Nicaragua approves massive canal project

Nicaragua approves handing massive canal project to little-known Chinese company

Associated Press -

MANAGUA, Nicaragua (AP) -- A proposal to build a massive rival to the Panama Canal across the middle of Nicaragua was overwhelmingly backed by lawmakers Thursday, capping a lightning-fast approval process that has provoked deep skepticism among shipping experts and concern among environmentalists.

The National Assembly dominated by President Daniel Ortega's leftist Sandinista Front voted to grant a 50-year concession to study, then possibly build and run, a canal linking Nicaragua's Caribbean and Pacific coasts to a Chinese company whose only previous experience appears to be in telecommunications.

The legislation approved by a 61-25 vote contains no specific route for the canal and virtually no details of its financing or economic viability, simply granting the Hong Kong-based company exclusive rights to study the plan and build the canal if it proves feasible in exchange for Nicaragua receiving a minority share of any eventual profits.

Ortega's backers say the Chinese will transform one of the region's poorest countries by turning a centuries-old dream of a Nicaraguan trans-ocean canal into reality, bringing tens of thousands of jobs to the country and fueling an economic boom that would mimic the prosperity of nearby Panama and its U.S.-built canal.

"One of Nicaragua's great riches is its geographic position, that's why this idea has always been around," Sandinista congressman Jacinto Suarez said during Thursday's legislative debate. "Global trade demands that this canal is built because it's necessary. The data shows that maritime transport is constantly growing and that makes this feasible. Opposing it is unpatriotic."

The Hong Kong company will now begin a study of the project's feasibility that will last many months, said chief project adviser Bill Wild, one of a number of Western experts hired by the firm to provide advice ranging from engineering and environmental planning to public relations.

He said it was too early to say if a widely reported project cost of $40 billion would turn out to be accurate. While rising demand for shipping appears to make a compelling economic case for the new canal, it is impossible to predict before the study is complete if the project will turn out to be financially feasible, he said.

The canal project will require financing from international investors.

"There's a compelling commercial reason to build the canal," Wild said. "We have to prove now that the actual rate of return that the investors will get is adequate."

While the company has said almost nothing about the canal's route, it would certainly cross Lake Nicaragua, the country's primary source of fresh water. If one of the world's largest infrastructure projects ever is actually built, the water used by the canal's locks could seriously deplete the lake, environmentalists say.

"Approving this is unconstitutional, fraudulent and damaging to the interests of Nicaragua. The 'great Chinese' don't have the capital or the experience for a work of this size. There's no precedent to support it," Eduardo Montealegre, the leader of opposition legislators, said during the assembly debate Thursday.

Global engineering and shipping experts say those concerns are real and that lowered demand for massive container shipping and increasing competition from other potential routes may mean that the Nicaraguan canal will simply prove economically unfeasible.

Either way, the quick march of the canal project through the National Assembly has set off a backlash from environmental and other activists, who held a series of marches this week to protest the granting of rights to the HK Nicaragua Canal Development Investment Co., without any open bidding process or details of its financing.

"Nicaragua isn't for sale. Nicaragua belongs to all Nicaraguans and isn't the private property of Ortega and his family," the Movement for Nicaragua, a coalition of civil-society groups, said in an open letter to the country Wednesday.

When he took power in 1979, Ortega was a socialist firebrand whom the U.S. government tried to overthrow by backing Contra rebels in the 1980s. He was voted out of office in 1990 but returned after winning the 2006 election. Since then, critics allege, the 67-year-old leader has maneuvered to become president for life, using courts and electoral institutions that are stacked with appointees from his Sandinista Front.

In 2009 the Sandinista majority on the Supreme Court overruled limits on consecutive terms set by the Nicaraguan constitution, allowing Ortega to run for his third 5-year term and win.

Other recent Nicaraguan presidents also had repeatedly tried to win support for a canal, without much success.

Some economists express doubts about the proposed canal.

North American companies are increasingly looking to factories and suppliers in the U.S. and Latin America rather than in Asia, where rising salaries in China are making manufacturing less appealing for foreign companies.

In addition, the global economic slowdown of recent years means large numbers of ships are unused, perhaps 5 percent of the global fleet. Many vessels are scheduled to be completed in coming years, meaning the percentage of idled ships could grow to more than 20 percent, experts said.

And global warming means that even the Arctic may become a viable alternative to crossing Central America by canal.

"Looking at the changing flows and where the growth is in the world economy, personally I'm not seeing it. I wouldn't invest my money in it," said Rosalyn Wilson, a senior business analyst at the Delcan Corporation, a Toronto-based transportation consultancy and author of the U.S. logistics industry's annual report.

