DESA: Fraud and Corruption

On the third anniversary of Berta Cáceres' murder, MACCIH and the UFECIC-MP (Unidad Fiscal Especial Contra la Corrupción y la Impunidad del Ministerio Publico) announced new legal cases against 16 individuals, brought as a result of studying the approval and license allocation processes for the Agua Zarca dam on the Gualcarque river in Honduras. 

So far in the Honduran press, only El Tiempo and Proceso Digital reported it, both digital publications.  The major Honduran print papers have ignored it.

The combined forces of MACCIH and UFECIC-MP chose to investigate the more than 40 complaints about irregularities in concessioning and licensing hydroelectric projects that affect the Lenca people, complaints lodged by Berta Cáceres before her murder, complaints about DESA and the Agua Zarca dam. Ana Maria Calderón, the Corruption coordinator in MACCIH, noted that the implications of their findings have a much larger application:

In light of today's findings, the Mission suggests that the [Government of Honduras] review the remaining active contracts and the norms that regulated them, because to continue with this energy strategy could produce an unbalance in the market and bring about the bankrupcy of ENEE;  its possible that all the contracts tied to renewable sources were let in the same way [as this one].

If all of the many contracts and licensing processes underwent the same irregularities as this contract, it has implications for the future viability of ENEE, the national electric company, which currently runs at a loss.  The Honduran government is due to tell the IMF how they plan to bring this entity to profitability sometime in the next three months.  With more contracts authorized like the DESA one, they probably cannot.

The investigation found that DESA was created in 2009 by two brothers (the Abate Ponces) and almost immediately Roberto David Castillo Mejia was its de-facto representative. 

But Castillo Mejia was also employed full time in ENEE, in the department that reviews and allocates contracts for hydroelectric projects. Very convenient for DESA.

He obtained shares in the firm through a front company formed in Panama, called PEMSA, which had just two shareholders, Castillo Mejia and Carolina Lizeth Castillo Argueta.  Castillo Argueta was the lawyer for the ENEE workers' union at the time, but became DESA's lawyer as well and signed the contract for DESA.  She signed instead of Castillo Mejia to cover up his conflict with his role in PEMSA.  DESA has another investor, Inversiones Jacaranda, owned by the Atala Zablah banking family.

Both David Castillo Mejia and Carolina Castillo Argueta worked directly for the head of ENEE, Roberto Anibal Martinez Lozano, who signed the contract with DESA on behalf of ENEE.  He signed the contract despite knowing DESA was not on the list of ENEE approved contractors (a prerequisite to any ENEE contract).  He signed without investigating how a front company with no technical or financial assets was going to carry out this somewhat tricky contract.  In short, it was an illegal contract, but he signed anyway, even over objections from his legal department.

Fraud happened in the approvals process at a number of government institutions.  SERNA, the environmental resources agency, for example, approved the feasibility study on December 16, 2009, without bothering to locate the land on which the project would take place, or determining who owned that land, or confirming approvals from the municipality where the dam would be located, all abnormalities that the legal department at SERNA noted.  Yet they too recommended approval of the project.

The feasibility study itself was improperly done.  It was submitted to SERNA on October 5, 2009, just 24 hours and 5 minutes after ENEE gave its permission.  Nevertheless, SERNA and Castillo Argueta signed a contract on January 22, 2010 that gave DESA the use of national water.  This contract was signed despite a negative recommendation from the National Energy Council, which noted that DESA did not meet the legal requirements for a contract.

SERNA issued a "Category 2" environmental license for the Agua Zarca project on March 24, 2011.  MACCIH and UFECIC-MP allege the project was miscategorized in favor of DESA, giving them cheaper license fees. The environmental license required a two-year study of the amount of water flowing in the river, and the law specifies that is two years after the water use contract is issued. The study was supposed to contain two years of data on the volume of water flowing in the Gualcarque river.  It was supposed to be current data.

Instead the study contained data from a 2003 proposal previously rejected by ENEE, that Carolina Castillo Argueta had access to because the union she represented was supposed to partially finance the rejected project.

Less than two years after the water use license was approved on January 22, 2010, SERNA issued an environmental approval for the Agua Zarca dam.  They had to know the data included were falsified.

