New Internationalist

Megacrime Scenes

Issue 358

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[image, unknown] Corporate crime / MEGA-PROJECTS

Megacrime scenes

Ambitious mega-projects provide ample opportunity for
corporate crime – from fraud and bribery to human-rights
abuses. Pratap Chatterjee fears that Iraqis may
be the next ‘beneficiaries’.

Three Gorges Dam – site of China’s prestige mega-project – complete with forced removals and a seedbed of corruption.
Photo: Chris De Bode / Panos

This March, while US tanks were rumbling across the Iraqi desert to Baghdad, military officials were busy preparing blueprints at the Hilton resort in Kuwait for an unprecedented construction bonanza worth up to $100 billion. With Saddam Hussein’s statue in bite-size pieces of souvenir ‘rubble’, the US announced the winners of the reconstruction of Iraq’s infrastructure: Bechtel and Halliburton, two generous contributors to George W Bush’s Republican Party.

According to Bechtel President Tom Hash: ‘Bechtel is honoured to have been asked to help bring humanitarian assistance, economic recovery and infrastructure reconstruction to the Iraqi people.’ Citizens of Kabul, scene of the previous war with the US, might be wondering why Bechtel was not as eager to rebuild Afghan infrastructure, which is just as dilapidated. The key difference is oil: Iraq can pay (or may be forced to pay) for extensive repairs and the US is only too happy to help American companies cash in. Never mind that Iraqi hospitals have been robbed bare or that there is little by way of decent water or electricity; the very first contract awarded was for repairing southern oil wells.

The price tag for the construction of major highways, dams and power plants can only be met by big governments or major corporations. The health or rights of the affected communities are not a major consideration. Such mega-projects also provide ample opportunity for an avalanche of kickbacks, bribes, cost overuns, and abuse of human and labour rights.


West Papua
The expatriate mining executives gathered at the 2001 Christmas celebration in Tembagapura beamed with pride as their children’s voices rang out in the mountain air on the remote island of Papua in eastern Indonesia: ‘On the 12th day of Christmas, Freeport gave to me – 12 sticks of dynamite’ – paraphrasing the popular carol to reflect their parents’ jobs at the world’s largest gold mine, run by Freeport McMoRan of Louisiana.

Every day hundreds of thousands of tons of toxic mining waste, the residue from the explosives at Freeport gold mine, are dumped into the local rivers, killing the fish and the forests downstream. The mine is situated on the land of the Amungme and Dani indigenous tribes in the heart of the world’s third-largest rainforest – and is perhaps among the worst examples of corporate greed, environmental and human- rights abuse.

Back in 1994 three local people were tortured to death by the Indonesian military guarding the mine in the neighbouring village of Koperapoka, the day after returning from a Christmas prayer gathering – just a few of the many who have died at the mine site for organizing protests against Freeport.

The stories of the torture and death in Indonesia made almost no ripples in the US media. But eight months after the 2001 Christmas party Rick Spier, an elementary schoolteacher and US citizen, was cut down in a hail of automatic-weapon fire when returning from a picnic. ‘The attackers kept shooting and shooting for about 45 minutes... it felt like thousands of bullets and pieces of shrapnel [were] ripping through the vehicle... People were screaming,’ recounts his widow, Patricia Speir, who survived the attack.

Spier died, Indonesian government investigators believe, at the hands of the same Indonesian military that has been terrorizing the local people. Finally the governments concerned woke up: in December 2002, President Bush sent a personal envoy to Indonesian President Megawati Sukarnoputri to underline the importance of finding the culprits and to request permission to open an FBI investigation.

Some of what was uncovered is shocking. In March 2003 Freeport admitted it paid more than $11 million annually to the Indonesian army for security at its operations at the mine site – to those who tortured the indigenous people and allegedly shot Spier.