"It's addressing a need that definitely is not here now and I'm not sure if it's 'a build it and they will come sort of thing,'" she said.

Eduardo Lugo, a Panamanian port logistics consultant who worked for 10 years studying traffic demand for the Panama Canal's expansion plan, also questioned whether global traffic demand would support the high costs of the Nicaragua project.

"There's going be some growth in world trade. The big question is, what routes is that trade going to move on. That's the real challenge that Nicaragua faces," said Paul Bingham, the head of economic analysis at engineering planning firm CDM Smith, which specializes in large water and transportation infrastructure. "It's very easy to say trade is going to grow but that doesn't mean that Nicaragua is going to be in a competitive position to take advantage of it ... I'm not convinced right now."

Backers of previous canal plans have argued that the Nicaraguan route would prove more economical than Panama's because it would handle ships with far larger cargo capacity.

But the Nicaraguan path would have to be roughly three times as long as than Panama's, which is about 50 miles (80 kilometers) long, a fact that Panama Canal Administrator Jorge Quijano said "gives us even more of a competitive advantage."

"It isn't easy," Quijano said. "The terrain is really complex, more than ours."

Wilson also said the project could have serious impacts on Lake Nicaragua, also known as Cocibolca, because of the amount of fresh water that would be used to operate the canal.

"It takes a lot of water to run locks," Wilson said. "Is it going to be done in such a way that's not trading away another part of the country's economy down the line?"

Roberto Troncoso, president of the Panamanian Association of Business Executives, said China's government may be encouraging the new canal as a way to establish a route independent of the Panama Canal, which is perceived as remaining under heavy U.S. influence.

"The money is totally irrelevant," he said. "We're talking about national hegemony. China is looking to turn itself into the predominant economic power. Whoever dominates trade, dominates the world."

The United States has taken no official position on the Nicaraguan canal.

The Chinese company has declined to comment on the record about its funding and backers.

According to local records, HK Nicaragua Canal Development Investment Co. head Wang Jing has also been a director of about a dozen other companies, some current and others that have been dissolved.

He also heads Beijing Xinwei, a mid-sized telecommunications firm that, according to Chinese media, was partly owned by a large government telecoms equipment company, Datang, which sold its shares in a 2010 restructuring.

Panama and Nicaragua were the top contenders for the route of a trans-ocean canal from the first arrival of Europeans in Latin America. A French company began excavating the Panama canal in 1880 but work was halted by rampant tropical diseases such as malaria and yellow fever. The project was sold for $40 million to the United States, which finished it in 1914.

Historians say 5,609 people, mainly West Indian workers, died during its construction, on top of the 22,000 dead during the period of French control.

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AP Exclusive: More Bangladesh factories dangerous

AP Exclusive: Inspections show more Bangladesh garment factories poorly planned and built

Associated Press -

DHAKA, Bangladesh (AP) -- Bangladeshi garment factories are routinely built without consulting engineers. Many are located in commercial or residential buildings not designed to withstand the stress of heavy manufacturing. Some add illegal extra floors atop support columns too weak to hold them, according to a survey of scores of factories by an engineering university that was shown to The Associated Press.

A separate inspection, by the garment industry, of 200 risky factories found that 10 percent of them were so dangerous that they were ordered to shut. The textiles minister said a third inspection, conducted by the government, could show that as many as 300 factories were unsafe.

Taken together, the findings offer the first broad look at just how unsafe the working conditions are for the garment workers who produce clothing for major western brands. And it's more bad news for the $20 billion industry that has been struggling to regain the confidence of Western retailers and consumers following a November fire at the Tazreen Fashions Ltd. factory that killed 112 people and the April collapse of the Rana Plaza building that killed 1,129 people in the worst garment industry tragedy. But the proliferation of inspections could signal the industry is finally taking its workers' safety seriously.

Rana Plaza was "a wakeup call for everybody" to ensure their buildings were structurally sound, said Shahidullah Azim, vice president of the Bangladesh Garment Manufacturers and Exporters Association.

"Earlier it was not in our minds. We never, ever thought of this," he said.

But Rana Plaza wasn't the first factory building to collapse in Bangladesh. In 2005, the Spectrum sweater factory crumbled on top of workers, killing 64. That building was also found to have illegal additions.

After the Rana collapse, the government and the garment manufacturers asked the Bangladesh University of Engineering and Technology to begin evaluating the buildings. The university formed 15 teams of two engineers each — a structural expert and a foundation expert — to conduct initial inspections, examining a building's support columns, frame, foundation and the soil it was built on, said Mujibur Rahman, head of the university's department of civil engineering.