The 2003 project DESA plagiarized asked to construct a 6 MW power plant, and DESA's original request was also to build a 6 MW project. 

In August of 2010, DESA received a concession for a 14.5 megawatt project. 

On May 14,  2011, DESA asked for, and received an increase to 21.5 megawatts. 

DESA said it would add a third turbine to generate this power, but MACCIH suggests that it's not clear the river actually has enough water to support a third turbine, or even fully support the second turbine. Without a constructed project producing power using the proposed model, it's difficult to judge the alleged improvements. 

An economic analysis suggested the proposed investment in a third turbine was intended to increase the total investment DESA had in the project, which would then increase the purchase price ENEE would have to pay for their electricity. 

Higher investment ==> higher purchase price in ENEE's pricing models.

All in all, not only does the project have the problems we knew with community consultation and approval; as an engineering project, its feasibility was uncertain. The record of approvals and contradictory roles of individuals involved is a clear indication of violation of law. And it seems the main purpose in setting the project up the way it finally was approved and was to be implemented might have had more to do with extracting more government money, than with any actual power production.

The sixteen individuals charged in this case are:  Francisco Rafael Rivas Bonilla, Julio Alberto Perdomo Rivera,  Catarino Alberto Cantor López, Luis Eduardo Espinoza Mejía, Anna Lourdes Martinez Cruz, Aixa Gabriela Zelaya Gomez, Dario Roberto Cardona Valle, Mauricio Fermin Reconco Flores, José Mario Carbajal Flores, Oscar Javier Velásquez Rivera, Roberto Anibal Martínez Lozano, Roberto David Castillo Mejia, Julio Ernesto Eguigure Aguilar, Raul Pineda Pineda, Carolina Lieth Castillo Argueta, and Saida Odilia Pinel. 

They now stand accused of Abuse of Authority, failing to fulfill the requirements of a public official, falsification of documents, negotiating in a way not compatible with holding public office, and fraud.

Renewable Power Down in Honduras

Despite having increased its installed base of renewable energy generation sources, Honduras is actually getting proportionally less energy from renewable sources than it previously was.

The result of this lower generation has been roving blackouts all across Honduras this year. This comes despite policies of the Lobo Sosa administration.

In 2010 they approved 47 renewable energy projects, with a combined generation capacity of 750 megawatts.  Only four of those projects have actually broken ground to begin construction, and only one, a small hydroelectric project generating 12 megawatts, is actually operating.

In 2010, Honduras generated  6,744.3 gigawatt hours of power, split as follows:

• 3,449.6 gigawatt hours (52%) from oil fired plants
• 3,080.3 gigawatt hours (44.8%) from hydraulic generation
• 142.1 gigawatt hours (2.1%) from biomass 
• 22.1 gigawatt hours (0.3%) from imported power

From 2010 to 2013, Honduras saw a slight increase in installed capacity, from 1610 megwatts to 1734.9 megawatts.  That's a 124.9 megawatt increase, nearly all of it because of a single wind power farm, Cerro Hule (102 megawatts), coming on line.

There was a slight increase in biomass generation by 2013 as well, from an installed capacity of 91.4 megawatts to 105.5 megawatts, primarily from sugar cane processing.

By installed capacity, in 2010 renewable sources represented 38.4% of the generating capacity of Honduras.  In 2013 that had risen to 43.7% of installed capacity, as the director of SERNA reported earlier this year.

But despite representing almost 44% of the generating capacity, renewable installations actually generated only 40% of the power produced in Honduras this year.

Why was this?

There was an overall drop in power generation in Honduras between 2010 and 2013.  In 2010, Honduras generated 6744.3 gigawatt hours of power.  In 2013, it generated 5898.8 gigawatt hours, a decrease of 845.5 gigawatt hours.

The good news is that wind power and biomass generation increased.

The bad news is that everything else decreased.  Oil-fired plants generated 22 gigawatt hours less electricity in 2013 versus 2010.

The biggest drop in generation came from hydroelectric.

