The Environmental Protection Agency of New South Wales is investigating claims that one of the Australian state’s largest power stations manipulated monitoring of its coal-fired power units to make them seem lower than actual emissions levels. Only one of the four coal-burning units at the Bayswater power station was only required to report pollution data, and according to reports, plant staff were instructed to supply it with lower sulphur coal while dirtier coal was burned in the other three units.
The company that operates the plant, AGL, did not deny that the previous owner had deliberately blended coal to mask the true emissions of nitrous oxides, sulphur dioxide and other pollutants. A former engineer at Bayswater told journalists that the practice of burning variable quality coal to curb pollution readings had been going on since at least 2000. As a result, the EPA has broadened its inquiry and contacted all currently operating and licensed power stations in New South Wales to find out whether Bayswater and other plants have under-reported emissions in the past or continue to do so. By using cheaper, dirtier coal, it’s possible that the coal plant operator was able to avoid paying the pollution fees and carbon taxes.
– The Sydney Morning Herald (Updated June 2017)
Two former members of Parliament and political power brokers in the New South Wales have been implicated in separate corruption schemes related to developing coal in the southeastern Australia state. Both cases resulted from inquiries by the Independent Commission Against Corruption into the activities of the former NSW Labor government.
In May, former NSW Mining Minister Ian Macdonald was sentenced to a maximum of 10 years for awarding a multimillion-dollar coal exploration license in 2008 to a company chaired by a union boss and political associate without a competitive public bidding process. In previous licenses granted for coal exploration in New South Wales, companies had paid tens of millions of dollars to the government as compensation, but the license to Doyles Creek Mining, run by a political associate, was offered for almost nothing in return to the state. The judge at Macdonald’s hearing noted the deviousness of the deal, saying it was cloaked in misconduct as the principals tried to hide their scheme by couching it in the context of developing a training mine to promote mining safety. The former head of the Construction, Forestry, Mining and Energy Union made $6 million from the deal selling shares in a company that acquired Doyles Creek Mining after the license was granted and was found guilty as an accessory.
In July 2016, another former member of Parliament, Eddie Obeid, was charged for his role in netting a $30 million profit from a rigged permitting process for developing coal on Obeid family property while he was still in office. Macdonald was also charged with conspiracy to commit misconduct in that scheme.
A Bangladeshi court sent the former deputy commissioner of the port town of Cox’s Bazar to jail as part of an investigation into embezzling funds from the proposed Matarbari coal-burning power plant. The chief judge in the case rejected a request for bail filed by the accused commissioner.
According to case files, a syndicate of 36 people embezzled more than $US 55 million (Tk 46,24,03,320) by disguising payouts as compensation for the purchase of 25 shrimp enclosures at the project area, which includes a proposed port for importing the coal to be burned at the plant. The scheme was discovered in In 2014 by the project’s Land Acquisition Officer, who noticed irregularities while processing five checks to disburse the compensation money. The case was then taken over by Bangladesh’s Anti-Corruption Commission, which ultimately filed the charges. In all, five people have been arrested, including another former deputy commissioner of Cox’s Bazar. The previous four suspects were all released on bail.
The initial price tag to build the 1,200-megawatt project and dredged coal port came in at $US 4.5 billion, an amount the Bangladeshi newspaper The Daily Star called “staggering.”
– The Dhaka Tribune
Allegations of deception by the developer of a proposed coal export terminal in Longview, Washington date back to 2011, when Millennium Bulk Logistics was caught concealing the true scope of its plans from local residents and elected officials. The company had publicly stated that it intended to ship a modest 5.7 million tons per year from the Pacific Northwest port facility it wanted to build. But court records obtained by the New York Times showed the company secretly was planning to a massive expansion from its initial plan in a second phase that would ship allow the port to ship up to 80 million tons annually, 14 times more than the company originally stated in its application.
