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### Viewing cable 08SANTODOMINGO1371, FORBES ENERGY CITES CORRUPTION IN ETHANOL PROJECT

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
08SANTODOMINGO1371 | 2008-08-29 15:08 | 2010-12-17 21:30 | CONFIDENTIAL | Embassy Santo Domingo

`

    VZCZCXYZ0001
    RR RUEHWEB

    DE RUEHDG #1371/01 2421508
    ZNY CCCCC ZZH
    R 291508Z AUG 08
    FM AMEMBASSY SANTO DOMINGO
    TO RUEHC/SECSTATE WASHDC 1359
    INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
    RUEHPU/AMEMBASSY PORT AU PRINCE 4854

` `

    C O N F I D E N T I A L SANTO DOMINGO 001371

    SIPDIS

    E.O. 12958: DECL: 08/27/2018
    TAGS: ECON ENRG KCOR EINV DR
    SUBJECT: FORBES ENERGY CITES CORRUPTION IN ETHANOL PROJECT
    DELAYS

    REF: A. STATE 85047
    ¶B. SANTO DOMINGO 1353

    Classified By: Ambassador PRFannin for Reasons 1.4 (b) and (d)

    ¶1. (C) SUMMARY. Executives with Forbes Energy met with the
    Ambassador regarding the company,s planned USD 700 million
    sugarcane ethanol project straddling the Dominican
    Republic-Haiti border. They said that while they have
    already obtained all needed permits for the project, which
    will be based in Manzanillo, Montecristi, Dominican Republic,
    they continue to face unnecessary delays and moving goalposts
    that they interpret as prompts for bribes from government
    officials. They also described two overt solicitations from
    high-level officials for cash payments. The project is
    currently held up due to delays in finalizing a negotiated
    land swap with a state entity; the Ambassador has sent a
    letter to the top official of this entity requesting a status
    update. END SUMMARY.

    ¶2. (U) On August 28, the Ambassador met with Forbes Group CEO
    Lucien Forbes, Director of External Relations Josh Fenton,
    and Chief Legal Counsel D. Edward Wilson . Also present were
    DCM Bullen, EconChief, PAO, EconOff and FCSO. The meeting
    followed a July 31, 2008 meeting between the company and WHA
    Assistant Secretary Shannon (ref A).

    ¶3. (U) The Forbes executives said that the company has been
    working since 2006 to establish operations in the northern
    border region to produce ethanol from sugarcane stock
    primarily for export to the U.S. market. Initially, the
    plant would denature Brazilian &wet8 ethanol for the United
    States. Subsequently, the company will produce ethanol from
    locally-grown sugarcane stock for the domestic and export
    markets as well as generate 50 MW of electricity from bagasse
    (sugarcane waste) for sale to the Dominican electricity grid.
    The major part of the project will operate under the Special
    Duty-Free Zone tax incentive regime. The local affiliate of
    the company, Forbes Energy Dominicana, S.A., has already
    received a 20-year renewable permit for a duty-free zone.
    The executives said that this will be one of the largest
    private investments ever in the country and the largest
    commercial venture of its kind in the world.

    ¶4. (U) The project would also impact Haiti. While the ethanol
    and electricity production will all take place in the
    Dominican Republic, Forbes plans to either cultivate land
    that it buys or else buy feedstock from Haitian producers
    directly across the border from its Dominican assets. Forbes
    said he aims to make the project fully operable with an
    entirely Haitian-Dominican workforce within five years of
    launch.

    ¶5. (SBU) Although the Forbes executives said that the company
    has obtained all necessary permits to begin the project and
    negotiated a Power Purchase Agreement (PPA) for the sale of
    electricity to the local grid, they are awaiting the
    signature of Radhames Segura, the executive vice president of
    the Dominican Corporation of State Electrical Companies
    (CDEEE), on a land-swap agreement. Although Segura has told
    Forbes that &It,s done8, weeks have passed without a
    signed agreement.

    ¶6. (C) The executives said they feel that Segura is moving
    the goalposts in an attempt to prompt a personal payment for
    him to facilitate the project,s completion, but noted that
    he has never directly solicited a bribe. &He knows this is
    costing me money,8 Forbes said. Fenton said that the
    company would absolutely not pay any bribes and asked the
    Ambassador to support this position. The executives also
    mentioned two overt requests for bribes from senior GoDR
    officials. Forbes said that at the end of 2007 the former
    Minister of Tourism Felix Jimenez offered to get all
    necessary permits in exchange for USD 10 million. (Note:
    Jimenez was removed from his post on August 16 in the
    inauguration cabinet reshuffle (ref B ). However, Jimenez
    recently told the CONGEN that he was going to be the next
    Ambassador to Washington after he improves his English. End
    Note.) They also noted a similarly explicit request for cash
    from an assistant to the Secretary of Defense whose name they
    did not recall.

    ¶7. (C) Forbes also described the project as a victim of a
    political rivalry between Segura and Juan Temistocles Montas,
    the Secretary of Economy, Development and Planning. He
    criticized the Fernandez administration,s inability to
    transcend the personal impasse between these two officials,
    both of whom are rumored to have presidential ambitions. He
    said that while &the problem is Radhames Segura8, he
    wondered whether the true holdup lies with the President
    himself. He urged the Ambassador to make contacts with key
    GoDR officials on the company,s behalf.

    ¶8. (SBU) The Ambassador told Forbes that he appreciated the
    corruption-related challenges that the company is facing in
    the Dominican Republic, and described USG efforts to combat
    the government corruption at the institutional level through
    USAID programs and other efforts. The Ambassador agreed to
    write a letter to Segura inquiring into the status of the
    land swap agreement. The letter was sent on August 28.

    ¶9. (C) COMMENT. While the corruption issues that Forbes
    raised are not new or surprising, it was disturbing to hear
    of the audacity of certain GoDR officials in offering their
    assistance in exchange for large bribes. It is even more
    worrisome that Post has now heard from two different sources
    that Jimenez could be appointed as the next Ambassador to the
    U.S. Post will consider whether to request a revocation of
    Jimenez's visa for corruption and looks forward to
    coordinating with the Department on whether to accept
    agreement for the former minister if he is nominated as
    Ambassador to the U.S. END COMMENT.
    FANNIN

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