The Enron debacle has resulted in Andersen Legal's Indian member firm Hariani & Co losing the government of the Indian state of Maharashtra as a client
The loss was due to a conflict arising out of Andersen's association with Enron. Hariani was advising the government on its case against the Dhabol Power Company. Dhabol is 65 per cent owned by Enron; the other partners are GE and Bechtel. The vicious dispute between independent power provider Dhabol and the Maharashtra government came to a head last October. Following a series of disputes over payment and quality of service, the Dhabol power company declared force majeure on the supply contract and invoked an arbitration clause. At this stage, Maharashtra appointed Hariani to argue its case. The Maharashtra government then brought a case before the Commercial Court in London alleging misrepresentation by Dhabol and Enron, but the court refused to consider the case. Enron was looking to offload its stake in Dhabol before it received bankruptcy protection from the US courts. Indian companies Tata Power and BSES may now pick up the energy trader's stake at a knockdown price. Hariani finalised its entry into the Andersen Legal network at the beginning of January, provoking Maharashtra state to replace it with local law firm Wadia Gandhi & Co last week. According to Andersen Legal, the firm decided it could not continue to act because of the risk of conflict over Andersen's role as auditor of Enron.