In 1992, the Enron Development Corporation, a subsidiary of the Houston-based energy company, signed a contract to build the largest-ever power plant in India, requiring a total investment of $2.8 billion. After Enron had spent nearly $300 million, the project was canceled by Hindu nationalist politicians in the Maharashtra state where the plant was to be built. Which of the following are true?
A)Subsequently, Maharashtra invited Enron to renegotiate its contract.
B)The lack of an effective means of enforcing contracts in a foreign country is clearly a major source of political risk associated with FDI.
C)In an effort to pressure Maharashtra to reverse its decision, Enron "pushed like hell" the U.S. Energy Department to make a statement in June 1995 to the effect that canceling the Enron deal could adversely affect other power projects. The statement only compounded the situation. The BJP politicians immediately criticized the statement as an attempt by Washington to bully India.
D)All of the above

Question

Quizplus · Accepted Answer

A is true as Maharashtra did invite Enron to renegotiate the contract. 
B is true as the cancellation of the project highlights the risk associated with investing in foreign countries where contracts may not be effectively enforced. 
C is true as Enron did pressure the U.S. Energy Department to make a statement, which was then criticized by the BJP politicians.

In 1992, the Enron Development Corporation, a Subsidiary of the Houston-Based