Longview is the last of six coal export terminals proposed in the Pacific Northwest that still has any life life, although in early 2017, the Washington State Commissioner of Public Lands denied a key permit need for the project, citing “a chronic pattern of failure by the company to provide essential and accurate information” as a key reason. The company is challenging the permit denial and continues to pursue a plan to export up to 44 million tons of coal per year. That amount of coal would mean eight full coal trains per day moving through dozens of cities and towns along a 500-mile rail shipping route from the Powder River Basin in Wyoming and Montana. Concerns about toxic coal dust, noise, public safety and snarled traffic have drawn stiff opposition from residents, community leaders and elected officials in communities all along the rail line.
After more than a decades of shady financing deals, Serbian investigators in early 2011 opened a case against state-run Electric Power of Serbia related to its operation of Kolubara coal mine in west-central Serbia. An internal audit of the company’s books revealed serious irregularities by management that resulted in unnecessary expenditures benefitting private contractors. The investigation led to the arrest in late 2011 of 17 people, including Dragan Tomic, who had been director of the Kolubara mine, deputy director at EPS and also a member of the Kolubara legislative assembly.
The suspects, which included officials from the mining company and the private businesses that resold lignite from the mine or leased machinery to Kolubara, were accused of running up fraudulent costs equivalent to around $11 million (US). According to reports, Tomic allegedly paid the companies for unnecessary mining equipment and services, and the companies overcharged for the number of hours they worked. Some of the private businesses that were accused belonged to high-level management in Kolubara. In all, 28 people were finally charged in connection with the case.
In a related case, several other executives of Kolubara Mining and EPS were also arrested for their part in fraudulently profiting from resettlement funds. An EPS board member was paid €1.2 million by the company as compensation for his house in the village of Vreoci. He claimed his house needed to be moved to make way for a new strip mine even though it was in fact located far from the mining zone and wasn’t actually his residence.
A second employee at Appalachian Laboratories, Inc. is headed to jail for taking part in a broad scheme to cover up coal company water pollution by submitting fake water samples for required testing for compliance with permit limits. Former lab manager John Brewer has been sentenced to a two-year jail term. Another former employee, John Shelton, is already in prison. Shelton admitted diluting water samples and substituting water he knew to be clean for actual mining discharges. He said he would take water from what he called a “honeyhole” known to have water that would pass testing. Brewer admitted that he and other employees would falsify the dates on water samples to avoid having to submit samples they knew would violate pollution limits. U.S. District Judge Irene Berger said the crime put communities at risk and enabled companies to pollute without fear of getting caught or facing any consequences.
From 1993 to 2011, the government of India gave away the nation’s coal deposits for free to government and private companies, providing a massive windfall for mining firms and depriving the country of at least Rs1.86 lakh crore in revenues. Just between 2006 and 2009, the coal blocks given away without auction accounted for some 14 percent of India’s total coal reserves. The scandal that resulted – known as ‘Coal scam’ or ‘Coalgate’ – prompted widespread media attention, corruption investigations by India’s Special Central Bureau of Investigation, and a special court to hear the coal allocation cases.
Convictions started coming down in April 2016, starting with jail terms and fines for two directors of a firm called Jharkhand Ispat Private Ltd. They were found guilty of cheating and criminal conspiracy – “fraudulently” and with “dishonest intention” deceiving the government in allocation of a coal block. In its second conviction several months later in July, the special court found Rathi Steel and Power and three of its officials similarly guilty of fraud and deception in procuring a coal block.
In early January 2017, yet another firm – Himachal EMTA Power Ltd – and three of its senior officials were charged by the special court. Over the course of the CBI investigations, allegations also surfaced that some senior officials in the agency were taking bribes from companies to fix or weaken cases.
Nearly two dozen coal allocation scandal cases are pending before the special court. In late December 2016, former Coal Secretary H C Gupta was charged along with two other government officials for cheating and criminal conspiracy in allotment of the “Mahuagarhi Coal Block’ in Jharkhand to a private firm. In June 2017, Gupta and two other senior government officials were sentenced to two years in prison by the special court for his role in the coal scam.
Also in June, executives for the firm Jindal Steel and Power were summoned by a special court which accused them, according to the CBI, of cheating and criminal conspiracy by misrepresenting equipment purchase orders in the allocation of a coal clock. The accused are scheduled to appear before a special CBI judge in September 2017.