Rahman said further tests using sophisticated equipment will be completed in the coming months.

AP was shown initial results of some of the inspections of about 200 buildings — many of them garment factories — on condition the factories not be identified. The owners volunteered their buildings for inspection — even paying for the surveys — a decision that suggests they are among the more safety conscious in the industry. The remainder of the country's 4,000 garment factories could be worse, said Rahman.

While initial inspections showed that many of the factories appeared safe, some had problems so serious that engineers recommended they be immediately shut down. Others were told to seal off the illegal floors at the tops of their buildings and gingerly remove the heavy equipment stored there.

"There were buildings that we found that were really critical and we asked them to immediately vacate those buildings," Rahman said.

The engineers found that huge numbers of the factories were housed in commercial or residential buildings not designed to withstand the vibrations and heavy loads of industrial use, Rahman said. Machinery vibrations were blamed as one of the causes along with additional illegal floors as the cause of the Rana collapse.

Most of the examined buildings did not have structural tests dating back to their construction, and it was "very rare" that an engineer supervised construction, Rahman said.

They found a building approved for only six stories that had been expanded to 10. Support columns that were supposed to have five steel bars inside them had only two. Other columns were too small to support the structures. Some of the buildings had structural cracks that threatened their integrity.

In one report, the engineers found structural cracks on two columns and a heavy power generator located on the roof, where its vibrations could threaten the building's integrity. They recommended sealing all the floors above the ground floor pending a more thorough assessment. Rahman said he told the owners it would be safer just to demolish the building and start over.

A five-story factory had 30-centimeter by 30-centimeter (12-inch by-12 inch) structural columns that did not appear strong enough to handle the load. The engineers called for sealing the top floor until the building could be strengthened.

Another factory building had seven stories instead of the approved five and was meant for residential use. Its 25-centimeter by 25-centimeter (10-inch by 10-inch) columns were too small and the foundation was not wide enough to anchor the building in the red Dhaka clay. The engineers recommended closing the top two stories.

In other cases, the engineers called for the demolition of the illegal top floor of a seven-story building and the closure of several other buildings with structural cracks.

Rahman said some owners begged him to change the recommendations, saying they had three months of back orders to fill and then could address the problems. He refused.

Other owners appeared to think twice about the inspections.

The engineers were initially overwhelmed with requests to examine 400 buildings. But after their work began, some owners stopped answering their phones and engineers were unable to visit half of them, Rahman said.

It was not clear whether all the recommendations were being followed, but there were signs that some risky buildings were being forced into compliance.

Not far from the swampy pit where Rana Plaza once stood in the Dhaka suburb of Savar, a factory was dismantling — on government orders — two illegal floors it had been adding.

Industry and government officials said they were taking the results seriously and have announced a steady stream of factory closures in recent weeks.

"We are very much taking care of this thing, because we know that for one or two buildings, we cannot destroy all the industry," said Azim from the garment manufacturers' group.

The group set up its own engineering team and inspected 200 suspect factories in recent weeks, he said. They found violations so worrisome they shut 20 of them, he said.

Some will be moved to other buildings, others will be strengthened and some will be allowed to reopen after heavy equipment is removed from upper floors, he said. It was not clear if those 20 factories overlapped with those inspected by the university.

The garment association also established rules forcing factories to submit structural plans and soil test reports or risk losing their membership in the organization — and their export licenses, he said.

Textiles Minister Abdul Latif Siddique said the government was conducting its own inspections and expects to close factories as well.

"I think 200 to 300 factories will be vulnerable, and I think we will identify those buildings very quickly," he said.

In the wake of the Rana Plaza disaster, the country was under extreme pressure from Western brands to improve safety, he said. But he also appealed to those companies to pay higher rates to cover the upgrades.

"To provide security, better wages and compliance is not cheap," he said.

Swedish retailer H&M, PVH, the parent company of Calvin Klein, and Inditex, which owns Zara, are among companies that signed an agreement to help finance safety improvements in Bangladesh factories. Wal-Mart and the Gap have not.

Experts said the recent disasters were a product of the explosive growth of garment manufacturing here from a cottage industry into a behemoth that employs 4 million people. It began in the 1980s with small factories in residential buildings with no special fire exits, the workers sewing and cutting on the lower floors while the owner lived upstairs. When the business grew, the owner moved out and the factory expanded into the whole building.

Some factories later moved into commercial space. The most successful eventually constructed their own buildings, but even that was unregulated until Bangladesh established its first statutory building code in 2006.