In 2010 hydroelectric plants generated 44.8% of the power used in Honduras.  In 2013, only 33.7% of the power generated in Honduras came from hydroelectric, a drop of 11%.  Total hydraulic generation dropped by nearly a third, from 3083.3 gigawatt hours in 2010 to 1999.1 gigawatt hours in 2013.  Part of this is due to mismanagement of the El Cajón dam, built on the Comayagua River in the 1980s.

The amount of water in its reservoir has been lowered to reduce pressure on the dam, which is reportedly leaking more than 2000 liters per second through cracks that threaten to flood the turbine room.  Reduced water pressure means reduced production of electricity.

Another factor contributing to this decrease in hydroelectric generation is drought.  Much of the southern half of the country has been experiencing a multi-year drought.

The renewable energy strategy of ENEE places a higher emphasis on hydroelectric projects than any other form of renewable energy.  The majority of the 47 renewable energy projects approved in 2010 were hydroelectric projects, mostly small.

Honduras is at continuing risk for drought going forward, according to climate change maps.

Other types of renewable power would seem like better options for the future, and would lower the confrontations caused with local people-- often rural farmers, and in many cases indigenous people.

Unfortunately, when Honduras strikes out into renewable energy, it is just as likely to grant contracts to companies with no expertise.

So the hydroelectric projects that can be done with local resources keep on coming. But the power generated does not.

Foster Tilapia, Kill Lake Yojoa

 Lake Yojoa is an amazing, beautiful natural wonder located on the road between Honduras' two largest cities, San Pedro Sula and Tegucigalpa. Located in the midst of mountain peaks, with hundreds of species of birds reported, it has long been a destination for Hondurans traveling the road, who stop at roadside fish restaurants. The name on the menu, if not the fish on the plate, was always bass. The lake was stocked with black bass back in the 1960s by the Tela Railroad Company, sparking a sport fishing industry that attracted fishermen from all over the world, especially the United States.

But Lake Yojoa has not fared well from the Honduran government.

A recent decision by the Dirección General de Pesca y Acuicultura, DIGEPESCA, to add 500,000 minnows of Tilapia to Lake Yojoa is among the most stupid and damaging things that could possibly be done to the lake. DIGEPESCA had a choice of any number of fish varieties to add to the lake. They picked a terrible, environmentally destructive fish.

Tilapia already exist in the lake. Tilapia were supposed to be farmed on the lake edge and in streams, but escaped into the lake, overpopulating it, reducing the oxygen available.

The black bass population decreased, as did the size of bass remaining in the lake, decimating the sport fishing industry and making it difficult for the Lake Yojoa area restaurants to obtain the famous black bass that drew in the crowds. 

No one comes to eat fried tilapia

Black bass, although also introduced, were not destructive of the lake environment the way tilapia are. Studies in 2008 found that tilapia farms were the major cause of pollution of the lake.  In particular the fish feces was found to promote algae growth. It also makes the lake smell bad. 

Today the lake is full of algae, a direct result of tilapia excrement, and red and black tilapia in abundance. To this overpopulated lake, DIGEPESCA will add 500,000 minnows of tilapia. 

The good news is that these will be devoured by the existing fish so in effect, DIGEPESCA will be supplying dinner for the existing fish supply, not introducing a new commercial fish.

In 2008 Donard Reyes condemned the government for fostering the destructive shift to tilapia:

The government has weighed in a balance, we can have the beauty of lake Yojoa or we can export tilapia, because undoubtedly, the cages that produce the tilapia, generate a good economic return for the state.

Black bass, and the international fisherman who prized them, are not the only victims of bad decision-making here.

The algae, low water, water hyacinths, and low oxygenation has greatly diminished the diversity of species of birds and animals found in and around the lake.

SERNA, the ministry responsible for the environment was trying in 2010 to restore some balance to the lake by removing water hyacinths and restricting agricultural runoff into the lake.

There was even talk of removing the existing tilapia farms in the lake to try and reduce the contaminants.

DIGPESCA, however, belongs to the Secretaria de Agricultura y Ganado, not SERNA, and appears to be unconcerned about working against another minisry. 

Nor is there any concern apparent about the impact on the work of Hondulago and Amuprolago, NGOs working to provide water treatment for communities dumping wastewater into the lake.

