Mandelson approves Enron bid for Wessex
Friday 11 September 1998
Mr Mandelson ruled that the bid by the US energy group, which has given Labour almost pounds 30,000 in the last two years, could proceed without a reference to the Monopolies and Mergers Commission, provided it gave undertakings to ring fence Wessex's regulated water business and keep its existing management.
The deal, expected to be concluded in the next few days, will net the Wessex management, led by chairman Nicholas Hood, more than pounds 1.2m in share option windfalls.
The deal makes Wessex the second of the 10 privatised water companies to fall into foreign hands, following the takeover of Northumbrian Water by Lyonnais des Eaux.
It is also the second foreign takeover of a UK utility to be approved by Labour without an MMC reference. The Texas Utilities bid for Energy Group was waved through without a reference.
Other controversial decisions involving companies that have given the Government financial support are also lying in Mr Mandelson's in-tray. Chief among them is a ruling on whether British Airways. which has provided pounds 8m for the Millennium Dome, should be allowed to sell runway slots at Heathrow and Gatwick that have been valued at pounds 500m.
Mr Mandelson said that his decision in the Enron case was in line with the advice of the water regulator, Ian Byatt, and the Director General of Fair Trading, John Bridgeman.
Enron Europe said that in 1997, Enron had paid pounds 7,500 for a table at the Labour Party Gala dinner. In 1998, Enron have made two payments in sponsorship. The first was pounds 5000 for the same annual Labour Gala. This was held at the Hilton in the spring. They also gave pounds 15,000 in sponsorship for a reception at the Labour Party Conference to be held at the end of the month.
However, the Texas-based group has also been at loggerheads with the Government over its energy policy, and in particular the moratorium imposed earlier this year on the building of gas-fired power stations.
Enron invested heavily in Britain during the Thatcher years and owns two of these, including one in Teesside. It currently has applications for a further two projects which have been caught by the moratorium.
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