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Sunday, August 30, 2009

A careful balancing Act: Neither side willing to admit what happened in El Paso Texas...

[remember two things when reading this -- that in 1998 both the EPA and the Federal DOJ knew that ASARCO (Grupo Mexico sat on the board but did not own it) that Asarco had illegally burned secret toxic wastes from military and industrial sources for years (and the DOJ/EPA hid this information from the public for EIGHT MORE YEARS as a confidential-document!).  The winter of 1998 the TCEQ abruptly decided not to have a nuclear dump in Sierra Blanca TX after all, and the EPA quietly registered Beta-Radiation levels in El Paso TX that were the highest in the U.S.A. Then Asarco decided in Feb. 99 to shut down temporarily, saying that copper prices were down and both ASARCO and the patent for the Con-Top furnaces were coincidentally sold off....]

The following is an excerpt of M. Bosque's TX Observer article

"....On a hot afternoon in June, the 54-year-old Larrea, one of the world's richest men, took the witness stand at the federal courthouse in Brownsville. It was the first time many of the people inside the courtroom - including attorneys on his payroll - had ever seen the reclusive Mexican billionaire. There are few available photos of Larrea and little public information about his private life. He had fought the federal subpoena compelling him to testify for days. He had finally relented and flown into Brownsville on his private jet from Mexico City earlier that morning. Security guards had banned photographers from the front steps of the courthouse. Shortly before his testimony, Larrea was whisked into the courtroom under the escort of several armed U.S. marshals, who remained on site throughout his five hours on the stand.

Seated in the witness chair, Larrea glowered at the 30 lawyers in the courtroom - representing Asarco, and Grupo Mexico - business reporters, miners, and large, moveable bookcases of evidence that had been wheeled into the room. Larrea had come to defend himself in a lawsuit alleging that he had defrauded Asarco's creditors.

The case in which Larrea was testifying is an outgrowth of the bankruptcy. When Asarco filed for Chapter 11, federal Judge Richard Schmidt removed Asarco from Larrea's control. Bankruptcy experts say this was a highly unusual move. Larrea's Grupo Mexico still technically owns the company, but no longer has any say in operations. The judge appointed a three-member independent board to oversee Asarco (the board remolded the company into an entity called Asarco LLC). The board is supposed to ensure that the company isn't deceiving several hundred creditors with unpaid contracts and asbestos claims.

Controlled by the independent board, Asarco LLC then sued its former bosses at Grupo Mexico. The lawsuit alleges that Larrea had defrauded Asarco's creditors by swiping Asarco's most valuable asset - Peru's largest copper company. The Peruvian mines' stock was worth $8.25 billion at the time the lawsuit was filed in 2007, according to court records, though Larrea transferred the mines from Asarco to a Grupo Mexico subsidiary at a grossly undervalued price, $756 million, according to the lawsuit. The suit accuses Larrea of bilking creditors out of billions of dollars. "The plaintiff contends that the sale, therefore, was not made to improve Asarco's financial position, but was solely a means for Grupo to 'cherry-pick' Asarco's most prized asset before it was lost to creditors or by bankruptcy," the suit alleges. Asarco LLC wants the value of the Peruvian company stocks returned to Asarco LLC creditors.

The lawsuit is a legal sideshow to the larger bankruptcy case. But the outcome of the lawsuit could have a huge impact. Some of the money at stake in the lawsuit over the Peruvian mines could help pay for cleanup of Asarco's environmental pollution. (The U.S. government considers the Peruvian mines a crucial asset in paying to clean up Asarco's many toxic sites.)

On this June day in Brownsville, Larrea had come to tell his side of the story. Federal Judge Andrew Hanen had to silence the courtroom before Larrea could begin his testimony. The CEO wore a conservative, well-tailored, dark blue business suit with a red tie. For such a powerful man, Larrea was surprisingly soft-spoken, answering the lawyers and judge in a hushed and barely audible, but fluent, English. Several times, the judge asked him to speak louder so that people in the back of the courtroom could hear.

Larrea repeatedly denied that his motive for purchasing Asarco was to gain control of the valuable Andean copper mines. The CEO said the decision on the mines was solely the opinion of some Asarco and Grupo Mexico officials. (U.S. marshals ensured that no journalists could get within speaking distance of the billionaire.) In a separate statement from his company, he called Asarco LLC's lawsuit "reprehensible."

His history with Asarco began in 1999, when Larrea took over as CEO of Grupo Mexico shortly after his father's death. One of his first purchases was Asarco, for $2.2 billion. [Purchased after the EPA/DOJ sealed the information about what had happened, and after the El Paso site was shut down "temporarily"] At the time, however, the once-powerful Asarco was hemorrhaging cash.

Initially, Larrea testified in Hanen's courtroom, he believed the company's growing environmental liabilities could be solved through negotiations. [What negotiations were made to get someone on the board of Asarco (Grupo Mexico) to buy it after this devastating environmental catastrophe happened -- i.e., incinerating unmanifested illegal toxic wastes from military & industrial sources for years in the heart of a community??!] "In those days, we were confident we could reach an agreement with all parties on the remediations," Larrea said. "But then the company started losing too much money on legal issues."

By 2002 [Right after the EPA came to El Paso TX to "test" in 2001, but EPA still kept the real contamination SECRET], officials in the U.S. Department of Justice worried that Asarco would sell off its most valuable asset - the Peruvian mines - and would be left with nothing to pay for its numerous environmental cleanups. The department sought an injunction to stop the sale. Negotiations between the Justice Department and Grupo Mexico labored on until the end of 2002.[Just how bad was that contamination??] Finally, Grupo agreed to fund a $100 million trust to help pay Asarco's $1 billion in environmental liabilities at the time.  [Remember, there was a change-over from the Clinton Administration to the Bush Administration during this time, and that Carlyle Group now owns 20% of Grupo Mexico]

It was a good deal for Larrea. The Justice Department allowed Larrea to proceed with his sale of the lucrative Peruvian mines in exchange for paying one-tenth of Asarco's environmental cleanup costs...." [which came partially from the ASARCO company burning military wastes illegally along with whatever other unmanifested (i.e. "untracked") wastes were burned during the 1990's].

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