A group of lawmakers is urging Obama administration officials to oppose a multinational U.S. company's efforts to sue Peru in a mining dispute, citing the company's environmental and health record.
The request, made in a letter last month to Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner, pits the lawmakers against a secretive billionaire and big U.S. political donor—and, in some cases, against themselves.
Four of the letter-signers—Reps. Bobby Rush, D-Ill., Lynn Woolsey, D-Calif., Ed Towns, D-N.Y., and Danny K. Davis, D-Ill.—have switched sides in a controversy involving Doe Run Peru, which environmental groups have accused of causing lead contamination in a small Peruvian town called La Oroya. The four were among eight legislators who, when we last looked in on this dispute a year ago, were praising the company's environmental record and argue it was being subjected to "disparate treatment" by Lima, the same rationale used in a lawsuit the American firm filed against Peru.
Doe Run is the Latin American affiliate of the Renco Group, a conglomerate owned by notoriously secretive billionaire Ira Rennert, who built a fortune on junk bonds, owns what is reportedly the largest private home in the U.S., and has contributed over $600,000 to U.S. political campaigns over the years, according to Influence Explorer data.
Being told of their contradictory positions seemed to catch lawmakers off balance.
Renee Ferguson, a spokesperson for Rush, said the Chicago liberal "changed his mind after getting more information" and that he might not have been thoroughly briefed on the issue before. "After multiple consultations, we realized that the dispute was related to environmental degradation," Ferguson said.
In a statement, Rush explained the mix up as one of competing priorities. "It is my instinct and natural desire to support the interests of American business development but never at the expense of the health, safety and well-being of people, especially vulnerable children."
A spokesperson for Davis, Ira Cohen, also said that new information prompted the recent letter. He did not answer whether Davis was aware of the old letter when he signed the new one. Meanwhile, spokespeople for Woolsey and Towns did not respond to multiple requests for comment.
The sign-on effort for the new letter was led by Rep. Raul Grijalva, D-Ariz., after two advocacy groups, Oxfam and Public Citizen, sponsored a congressional briefing on March 28 about how investor protection clauses written into free trade agreements can threaten the peoples' health and environment in foreign countries. A total of 17 lawmakers signed on. Another congressman, Russ Carnahan, D-Mo., wrote a separate letter to the Peruvian Congress asking them to encourage Doe Run Peru to meet its environmental agreement. Missouri is home to another Renco subsidiary that runs a lead smelter, which paid $65 million in fines to the EPA for breaking environmental laws.
The new letter comes as Renco's lobbying campaign has fizzled. In the final two months of 2010, just before the lawmakers wrote pro-Renco letters, the company spent about $250,000 on lobbyists advocating for Doe Run Peru. By the following spring, Renco had five firms working the halls of Congress on its behalf. A year later, two firms are on hire for $30,000, according to the most recent filings.
According to the Center for Responsive Politics, the Renco Group has spent about $4.6 million lobbying for its various businesses since 1998, most of that for one of its businesses, AM General Corp, the maker of Humvees sold to the U.S. military. Rennert's political contributions have tilted towards Republicans of late, most notably the more than $60,000 he gave to a joint fundraising committee for House Majority Leader Eric Cantor, R-Va., in 2010; $100,000 to Texas Gov. Rick Perry (running in a state with no contribution limits), and more than $30,000 he gave to the committees affilated with 2008 GOP presidential nominee Sen. John McCain, R-Ariz. But Rennert has given to plenty of Democrats, including former New York Gov. Eliot Spitzer, and then-Sens. Al Gore and Joe Biden.
His company's metals smelter is controversial for several reasons:
- The health problems of the people in La Oroya;
- Financial troubles that led to the plant's shutdown, and
- An ongoing dispute with the Peruvian government over who is responsible for cleaning up the environmental contamination and the legal claims of children suffering from lead poisoning.
The latest bump in the road came because Doe Run Peru submitted a plan that only funds part of the $200 million environmental cleanup and asks Peru to be liable for the children's U.S. court claims. Peru's mining minister called the plan "unacceptable" and until a plan is accepted, the company cannot restart operations.
The new congressional letter, written on March 29, asks Clinton and Geithner not to back Doe Run Peru's investor protection claim asking Peru for $800 million in damages, a claim allowed under the U.S.-Peru free trade agreement signed in 2010, and accuses the company of repeatedly evading environmental agreements.
Last year's sharply contrasting congressional advocacy seemed to be the direct result of Renco's lobbying. Lawmakers leading the charge for Renco last year—the late Rep. Donald Payne, D-N.J., and Spencer Bachus, R-Ala.—both had ties to lobbyists working to press the U.S. government to support the troubled company. Renco hired a lobbyist who used to work for Payne. The veteran New Jersey Democrat, who spoke on House floor to defend Renco in February 2011, died last month after battling colon cancer. A former aide would not talk on the record about the Renco issue.
Public Citizen, the advocacy group that opposes free trade agreements, suggested that the lawmakers' advocacy last year had an impact on U.S. policy. The Treasury Department's response was that the U.S. negotiated the investment chapter of the free trade deal with Peru to allow such disputes to be resolved in a neutral international court. At the time, the State Department had already assured the lawmakers that it had expressed its concern to Peru, the legislators' letter.
"Even making the statements they’ve made send the signal to the Peruvian government that the heavies are in town and supporting Renco," Todd Tucker, the global trade research director at Public Citizen, wrote in an email.
In a Public Citizen report, Tucker suggests that the international arbitration was used to move its U.S. court case, where Peruvian children are suing Renco for lead poisoning, out of Missouri court and into federal court, which it accomplished in June 2011.
A spokesperson for Renco did not respond to a request to comment. One of the lawyers defending Renco's affiliate in the U.S. court case, Richard Ahrens of Lewis Rice, referred media inquires to the company itself.
It's unclear if the lawmakers' new advocacy against Renco will affect the U.S. position. A spokesperson for the Department of Treasury declined to comment. The State Department is monitoring the matter but must refrain from taking a position on the merits of a dispute once it is taken to court, wrote Kerry S. Humphrey, a senior media advisor in the Bureau of Economic & Business Affairs.
But the lawmakers have certainly completed an about-face.
Last year, they even floated the idea of cutting off U.S. investment in Peru if the company were expropriated, a threat Renco worried about.
This time around, they argued that "the mere threat" of an international arbitration case "can cast a chill on environmental and health regulation."
"If anything, the United States Government should be urging Renco to drop its investor-state claim," they added.