So much for the tourism industry around the lake.  It, like the lake, will die of government stupidity.

Pigeons or Patrimony

There's a legal battle brewing in Tegucigalpa between the Catholic Diocese and pigeon lovers from La Casa de Noé.

The historic Cathedral in Tegucigalpa was renovated in 2009.  At that time the Honduran Institute of Anthropology and History (IHAH), as part of its mission to protect the national patrimony, installed  nets designed to keep pigeons from roosting on the historic structure. Their nests damage the building, and their excrement is corrosive.

Now, La Casa de Noé claims that the nets are killing hundreds of pigeons, and that constitutes animal cruelty.

It's not just the Catholic Diocese and IHAH that want to keep the pigeons out.  The city has cut down all of the trees near the Cathedral, removing nesting sites for pigeons.

In a solomonic decision, the director of SERNA, the natural resources and environmental ministry of the Honduran government, in decree 686-2012, ordered that the netting on the right-hand side of the cathedral be removed because it was hurting the pigeons and their decomposing bodies damaged the environment.

The problem appears to be that the mesh is too big. Pigeons can become trapped in the holes in the mesh and die there, or so the spokesperson for La Casa de Noé, Silvia Alfaro, claims.

When she complained to the Environmental commission and the Institute for Forestry Conservation, (ICF) they informed her that pigeons were not endangered in Honduras.

Why only the net covering the right hand side of the building needs to be removed is not clear, but a possible solution is: install netting with a smaller mesh, so that the pigeons cannot become trapped in the mesh. The ICF has proposed to begin feeding the existing pigeon population with contraceptive feed.

That would allow both the Cathedral and the pigeons to peacefully co-exist. But will it satisfy La Casa de Noé?

Dammed

On August 31, 2009, the de facto government of Honduras announced a new accelerated program to approve environmental licenses for projects. Under the program, private industry would fund 35 new positions for lawyers and technicians at SERNA, the Secretary of Natural Resources and Climate, to speed up the approval of environmental licenses for projects such as housing developments, roads, dams, and such, which take an average of two years to get approved. The goal of the acceleration was to get through the entire backlog of 1200 applications by year end.

Less than a month after the program had been funded, SERNA had approved 320 of those programs and turned over the environmental licenses, projects like a new pier for cruise ships to dock on the Bay Island of Roatan, housing, restaurants, pharmaceutical factories, chemical plants, dams, none of which raised any environmental concerns according to SERNA last September 26.

Now comes word that the Prosecutor for Environmental Crimes is worried, according to the office of the Public Prosecutor. Aldo Santos, the prosecutor in charge, has seen a number of clearly worrisome projects with environmental licenses approved under this accelerated process.

"The prosecutor already has the first reports of some licenses that should be reviewed because their environmental permits were issued in less than nine days under the previous administration, and that really scares us because in so many years of being here with the theme of the environment, physically it is impossible for an environmental license to be given in nine or ten days."

Among the licenses he is investigating are several for dam projects near La Ceiba which were approved under the accelerated processes at SERNA.

"This office is not opposed to having more dams, if needed, but these should be built within the law, the Constitution, and above all, with proper mitigation, not as official grants to help a friend or member of a political party, that's irresponsible."

So, under the de facto government, environmental license approvals went from an average of 720 days wait, to 9 or 10 days. The real question is, why did it take even 9 or 10 days? They clearly weren't doing the required oversight, so why weren't the licenses just issued immediately? Maybe it was the sheer volume of environmental licenses they were handing out to their backers....

Adolfo Facussé to Honduras: Don't Demonize Mining

One of the clear contributing factors to the coup d'etat of 2009 was the abysmal nature of Honduran press coverage of politics. Today's La Tribuna brings an article that so perfectly exemplifies this, while also exposing more of the web of economic interests that distort Honduran society, that it merits commentary.

Under the headline They can't close sources of work with a new Law of Mining the article opens with the news that the San Martin mine, operated by Entre Mares, will be closing, having ended its cycle of production.