The Indian conglomerate planning one of the world’s biggest new coal mines – the Carmichael mine in Australia – is now under investigation by India’s Directorate of Revenue Intelligence for fraud and money laundering. The probes of the Adani Group companies focus on fraudulent invoicing of coal imports and false invoicing for capital equipment imports – schemes whose objectives appear to include both diversion of money into offshore tax havens as well as profit at the expense of the Indian people through higher electricity prices that are based on inflated coal costs.
In addition the Carmichael mine, Adani wants to build a new 400km rail line linking it to the Abbot Point shipping terminal and greatly expand capacity at the port to handle more coal. The Australian government is considering a $1 billion subsidy to support the railway. All the planned developments are based on a web of Adani corporate structures that involve tax havens in the Caribbean and other locations. The Carmichael mine would be 40km long and 10km wide, with six open-cut pits and five underground, threatening the land and existence of the Wangan and Jagalingou people. Expansion of the Abbot Point terminal and shipping threatens the Great Barrier Reef.
On January 7, 2017, Dominican Republic President Danilo Medina named a civil society commission to investigate construction of the Punta Catalina coal power plant — the same day the director of the plant’s construction firm was questioned in Brazil over its admitted $92 million in bribes paid to Dominican government officials in return for contracts on 17 key government projects. Punta Catalina — two power plants and a coal receiving terminal in the Dominican Republic — has been dogged by allegations of a full range of dirty dealing, including lack of transparency, deception, favoritism, overbilling and bribery.
The Dominican government awarded the Punta Catalina coal project contract to Brazilian firm Odebrecht, with financing from Brazil’s BANDES bank, despite Odebrecht’s bid that inflated costs by $1 billion – double that of competing bids — according to the National Committee to Combat Climate Change (CNLCC). And according to news reports, documents emerging from corruption investigations of Odebrecht in Brazil reveal that the company received insider information from the Dominican government and then ran a scheme in which it billed exorbitant wages for workers on the project. Odebrecht is being investigated in Brazil for using mechanisms to overvalue construction projects and also for paying bribes and providing electoral advice in return for contracts, including in the Dominican Republic. Because of the corruption investigations in Brazil, financing from Brazil’s BANDES bank was stopped, prompting the Dominican Republic to turn to public funds, including from the state pension fund, to finance Punta Catalina.
– Washington Post (Updated June 2017)
Six former executives at major U.S. coal company Alpha Natural Resources have been sued for fraud by the state of West Virginia, charged with knowingly making false and misleading financial projections in order to finalize Alpha’s plan to get out of bankruptcy. West Virginia’s environment department said the Alpha execs failed to disclose $100 million in obligations to restore land at Alpha mining sites in order to make Alpha’s cash flow look better. The $100 million in debts and obligations came to light just three months after Alpha got approval to exit bankruptcy and create a new stripped down company called Contura where the Alpha executives quickly took management positions.
According to West Virginia’s environment department, “…the debtors’ senior mangement knew about but did not disclose those impending “unaccounted-for” expenditures“ and “…the debtors’ senior management sat on both sides of these very issues and stood to benefit uniquely from consummation of the plan….” The $100 million shortfall could threaten Alpha’s viability and could saddle taxpayers with the costs of cleaning up Alpha’s mining sites. Alpha’s executives also wrote into the bankruptcy agreement that they could not be held liable if Alpha goes belly up. Without a bankruptcy agreement that was facilitated by alleged fraud by Alpha execs, the company could have been deemed too financially shaky and instead sold off to pay its reclamation obligations.
The 355-page State of Capture report from South Africa’s Public Protector reveals details of favorable decisions by state utility Eskom to award huge coal supply contracts to Tegeta Exploration and Resources, a company co-owned by South African President Jacob Zuma’s son, Duduzane, and the Gupta family, close friends of President Zuma. The revelations add new fuel to longstanding suspicion about the role of government leaders and relatives of President Zuma with ties to the coal industry in paving the way for new coal mining and new coal-fired power plants in the face of serious water use, pollution and economic concerns. According to a Circle of Blue investigative report, “the ANC operates an investment arm, called Chancellor House, that owned an investment stake in Hitachi, which won the multi-billion dollar contracts to build the boilers for the two giant and unfinished Medupi and Kusile coal-fired power plants. Chancellor House also has a financial stake in the proposed 1,050-megawatt coal-fired Colenso power plant.”
