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Enron in Jeff Parish
Should Jefferson Parish residents be alarmed over ongoing investigations of Enron's ties to Azurix, a global water treatment company with a $10 million parish contract?

"The short answer is no," says Herb Miller, director of public works for Jefferson Parish.

The long answer comes with a timeline: in October 2000, Enron-owned Azurix and the Jefferson Parish Council inked a $10 million, five-year contract, with two options for extensions. The deal allowed Azurix to replace global water giant Severn Trent as the operator and maintenance provider of the East Jefferson wastewater treatment facility. The plant serves 180,000 East Bank residents, commercial businesses and industrial customers (but not the municipalities of Harahan and Kenner).

The Jefferson Parish contract was but a drop in a big bucket for Enron, which acquired Azurix in 1998. As an Enron subsidy, Azurix then managed and owned utility operations in North America, South America and the United Kingdom.

"We have gathered top players from the water, gas and power industries who have proven track records in developing new businesses and growing existing businesses domestically and abroad," Rebecca P. Mark, chairman and CEO of Azurix, said in a 1998 news release announcing Enron's upper management team for its new acquisition. "All of these executives have exhibited strong leadership skills and have an unparalleled commitment to develop our international water business."

The acquisition of Azurix helped Houston-based Enron's reputation as the world's largest energy trader. But by last summer, California politicians were accusing Enron of fueling that state's energy crisis by manipulating market prices for natural gas. Enron then began to report heavy losses.

Last November, Enron sold Azurix to American Water Works, the nation's largest national private water company. On Dec. 4, 2001, Enron filed for the largest Chapter 11 bankruptcy protection in U.S. history. On Jan. 10, the Justice Department launched a criminal investigation of Enron and its allegedly illegal financial disclosures, investments and pension policies. And on Feb. 1, two congressional subcommittees expressed interest in Enron-owned Azurix Corp., which the panel characterized as "the ill-fated water company" set up by Enron and Rebecca Mark, a former Enron director.

"Enron invested $1 billion in this company, took it public and in late 2000 bought the shares back at more than double the market price," according to a joint letter by the subcommittees. Herbert Winokur, the former chairman of the board of directors of Azurix Corp., allegedly sold 22,500 shares to Enron for $184,275 at that time.

"Although Enron claimed Azurix was an independent company, all of its entire board of directors were also Enron directors," stated the subcommittees in the joint letter, which was made available to Louisiana Congressman Rep. W.J. "Billy" Tauzin, Chairman of the House Committee on Energy and Commerce. Enron, Azurix and its senior directors were sued in 2000 by shareholders claiming misleading statements about the company's financial condition and future prospects were issued.

Investigations of Enron are continuing -- and so are parish wastewater operations. Azurix still supervises the East Bank plant, but under new corporate parents.

Did Jefferson Parish dodge a bullet? "Quite frankly, the operations would have simply remained the same regardless because we are paying [Azurix] to operate the facility," says parish public works director Miller of the East Bank water plant. "As long as they are operating it properly, which they are, we continue to pay them. The personnel or whoever owns [Azurix] doesn't really change anything from our standpoint. The plant has been operating fine. We haven't had any problems."

Jefferson Parish President Tim Coulon and parish council members could not be reached for comment by press time.

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