Energy Co. On Defensive
The AES Corporation has gone on the defensive in the wake of reports that it sought to dump industrial waste on a man-made Bahamian island.
by Quincy Parker, The Bahama Journal (Nassau, Bahamas)
28 March 2006 –
The energy company, which is seeking approval to construct a liquefied natural gas (LNG) plant at Ocean Cay near Bimini, is also facing a legal fight with the government of the Dominican Republic, which claims rock ash dumped on beaches in the Caribbean nation caused illness and in some cases death.
Last night, AES spokesman Robin Pence told The Bahama Journal the company will defend itself against what it sees as baseless allegations.
The complaint filed against the AES Corporation by the government and the Secretariat of State of the Environment of the Dominican Republic is a tale of alleged corruption and bribery, and reads like pulp fiction in some places, and a horror story in others.
Shell companies, corrupt officials, attempted car fire-bombings and threats of murder and both successfully and unsuccessfully attempted bribery all figure into the lawsuit, filed on behalf of the Dominican government by the law offices of Dr. Bart Fisher.
There are seven counts in the complaint, ranging from "Violation of Racketeer Influenced and Corrupt Organizations Act" (RICO) and "Civil Conspiracy to violate the laws prohibiting bribery and regulating waste disposal" to "claim under the Alien Tort Statute" – under this last claim, the Dominican government says:
"(The) Defendants act as modern-day pirates – roaming the seas in the Caribbean with barges full of waste trying to bribe or intimidate officials from poor Caribbean nations into placing their own citizens at risk by accepting the waste. Such conduct is reprehensible and must be stopped."
And – according to the Dominican government – all this occurred with the knowledge and under the sanction of the AES "parent" company, headquartered in Virginia, named as Defendant along with three of its alleged 700 subsidiaries (AES Puerto Rico, L.P., AES Atlantis and AES Aggregate Services Ltd.), and one independent contractor (Silverspot Enterprises).
But Ms. Pence said the company will be defended "vigorously" against the charges.
The complaint alleges that the defendants violated numerous American, Dominican and international laws including the U.S. RICO and Foreign Corrupt Practices Act (FCPA), and the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal.
The RICO Act was passed in the U.S. in 1970, and was intended to eliminate the effects of organized crime on that nation’s economy. One legal commentary says "to put it bluntly, RICO was intended to destroy the Mafia."
The Department of Justice says, "in general, the FCPA prohibits corrupt payments to foreign officials for the purpose of obtaining or keeping business."
The Basel Convention is an international agreement under the United Nations Environment Programme (UNEP).
Under the General Obligations of the Basel Convention, parties to the agreement "shall prohibit or shall not permit the export of hazardous wastes and other wastes if the State of import does not consent in writing to the specific import…"
Each party to the convention agrees, among other things, to ensure the availability of adequate, environmentally sound disposal facilities for hazardous waste and other waste.
The parties also agree to minimize trans-boundary movement of waste, and to ensure that the State agreeing to the import of waste materials is informed of the effects of the waste on human health and the environment.
The Bahamas, the Dominican Republic, and the United States are all parties to the convention.
The complaint also alleges that the Bahamas was a target destination for the rock ash.
Paragraph 60 of the complaint reads:
"The contract between Defendants AES Puerto Rico and AES Aggregate Services attempts to shift the liability for the disposal of the waste to AES Aggregate Services (a company formed in the Cayman Islands). The contract includes provision for the disposal of the waste in the Bahamas."
Paragraph 65 reads in part:
"Upon information and belief (a phrase used to denote allegations the Dominican government expects to be able to prove in court after further investigation or discovery), the AES Defendants were unsuccessful in persuading the Bahamas to accept the waste…"
In the complaint, the Dominican government says AES engaged in this "wanton misconduct" in order "merely to save themselves the funds that should have been expended to dispose of the waste in a lawful manner…"
According to the complaint, the AES power plant in Guayama, Puerto Rico, generates about 250,000 tons of rock ash every year, or about 1,000 tons each working day. It is this ash – a form of industrial waste – that is at the heart of the lawsuit. The government claims that compacted ash from the Puerto Rico power plant was dumped on beaches in two Dominican provinces without proper permits and without containment measures between October 2003 and March 2004.
According to the figures given in the complaint, proper disposal of the ash in the United States would have cost AES between $25 and $30 per ton.
This works out to between $6.25 million and $7.5 million each year.
The Dominican government believes the evidence will show that AES at first tried to designate the ash as "manufactured aggregate" which it could sell for a profit as material that could be used in a manufacturing process, like making cement.
The complaint alleges that AES discovered that the ash was unsuitable for such a designation, and then sought to dispose of the waste for between $5 and $10 per ton, a third of the price or less.
The complaint alleges that AES Corporation conducts its daily operations through more than 700 subsidiaries, and that this "elaborate web" was constructed "to protect the parent company from legal and financial liabilities resulting from its global operations."
AES is a multinational power company whose 2004 revenue was pegged at $9.5 billion. The company is the largest direct foreign investor into the Dominican economy and also supplies much of that country’s electricity.
The complaint says that because of these factors, the Dominican government has "a valid and well-founded fear that the present judicial system (in the D.R.) may be susceptible to being influenced by corruption. AES would likely succeed, the complaint continues, in using the same alleged unlawful conduct it is charged with now to evade accountability.
In fact, the complaint names a number of Dominican officials who the current government alleges were bought off in order for AES to secure the necessary permits, and notes that criminal charges have been filed in the Dominican Republic.
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