In late May, the African National Congress’s parliamentary caucus called for the immediate removal of Eskom’s chief executive after a committee on public enterprises determined that there is total disregard for the principles of good governance in the state-run company.
– Eyewitness News (Updated June 2017)
After years of alleged coal procurement corruption and bid-rigging at Norochcholai Power Plant in Sri Lanka, the Anti-Corruption Front released a report this year finding that the country had lost 4.88 million US dollars, or more than 710 million rupees as a result of the scam. The ACF lodged a complaint with the Commission to Investigate Allegations of Bribery or Corruption. The Supreme Court in Sri Lanka said that the ‘conscience of the court was shocked’ by the conduct displayed by certain individuals involved in the coal tender process. According to news reports, former Power and Energy Minister Champika Ranawaka coined the term “coal mafia” to allude to lobbyists he claimed were influencing coal procurement contracts. Local residents ultimately pay the costs.
A report by PAX for Peace on paramilitary violence in the Cesar mining region of Colombia highlights the September 11, 2016 execution of Néstor Iván Martínez, leader of an Afro-Colombian community resisting the expansion of coal mines owned by the American company Drummond. “Two unknown armed men forced their entry into the farm of Martinez’s brother in the village of Chiriguaná,” the PAX for Peace report explains. “They tied up his brother and his brother’s wife, waited for Martinez to arrive and then shot him in the head with two bullets before the eyes of his family.” PAX notes that in several pamphlets, neo-paramilitary groups have claimed to defend the interests of mining companies and other economic interests in the region, yet “neither Drummond nor Prodeco/Glencore have publicly distanced themselves from these claims.”
Research by PAX has found that at least 200 people in the region have been attacked or threatened in the past four years.
This is the story of allegations that Australia’s largest coal mining company, Theiss, owned by Leighton (now CIMIC Group) – buried a corruption report detailing how a “fixer” for the company bribed officials in India, potentially millions of dollars, to award Theiss a $5.5 billion coal contract. In return, Theiss would give a company owned by the fixer work at the mine. An employee at Theiss who tried to blow the whistle on it several years ago was first bullied, then fired, and the fixer was eventually paid to go away.
Keith Hall, a Kentucky surface coal mine owner and former state representative, received a seven-year prison sentence for paying $46,000 to a state mine inspector in return for favorable treatment on mining violations. The inspector, Kelly Shortridge, testified that Hall helped him establish a corporation in his wife’s name for the sole purpose of receiving bribes to ignore or delay violations, including for water pollution. “That was a lot of money I was being paid, and I believed I was being paid it to give favors any time they were asked to be given,” Shortridge testified.
A representative from Kyauktan Township on the outskirts of Yangon told the Yangon Division parliament that a company pushing construction of a new coal-fired power plant in Kyauktan has been bribing and misleading local residents since March. Local lawmaker Daw Thet Thet Mu said residents of Zweba Kone village — most of whom could not understand English — were asked to sign forms in English indicating their support for the power plant after the company donated US$3,560 for fresh water excavation and promised to share profits from the project. There has been concern among villagers over pollution from the project impacting local farmland and water. An MOU for the coal plant had been signed several years ago by the Ministry of Electricity, Diamond Palace Services Co, E-Gateway of India and Global Advisors (Singapore). The Divisional Minister of Electricity told Daw Thet Thet Mu that the Yangon government would not allow the coal plant.
Despite being closed in 2004, a coal mine in Liaoning Province in China was able to illegally continue operations after the owner concealed the shaft within a coal washing plant. In July 2016 a fire at the mine trapped 13 miners 500 feet underground, killing 11 of them with one missing. The mine had only one opening, whereas normal mine shafts have at least two.