Mubasshar Hussain, president of the Institute of Architects, Bangladesh, said 50 percent of the factories likely have problems, but all of them can be addressed within a year with a coordinated campaign to retrofit those buildings.

"We have the manpower, we have the technology, we have the material. All we need is the awareness of the owner," he said,

But Hussain worried that the burst of activity following the Rana Plaza collapse could dissipate. He pointed to a long-forgotten 2005 garment association report recommending close structural monitoring of factories in the wake of the collapse of the Spectrum sweater factory that killed 64 workers.

Siddique, the textiles minister, said the new disaster was too horrifying to be ignored.

"We are serious now, hopefully it will be better," he said.

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Associated Press reporter Julhas Alam contributed to this report.

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State, feds seek cash penalty over Ark. oil spill

Arkansas attorney general, US attorney file suit for cash penalties over ExxonMobil oil spill

Associated Press -

NORTH LITTLE ROCK, Ark. (AP) -- State and federal authorities want a judge to find ExxonMobil broke the law when a pipeline failed at Mayflower and spilled an estimated 150,000 gallons of crude oil in a neighborhood and adjacent waterway, authorities announced Thursday.

Christopher Thyer, U.S. attorney for the Eastern District of Arkansas, and state Attorney General Dustin McDaniel jointly filed a federal lawsuit seeking $45,000 per day for violations since the March 29 spill plus other penalties.

An ExxonMobil spokesman said in an email that the company hadn't been served the lawsuit and had no specific comment.

"That said, we will continue to cooperate with all federal, state and local agencies," spokesman Aaron Stryk said.

Stryk said the company has recovered about 63,000 gallons of the spilled oil and the cleanup is continuing.

After the ExxonMobil Pipeline Co.'s Pegasus pipeline ruptured, 22 homes were evacuated and McDaniel said Thursday that those families still have not been able to return.

"Our investigations continue and there are still a number of outstanding issues that will be addressed, however this much is very clear: This oil spill disrupted lives. This oil spill harmed the environment and this oil spill was in violation of both state and federal law," McDaniel said.

McDaniel said the "future of many homeowners remains uncertain" and that the spill damaged aquatic life by causing levels of dissolved oxygen to drop.

"This spill has caused a significant and lasting impact upon our state's environment and Exxon, as the responsible party for the incident, should be penalized for those impacts," McDaniel said.

The company said sampling has shown that the spill was restricted to a cove within Lake Conway and that the oil did not reach the main body of the lake, a popular area for fishing and boating.

McDaniel said there is no distinction between the cove and the lake, though he credited Arkansas Game and Fish Commission crews for quickly using heavy equipment to seal off the spill area before the mess could drift.

The lawsuit seeks penalties of $1,100 per barrel of spilled oil under the federal Clean Water Act. A barrel is equal to 31.5 gallons. That amount would grow to $4,300 per barrel if ExxonMobil is found to have engaged in "gross negligence or willful misconduct."

Thyer stopped short of saying the company was negligent or willful in any misconduct.

"We don't have those facts yet," Thyer said.

The lawsuit accuses the company of violating the state Hazardous Waste Management Act, which carries a daily penalty of $25,000. It also seeks penalties for violating two separate sections of the state Water and Air Pollution Control Act, which each carry penalties of $10,000 per day.

Arkansas Department of Environmental Quality Director Teresa Marks said the company has been storing waste illegally at a company that uses hydraulic fracturing to drill for natural gas.

In a May 1 letter, Marks ordered ExxonMobil to remove waste that it stored at an ExxonMobil pump station in Conway and complained that the company hadn't responded to requests that it transport recovered oil and water to an approved disposal facility. The letter threatened enforcement action if the company didn't get rid of the waste.

On Thursday, Marks said the oil and water mix was being stored in "frack tanks," which are used by natural gas drillers who use high-pressure hydraulic fracturing to extract the fuel from underground rock formations. She said that a tornado or other severe event could cause the mixture to spill from the tanks.

Solids, such as oily soils, wood chips, asphalt and other materials were also covered under the order.

Stryk said at the spill site, crews have removed all "visible freestanding oil from the environment."

He said the emergency cleanup process will take months to complete and it will be followed by an effort to remediate the contaminated areas.

"We will remain until the job is done and will continue to work to restore Mayflower as quickly and as safely as possible," Stryk said in his email.

Mayflower is about 25 miles northwest of Little Rock.

