Back in 1997, when Enron was still a stock market darling, one of its subsidiaries bought a big stake in a curious little firm called InterOil. That latter company bought an Alaskan oil refinery from Chevron and later shipped it 6,000 miles away to Papua New Guinea.
In 1999, InterOil applied for an $85 million loan from the Overseas Private Investment Corporation (OPIC), which approved the money two years later. That was just a small part of the $2.2 billion that Enron (and Enron-linked firms) sucked out of OPIC in loans and insurance before the company went belly up in 2001, according to Robert Bryce’s Pipe Dreams: Greed, Ego and the Death of Enron.
InterOil used its OPIC money for the project in Papua New Guinea, where it planned to refine crude oil into gasoline for the local market. The company has staged photo-ops in Papua New Guinea with the Prime Minister and other local bigwigs, and made all sorts of upbeat announcements about its prospects. Last November, the New York Times reported, the company declared it had “uncorked a vast pool of natural gas potentially larger than the United States’ total residential consumption of the fossil fuel in 2005. The size of the discovery was so large, Phil E. Mulacek, InterOil’s chairman and chief executive, informed an analyst, that simply controlling its output ‘was sort of like trying to stop the Mississippi’.” But so far none of the big oil and gas discoveries it has announced have panned out. InterOil has consistently lost oodles of money–$9 million through the first half of this year–and had almost $200 million in debt at the end of 2006.
InterOil doesn’t have Enron’s political juice, but it does have some notable ties to the Bush administration through one of its key investors and directors, Gaylen Byker. Byker is the president of Calvin College in Grand Rapids, Michigan; the school is affiliated with the Christian Reformed Church. He’s donated roughly $30,000 to GOP candidates and causes in recent years.
Karl Rove’s grandmother and her two sisters attended Calvin around the end of World War I. In 2005, Rove arranged for President Bush to deliver the College’s commencement speech. Even though Calvin is quite a conservative institution, hundreds of students and faculty signed a protest ad that was placed in the local press. Erik Prince, the owner of Blackwater and a major GOP financial supporter, holds a top position at a family foundation that is a major donor to Calvin College. (Which explains Calvin College’s Prince Conference Center, which is named after Erik’s mother.) Another big Calvin College donor is Amway heir Dick DeVos, also a huge contributor to the Republican Party. (Which explains Calvin College’s DeVos Communications Center.)
Meanwhile, OPIC still has not been repaid its $85 million from InterOil, even though repayments were due to begin long ago. Instead, OPIC has granted InterOil a series of waivers and extensions. I called OPIC and asked about the loan to InterOil and why it kept extending the loan terms. Spokesman Timothy Harwood told me the agency “can’t comment on the status of loan repayments beyond to say that the InterOil loan is not in default.” I also contacted InterOil to ask about the loan and its business prospects, but a spokesman there simply referred me to the company’s SEC filings.