In the Surigao del Sur province in the Philippines, the Manobo group Malahutayong Pakigbisog Alang sa Sumusunod (Preserving Struggle for the Next Generation, or Mapasu) attributes years of armed attack on indigenous peoples to government efforts to protect coal mining in the Andap Valley Complex in the Caraga region. According to a Mapasu statement: “Surigao del Sur has been militarized to guarantee the entry of these mining operations within our ancestral lands. Our leaders have been killed, our schools and cooperatives are being burned down, our teachers and organizations are being vilified and our Lumad communities are being attacked because we remain steadfast in defending our ancestral lands from destructive mining operations and protecting it for our next generation.”
In the past six years, according to the story on Bulatlat.com, 75 of 90 indigenous peoples killed were Lumad: “Most victims were leaders or community members who resist mining, agribusiness plantations and development aggression projects.” Community concerns have included environmental destruction and the handover of lands, forests, minerals and water on indigenous lands to private companies. “Foreign mining corporations, aided by the government through the military, launched a campaign of deception and intimidation to force the indigenous peoples into leaving their land,” says Piya Macliing Malayao, secretary general of the Kalipunan ng Katutubong Mamamayan ng Pilipinas (Katribu).
A coal company proposing a controversial mining project in the Bylong Valley in Australia was prosecuted for fraud after a local landowner discovered that the miner had submitted fake photos in its bid to gain approval for the coal project despite local concern over impacts to water and agriculture. The photos were not of the property, showing a different environment instead. Charges brought by the government against Korean miner KEPCO and its contractor Worley Parsons were dropped and the companies avoided fines or criminal records by promising not to do it again.
Deception and allegations of money laundering and influence-peddling were all behind a scheme to export coal mined in Utah to Asia through a shipping terminal in Oakland, California. To avert public opposition to shipping coal from Oakland, that aim for a new terminal was kept secret for years, while $53 million in public funds in Utah that was supposed to be for local civic projects was diverted to help pay for the shipping terminal project. An investment firm that stood to gain $1 million and a rail line in the deal wrote the script. Utah elected officials supporting the plan took money from the coal company pushing the outlet for Utah coal, Bowie Resource Partners. And the secret scheme, once revealed, forced concerned communities in Oakland to scramble quickly to try to stop it. In Utah, a bill in the legislature to get around prohibitions on $53 million in community impact funds being used for an out-of-state coal terminal was criticized as a money laundering scheme. Ultimately the Oakland City Council voted unanimously to ban coal handling and storage, but developers are considering legal challenges still.
Indonesian law requires mining companies to set aside funds for land reclamation before extraction begins, but Luthfi Fatah, a resource economist at Indonesia’s Lambung Mangkurat University explains that companies evade reclamation by leaving a small parcel of land unmined in each lease. Then, “when the government asks them to do reclamation, they say, ‘We haven’t finished yet — we still have 10 hectares to be exploited,’” Fatah explains. It’s just one glimpse into coal corruption in Indonesia, where 50-90 million tons of coal is mined and exported illegally each year, shortchanging Indonesians of hundreds of millions in royalty revenues. District-level politicians trade coal concessions for cash or political favors, according to environmental advocates, and some companies hold concessions in protected wild lands like East Kalimantan’s Bukit Soeharto State Forest. Indonesia’s Corruption Eradication Commission (Komisi Pemberantasan Korupsi, KPK) has revoked the licenses of 721 mines in 12 provinces across the country for failing to comply with basic standards, such as royalty payments, forestry permits and environmental commitments.
One result of the endemic corruption are the hundreds of unused water-filled mine pits in East Kalimantan in which 22 children have drowned since 2011. The most recent was 13-year-old Aprilia Wulandari who was found drowned “in a soccer field-sized mine pit on the outskirts of Samarinda,” according to Inside Indonesia. “Aprilia was reportedly playing with friends on her way home from school when she fell into the unmarked pit.”
Peabody Energy, the world’s largest private sector coal company — now in bankruptcy — has asked a bankruptcy judge to let it pay up to $12 million in bonuses to six top executives because of the “extraordinary efforts” required of them in the bankruptcy process. Meanwhile, a small school district in Colorado near a Peabody mine needed a state bailout earlier this year as Peabody – in debt over $10 billion – missed a local tax payment. In April, Peabody and Arch Coal laid off 460 miners at Powder River Basin mines on the same day, saving the pair around $37 million in annual wages – or 84 percent of the $44 million Peabody and Arch paid their executive teams in 2014. From 2012-2014, Peabody paid its executives around $75 million, as the company lost $1.9 billion over the same period.