Jurors in Bulger trial shown collection of weapons

This undated photo released by the U.S. Attorney's Office and presented as evidence during the trial of James "Whitey" Bulger in U.S. District Court in Boston, Thursday, June 13, 2013, shows several weapons from an arsenal that investigators say the Bulger and his gang owned. Bulger is charged with a long list of crimes in a 32-count racketeering indictment, including participating in 19 killings in the 1970s and '80s. (AP Photo/U.S. Attorney's Office)

Defense attorneys for James "Whitey" Bulger, J.W. Carney Jr., left, and Henry Brennan, right, leave U.S. District Court in Boston after the first day of Bulger's trial Wednesday, June 12, 2013. Bulger faces a long list of crimes, including extortion and playing a role in 19 killings. (AP Photo/Bill Sikes)

BOSTON (AP) — Jurors in James "Whitey" Bulger's racketeering trial on Thursday were shown machine guns and other weapons from a massive arsenal that investigators say he and his gang owned, as prosecutors attempted to show that Bulger ran a criminal enterprise through violence, intimidation and fear.

Retired state police Col. Thomas Foley identified weapons hidden in several locations during a 2000 investigation, including in a shed behind a South Boston home owned by the mother of Bulger's partner, Stephen "The Rifleman" Flemmi. When investigators searched the shed, they found just one handgun, but later, Flemmi's son led them to a house in Somerville and a storage facility in Florida where investigators say the guns had been moved.

Foley slowly and methodically identified dozens of guns through photographs. But prosecutor Fred Wyshak also pulled out six machine guns — one at a time — and asked Foley to identify them.

Foley said Bulger's gang collected fees known as "rent" or "tribute" from bookmakers, drug dealers and others to allow them to operate within their territory.

"What were the consequences of not paying a fee?" Wyshak asked.

"Well, it could range from being put out of business to taking a beating, or actually at times, some people were killed," Foley said.

Bulger, the former leader of the Winter Hill Gang, is charged with a long list of crimes in a 32-count racketeering indictment, including participating in 19 killings in the 1970s and '80s. He was one of the FBI's most wanted fugitives after he fled Boston in 1994.

Bulger, now 83, was captured in Santa Monica, Calif., in 2011.

During cross-examination by Bulger's lawyer, Hank Brennan, Foley acknowledged that none of the weapons were found in Bulger's house and neither his fingerprints nor DNA were found on any of them.

But later, during questioning by Wyshak, Foley said "numerous" guns were found in Bulger's Santa Monica apartment when he was arrested two years ago. After Bulger's arrest, authorities said they found about $800,000 in cash and more than 30 guns in the apartment.

Brennan also tried, through Foley, to undermine the credibility of one of the prosecution's key witnesses: hitman John Martorano, who admitted to killing 20 people and has agreed to testify against Bulger.

Foley acknowledged that Martarano had insisted he would not testify against certain people, including his brother, before he agreed to cooperate with authorities. Martorano served 12 years in prison, a deal Bulger lawyer J.W. Carney Jr. called "extraordinary" in its leniency.

Carney acknowledged during opening statements Wednesday that Bulger corrupted FBI agents by paying them to tip him off to search warrants, bugs and indictment, but insisted that Bulger was never an FBI informant, as prosecutors contend.

Foley wrote a 2012 book about his investigations of Bulger entitled, "Most Wanted: Pursuing Whitey Bulger, the Murderous Mob Chief the FBI Secretly Protected."

Brennan questioned Foley about the extent of corruption within the FBI's Boston office, and suggested that the protection of Bulger extended to the U.S. attorney's office in Boston. Brennan repeatedly asked Foley if he had raised "issues" with the prosecutor's office.

"It was actually how they were handling the FBI's informant program, meaning particularly how they were dealing with Bulger and Flemmi while we were trying to investigate them," Foley said, in response to a question from Wyshak.

Foley's testimony came after another retired state police officer, Lt. Robert Long, identified Bulger on several surveillance videos from 1980. The videos showed Bulger meeting with members of his gang, as well as members of the Italian Mafia.

In opening statements to the jury Wednesday, prosecutor Brian Kelly said Bulger made millions through drugs, extortion and loan-sharking by instilling fear in drug dealers, bookies and others. Kelly said Bulger was a long-time FBI informant who provided information on the New England Mafia, his gang's rivals.

Carney, Bulger's lead attorney, agreed with the prosecutor's description of how Bulger made his money, but insisted he was never an FBI informant and denied that he killed two 26-year-old women he is accused of strangling or businessmen in Florida and Oklahoma.

Two bookmakers are expected to testify Friday about how Bulger allegedly extorted fees from them so they could continue to operate illegal gambling rackets.

Khartoum says rebels based in South Sudan caused oil pipeline blast