Entre Mares, owned by Goldcorp, a Canadian mining company, is well known to activists because of the complaints registered by local residents against the negative environmental impacts of its open-pit gold mine, located in an area of Honduras called the Siria Valley, in the Department of Francisco Morazán. Cyanide leaching processes are alleged to have led to elevated levels of arsenic, lead and mercury in the bodies of residents, contributing to a variety of illnesses. Cattle have died in the vicinity of the mine.

In 2007-- in the midst of the Zelaya administration-- the mine was fined one million lempiras (not quite $60,000) for environmental damage. Deforestation, damage to water sources, and displacement of a rural community are all products of this mining adventure. Reports on investigations by CAFOD (the Catholic Agency for Overseas Development, a branch of CARITAS) makes grim reading. CAFOD has called attention to the danger that Entre Mares and its parent Goldcorp will leave an environmental disaster that Honduras cannot clean up throughout 2009.

So what does Adolfo Facussé, president of the Asociación Nacional de Industriales (ANDI), have to add to the discussion? Well, let's let La Tribuna's objective reporting give us the answer:

Despite the fact that there are small groups in Honduras that demonize the companies, the businesses re-established all the environmental conditions that existed before the exploitation of the land, they even improved them, [Facussé] pointed out.

In the same way they left a tourist center constructed, where there is an hotel; these installations will serve to maintain the economic activity of the residents of the municipality of San Ignacio.

The bizarre notion of transforming a former open pit mine into a tourist center is hard to even take seriously.

I would point out that none of the above is in quotes, nor is the text that follows immediately:

Unfortunately the owners of the mine could not continue investing in Honduras, because some people meddled so that Honduras is the only country in the world where mining should not exist.

They are people inspired by the left and they forget that in Cuba, Peru and Venezuela there is exploitation of mines, only in Honduras they wish to prohibit it.

Ignore for the moment the nonsequitur between saying that the mine is being closed down because it reached the end of its cycle of production, and that the mining company cannot continue because of some meddlesome person. Attacking environmental and social justice groups-- among them, the Association for a More Just Society of Honduras, which published reports on the contamination as early as 2003-- by branding them as leftist, and especially, dragging in Cuba and Venezuela, is dangerous rhetoric in the wake of the coup in Honduras. (Why poor Peru got included I cannot say...)

But remember: the text above is not quoted. It is the body of the news report. It echoes and thus treats as facts assertions by Facussé, who is quoted next as saying

"To prohibit mining exploitation in Honduras damages the national economy, because in these moments gold has achieved extraordinary prices and in our country many mines could be opened to give work to thousands of compatriots, but it changed to thinking negatively."

The paper continues by paraphrasing Facussé further as saying

The enemies of Honduras do not want there to be work for the Hondurans, but they do not close the mines of Cuba and Venezuela, among other countries where there is mining exploitation.

then changes to direct quotes to continue his comments:

“In Honduras there already exists a Law of Mining that was agreed upon some years ago and we are in favor of them applying this law, and in it was established respect for the environment, an increase in the taxes that the mining companies should pay, among other regulations."

“Definitely, we are 100% against the project of Deputy Marvin Ponce, who wants to close the opportunities of work for thousands of Hondurans that need a job in this country.”

The line between reporting on the facts of the issue, and conveying the opinions of Facussé as if they were facts, is not just blurred in this article: it is obliterated.

The target of this thinly veiled piece of propaganda is a proposal Ponce-- congress member of the UD party-- made early in February. An article published on February 12 in Tiempo reports on the facts of the newly proposed law, which regulates, but does not end, mining. The key change to former practice that it would introduce would be the prohibition of open-pit mining like that in the Valle de Siria:

The project proposes the prohibition of open air mining in all the [Honduran] territory as well as the use of cyanide and any other chemical substance that might be manipulated in the processes of recovery and concentration of minerals and metals.

Ponce's proposal also calls for review of existing concessions for environmental impact, including the potential to close those found to be damaging the environment. It is worth recalling that one of the outcomes of last year's coup was a dramatic acceleration in the pace of approvals of petitions for environmental licenses by SERNA, the Secretariat of Natural Resources and Climate. The issue was and remains financial interests that lead some members of Honduran society to promote economic activities shown to be damaging to the common good and the people in general because of the benefits that would accrue to a small group.