Behind the Lines

AES Stalled in Uganda

The company chosen by the World Bank to build the controversial Bujagali dam in Uganda has run into major financial difficulties that may threaten its ability to complete the project [See “Falling for AES’s Plan?” Multinational Monitor, June 1999].

Virginia-based AES Corporation broke ground on the Ugandan dam in January, after receiving $225 million in loans and guarantees from the World Bank in December. But within weeks the company announced that it would be cutting its workforce by almost 90 percent.

The International Rivers Network’s Lori Pottinger says that various commercial banks and export credit agencies have dropped the Bujagali project in recent months, including the U.S. Overseas Private Investment Corporation, which pulled out in October, and Sweden’s SIDA, which pulled out in November.

Although AES officials would not reply to a request for comment, the company has admitted that financial difficulties created by the falling price of wholesale electricity, economic troubles in countries such as Argentina and Venezuela where it has power plants, and the bankruptcy of Enron have together created enough financial difficulties for the company to at least delay the Bujagali dam project.

The company’s stock has dropped 90 percent from its highest value in the last year. In February, the company announced plans to sell $1.5 billion in assets.

AES’s problems could spell trouble for the World Bank’s International Finance Corporation, which has probably lent more money to AES than to any other single company [see “AES: IFC’s Corporate Welfare King,” Multinational Monitor, September 2001].

Enviro Debt Cover-Up

With the Enron scandal revealing the severe potential consequences of corporate failure to disclose relevant information to shareholders, a citizen coalition is pointing to an epidemic of business failures to report on their hidden environmental debt.

Citing a 1998 U.S. Environmental Protection Agency survey which found that 74 percent of U.S. publicly traded corporations fail to fully report their environmental liabilities in annual Securities and Exchange Commission (SEC) filings, the Corporate Sunshine Working Group (CSWG) — a coalition of 60 organizations including environmentalists, steelworkers and money managers — is calling on the SEC to strictly enforce and improve securities laws governing corporate disclosure.

Potential environmental liabilities for asbestos and other products have caused major corporations such as Grace to file for bankruptcy, while Superfund cleanup costs are alone estimated by the insurance industry to be over $100 billion.

Although the SEC issued a bulletin in 1998 with stricter rules on material reporting requirements, CSWG says the SEC’s lax enforcement of its own rules allows companies to rarely pay a penalty for nondisclosure. Corporations can hide significant liabilities through the use of boilerplate language that suggests that costs and claims will not have a materially adverse affect on a company’s bottom line.

In October, EPA issued an enforcement alert directed at “the regulated community” to clarify when companies must notify the SEC of any enforcement action.

“Increased scrutiny of corporate environmental information, particularly legal proceedings, by the public, shareholders, and investors will likely provide an incentive for companies to handle environmental problems in a more expeditious manner, and provide a deterrent to future noncompliance,” EPA’s Office of Regulatory Enforcement says.

Bush’s Yucca Reversal

President Bush reversed a November 2000 campaign pledge in February by asking the U.S. Congress to approve construction of the Yucca Mountain nuclear waste repository.

The U.S. General Accounting Office (GAO), the Inspector General of the Department of Energy, the Inspector General of the Nuclear Regulatory Commission, and the Nuclear Waste Technical Review Board have all raised scientific concerns about the proposed Nevada dump, which sits in the middle of one of the most seismically active areas of the country.

Dump opponents say Bush’s announcement, like much of his administration's energy policy, is a political payoff to the nuclear industry, which gave more than $290,000 to the Bush campaign, according to the Center for Responsive Politics.

A White House statement explained that the administration’s decision was based on “decades of scientific study.”

However, opponents wonder whether the “decades” of study were all generated after the 2000 election, when the Bush campaign said it would oppose the plan the administration now supports. In November 2000, just before the election, Vice President Cheney told Nevada citizens that Bush would veto any legislation approving the dump that “is not based on sound science and can’t be done safely.”

Bush’s reversal caused Senator Harry Reid, D-Nevada, to call Bush “a liar” and join the GAO in a lawsuit asking the courts to force Cheney to release information related to energy policy meetings with industry executives.

“Finding a safe and central repository is not only mandated by law, but it is in America’s national security and homeland security interests,” the White House says.

But “transporting waste doesn’t reduce the number of potential radioactive targets, but rather vastly increases it because each shipment becomes a potential terrorist target,” says Public Citizen’s Wenonah Hauter.

— Charlie Cray