India
Governments and big development banks seem to think that the sheer size and scale of a project can transform the world and bring wealth to poverty-stricken communities. The lure of money is just as irresistible to the corporate world: attracting human-rights abuses as well as giant cost overruns usually at the taxpayers’ expense. The benefits of these projects are often questionable.

Take Enron, whose accounting scandals and subsequent collapse made headlines. Less well known are the human-rights abuses by the Indian police, that the company funded. Just before dawn on 3 June, 1997, police officers forcibly entered the homes of several women in Veldur, a fishing village in western India, dragged them into waiting police vans and beat them with sticks. The only ‘crime’ committed by these women was to lead a peaceful protest against the environmental impact of Enron’s massive new Dabhol natural-gas plant being built near Veldur.

Enron began work on the 2,015- megawatt Dabhol plant in early 1995 with the help of Bechtel and General Electric at an estimated cost of $2.8 billion. That year the company began clearing ground 160 kilometres south of Mumbai on several hundred hectares of porous red rock and shrub-covered hills that make up a volcanic outcrop overlooking the Arabian Sea.

According to Amnesty International, one of the women who was arrested in 1997 was Sugandha Vasudev Bhalekar a 24-year-old housewife whose husband, Baba Bhalekar, was a known leader of the protests. At the time of the arrest she was three months’ pregnant.

She testified to the Judicial Magistrate: ‘At around five in the morning, when I was in the bathroom, several male police with batons in their hands forcibly entered the house and started beating members of [my] family who were asleep.... the police forcibly opened the door and dragged me out of the house into the police van parked on the road. [While dragging me] the police kept beating me on my back with batons. The humiliation meted out to the other members of my family was similar to the way I was humiliated... My one-and-a-half-year-old daughter held on to me, but the police kicked her away.’

Enron denies any role in this. ‘The Dabhol Power Company does not employ, second or subcontract police officers at the site... we have no authority over their actions,’ the company claimed in a 17 November, 1997 letter.

However, a January 1999 report by Human Rights Watch (HRW) investigators found that Enron was directly paying police salaries. Police Sub-Inspector PG Satoshe, who was in charge of this operation, told HRW that Enron was picking up the tab for policing Dabhol. ‘I calculate the number of officers there and according to the (government set) rates, submit a report to the superintendent of police in Ratnagiri... I do not handle any money. The company pays directly to the Government.’

According to Kenneth Roth, HRW’s executive director: ‘Enron has invested in a democratic country, in a region with no significant strife – and human- rights abuses there have increased.’ The project was to provide Enron with a beachhead in Asia. From the beginning it was plagued with problems and by the time it was to come on line, the electricity produced was by some estimates four times more expensive than any other power source in India.


Boston
Nor does corruption and intimidation happen only in the global South. Many companies are happy to bribe government officials and cheat the taxpayer in their home countries. Take Iraq’s new San Francisco-based saviour – Bechtel. They have the contract for the most expensive civil- engineering project in US history: the Central Artery tunnel project, locally known as the ‘Big Dig’, intended to push a highway beneath the surface of the city of Boston in Massachusetts.

In 1985 the price tag of the project was an estimated $2.5 billion. This figure has been spiralling upwards every year. In 2003 state officials estimated that the latest price tag for the project was a whopping $14.6 billion or $1.1 billion per kilometre, making it the world’s most expensive highway.

The Massachusetts State Audit Office has over the last decade identified close to $300 million in cost overruns due to careless management on the part of Bechtel/Parsons Brinckerhoff.

Peter Berlandi, chief campaign fund raiser for the Massachusetts Governor William Weld at the time, apparently intervened on the company’s behalf. According to a Boston Globe investigation Berlandi, whom Bechtel paid $200,000 dollars for his services to the construction company, allegedly called Bechtel’s critics in the construction industry and said: ‘If you want to work in this state again, don’t play games with Bechtel.’ Berlandi and Bechtel deny making the statement.

Pratap Chatterjee is an investigative journalist based in Berkeley, California.

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