. Srikrishna, a well-known judge who had led the investigation into the role of the Shiv Sena and BJP during the Bombay riots in 1992-1993.59
The chief justice cannot transfer the case to a division bench; the case would first have to be referred to the chief justice by Srikrishna, which it was not. This was clearly interference by Shah through administration of a judicial order. A High Court judges decision can only be reversed by an appeal, which did not happen. A High Court order cannot be changed by legislation, either. There are plenty of Supreme Court rulings on this. This was blatantly irregular.62
Vivek Monteiro also recalled the incident and told Human Rights Watch:
Initially, Justice Srikrishna got the case and accepted the petition. The same evening, Enrons lawyers go to the chief justice, M.B. Shah, and lobby to have the case transferred to [the two-judge panel of Justices] Seraf and Rane. Enron claimed that if Srikrishna hears the case, it will cost Enron 86 lakhs per day in project costs, but when the case was transferred, they dropped this argument. It is very uncommon to have a case switched like that. It is extremely rare, basically unheard of, for a chief justice to overrule a High Court judge without conducting a separate hearing on the matter.63
The order to transfer public interest litigations to a division bench created an uproar among High Court lawyers. Initially, lawyers considered appealing the decision to the court, but they declined to do so for various reasons: the court was on a five-week recess, and challenging the chief justice would have ramifications on future cases.
[W]e do find that the statement of the State Government made before this court to the effect that corruption was never alleged by it at any time except in the plaint in the suit and in the submissions before the arbitrators is factually not correct. We have once again glanced throughthe Munde Committee report and the speech of the Chief Minister to verify the above claim. We find enough indications in the Munde Committee report which suggest corruption by those who were responsible for the deal and the PPA...
The message of corruption, bribery and fraud is eloquent in the above statements. We are really amazed at the bald statements made by the Government in support of its actions from time to time. When it wanted to scrap the project and decided to scrap it, it boldly said everything which it felt necessary to support the same. It talked of lack of competitive bidding and transparency, the speed and haste in finalising the project. It also condemned those who were responsible for the deal. It went to the extent of filing suit in this Court and made all possible statements and allegations it thought necessary to get the PPA declared null and void by the Court. It worked the same way when it wanted to stall the arbitration proceedings. But once it decided to revive the project, it acted in the very same manner in which its predecessors in office had done. It forgot all about competitive bidding and transparency. The only transparency it claims is the constitution of the negotiating team. The speed with which the negotiating group studied the project, made a proposal for renegotiation which was accepted by Dabhol, and submitted its report is unprecedented...The Committee, we are told, examined the project, collected data on various similar other projects as well as internal bids including data on a similar project executed by Enron in the U.K., held considerable negotiations, settled the terms of revival of the project, got the consent of Enron...and submitted its exhaustive report along with data and details to the Government of Maharashtra on 19th November, 1995, just 11 days after its formation...The speed at which the whole thing was done by the negotiating group is unprecedented. What would stop someone today, as was said by the Chief Minister in the context of the original PPA, Enron revisited, Enron saw and Enron conqueredmuch more than what it did earlier.
However, we need not go into all those aspects because that is outside the scope and ambit of the powers of judicial review... As indicated earlier, it is not within the domain of this Court in exercise of its power of judicial review to examine the merits of the Government. That will amount to sitting in appeal over governmental decision which is not permissible... In any event, one thing that is obvious is that at everystage, it is the common man who has been taken for a ride during elections by the Shiv Sena-BJP alliance by making Enron an election issue and a part of its election manifesto and after coming into power, by reviewing the project and branding it as anti-Maharashtra, anti-people, alleging corruption, bribery, fraud, etc., by scrapping the same and telling the people that the promise made to them to scrap the project had been fulfilled. When the government decided to revive the same, it came out with a different statement that it had succeeded in snatching some concessions from Enron.67
The court also criticized Enron/DPC for its conduct throughout the process. Continually, the company claimed that it had been unjustly maligned while it was providing a service to the Indian people and was forced to spend millions of dollars educating Indian officials and the public on the merits of the project. In response to these claims, the court stated:
We have also given our careful consideration to the submissions... that Enron has been victimised for no fault of its own. We are, however, of the opinion that to some extent, Enron is also responsible for vitiating the atmosphere and for the anti-Enron campaign. In our opinion, the multinationals who want to invest in developing countries should not indulge in tall talks about educating the people of those countries. The decision of multinationals to invest in that country is based on the security of its investment and lucrative returns on the same. It is not activated by the desire to help the resource-starved nations. They do no charity. They move out of their country for greener pastures or better returns. They should, therefore, act and behave like an investor or an industrial house and not as a Government.68
In the end, none of the issues that formed the basis of opposition to the project were adjudicated in the courts. The project, although suspended for eight months, was allowed to start construction. The petitioners, dissatisfied with Serafs ruling, filed a Special Leave Petition with the Supreme Court of India in an attempt to appeal. The court accepted the petition but ruled that it would only look into the conduct of the state government and would not examine the agreement between thecompany and the central government or allegations of corruption. At the time of this writing, that case is still pending.
Without any judicial or governmental recourse, the public, specifically those organizations and individuals opposed to the project and the manner in which it was negotiated and implemented, expressed their opposition to the company through protests in the district where the project was located (See Section V). The state, in turn, committed human rights violations to suppress opposition to the project. In this context, a statement in Seraf and Rane final ruling was particularly telling:
This case has highlighted to the people as to how, even after 50 years of independence, political considerations outweigh the public interest and the interest of the State and to what extent the Government can go to justify its actions.69
53 Mark Nicholson, Dabhol Plant Finally Gets Green Light, Financial Times, January 9, 1996.
59 For more information on the Srikrishna investigation and the Bombay riots, see India: Communal Violence and the Denial of Justice, a Human Rights Watch Short Report, April 1996. Justice Srikrishna released his report into the riots in February 1998. The report was more than 700 pages long and indicted leaders of the Shiv Sena in promoting violence against Muslims.