In Batang Regency, on the north coast of Central Java, Bhimasena Power Indonesia (BPI) has made way for a massive coal power plant project in part through strong-arm tactics against local farmers opposed to the project. In this report and video, farmers talk about the anger and frustration they feel about being fenced off from their land and livelihoods, harassed by security guards. “Farmers, landowners and others who reject the coal power plant often receive threatening text messages. In other cases, paid thugs have visited residents’ houses, intimidating them to sell their land.” Lembaga Bantuan Hukum (LBH) Semarang, a legal aid organization that has been working with the community, also says a deception tactic is being used in which the company makes it seem as if they’ve already acquired large amounts of land as a way to pressure residents who have not yet sold.
The breadth of corruption in China’s Shanxi province – long the country’s leader in coal production – has become visible as the government has cracked down in recent years. In 2014, an investigation by Beijing magazine Caixin found coal bosses in one western county in Shanxi spending $150,000 a year on bribes. According to The Economist: “Since 2013, seven of the 13 members of Shanxi’s Communist Party committee (the province’s leaders, basically) have been arrested or charged with ‘infractions of party discipline,’ a term that usually means taking bribes. In all, 50 high-ranking officials have been placed under investigation for graft. For its size, the province has had more leaders arrested or jailed than anywhere else.”
On July 1, 2016, Gloria Capitan was assassinated by two masked gunmen on motorcycles who shot her twice in the neck and once in the arm inside her karaoke bar in Mariveles, Bataan Province in the Philippines. Ms. Capitan had faced intimidation and threats since 2015 – allegedly from the coal companies — for her community group’s peaceful opposition to pollution and health impacts from coal operations in Bataan, which include two power plants, two open coal storage facilities and plans for three more plants by 2017. Another dozen people who have been at the forefront of the opposition to coal-fired power plants in the Philippines and neighboring countries have been killed since April, 2016.
An in-depth investigation by the New York Times has revealed that the company building the Kemper ‘clean coal’ plant in Mississippi has repeatedly tried to conceal problems and drastically understated the project’s true timetable and cost. With the plant some $4 billion over budget, Southern Company ratepayers who have been forced to shoulder much of the ballooning construction costs are suing the utility for fraud. The utility has also now admitted that the plant could cost much more to operate and maintain than it originally said, up to $1 billion over the first five years of operation.
With coal mine owners in China often quick to pay off families of workers killed in their mines (as well as media and regulators), a murderous scam has emerged over the years in which men are lured to work in the mines under false names and then killed for the hush money from the mine owner. More than 70 people were indicted in June 2016 for murder of 17 mine workers in six provinces. In addition to homicide, the charges include fraud, faking mine accidents, swindling compensation and concealing crimes.
Australia-headquartered global coal company BHP Billiton was fined $US25 million by the US Securities and Exchange Commission for violating anti-bribery law by paying for luxury hotels, sightseeing trips, and event tickets for government officials and their spouses at the 2008 Olympic Games. According to the SEC, BHP footed the bill for officials who were “”in a position to help the company with its business or regulatory endeavours,” including officials connected with BHP contract negotiations or regulatory dealings to obtain mining rights in Congo, Guinea, Burundi, and the Philippines.
In an Australian Senate inquiry into Black Lung, a manager for a company that sells dust suppressants to coal mines and a mineworker drew attention to mining company tactics to circumvent honest self-monitoring of coal dust levels in mines. Anglo American employee Chris Carter explained that at the Grasstree mine dust monitoring was usually done on a day each month when his crew was on a “maintenance” shift, a time when dust would be least likely to show up. “Fudging the figures has been going on for a long time,” said Quaker Chemicals Queensland manager Paul Oliver. “Guys have seen plastic bags over sensors. It’s scary when you see that kind of thing.”
Source: The Queensland Times