US loans fueled insider deal, failed power plan in Liberia

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BUCHANAN, Liberia — A failed U.S. government-backed plan to produce environmentally friendly energy in one of Africa’s poorest countries was marred by insider connections and questionable planning, an Associated Press investigation found. The federal agency at the center of the deal is one of the government’s biggest secrets and routinely escapes public scrutiny.

That agency, the Overseas Private Investment Corporation, approved three loans totaling $217 million to help a company, Buchanan Renewables, convert nonproducing rubber trees into biomass chips that would help power Liberia.

The agency approves more than $3 billion a year in global financing, but its internal watchdog, the Office of Accountability, has issued reports on just five deals since 2005, a period when OPIC approved more than 530 projects. OPIC’s profile is so low it regularly cancels annual public hearings because no one signs up to speak.

In early 2013, Buchanan Renewables shuttered its Liberian operations and dismissed 600 workers. It never built a promised power plant, so instead of powering a nation in need, it shipped biomass chips to Europe. It repaid the U.S. government loans, but left Liberia with fields of depleted rubber farms and allegations of sexual abuse and workplace hazards.

From the start, the AP found, OPIC’s support for the power project in this western African country was marked by questionable due diligence and deep political links. Even for ostensibly philanthropic projects meant to aid the world’s poorest, profit and corporate opportunities can intersect with family and business ties among Washington’s political elite.

On the ground in Liberia, Buchanan Renewables’ CEO was James Steele, a larger-than-life former U.S. military figure and onetime Texas business partner of OPIC’s then-president and CEO, Robert Mosbacher Jr. Mosbacher’s father was commerce secretary under President George H.W. Bush.

Steele drew acclaim, and controversy, over his role in U.S. military exploits from Iran-Contra to Iraq, where he performed work for President George W. Bush’s defense secretary, Donald H. Rumsfeld.

Even before the Liberian project, Mosbacher had tapped Steele as a consultant to help OPIC develop power projects in hard-pressed countries. Over 22 months from 2006 to 2008, the agency paid Steele $390,000 for consulting and an additional $114,556 in travel, the AP found. Then it approved three loans to support Buchanan’s vision in Liberia.

The venture collapsed amid tension between the company and Liberian government, questions from the U.S. Embassy and the withdrawal of a vital financier. As tensions escalated, troubling stories emerged: charcoal producers having to trade sex for wood promised as part of the undertaking; Buchanan’s machinery cracking open an ancestor’s grave on one family farm; the company leaving piles of woodchips that attracted stinging ants and fouled local waters.

Some women said they became pregnant after trading sex for sticks with Buchanan staff members in Liberia. “If we didn’t have sex with the employees they wouldn’t give you sticks,” Sarah Monopoloh, chairwoman of a local charcoal sellers union, told the AP. She said she suffered a painful miscarriage. “I nearly died in the process,” Monopoloh said.

Tree planter Aderlyn Barnard was knocked unconscious, breaking a leg and wrist and dislocating an arm, when the company’s clearing machine felled her with a tree.

“I am one of the victims,” she said. “Right now I am disabled.”

To Mosbacher, who abstained from OPIC’s loan vote, the project was an opportunity lost. Steele declined an interview request.

“This was absolutely for the best of intentions and that’s why it was literally the biggest disappointment I had from all my time at OPIC,” said Mosbacher, the agency head from 2005 to 2009. “What seemed to be a home run, a win-win, just didn’t work out the way any of us had hoped.”

In all, OPIC handed out $77 million of the $217 million approved in Liberia. The last loan came under the current president and CEO, Elizabeth Littlefield.

When OPIC approved the final $90 million loan in 2011, it did not conduct an onsite environmental and social due diligence visit for a project in a country haunted by a decade-long civil war and history of abuses against women.

OPIC’s own Office of Accountability questioned the agency’s review process in one of its few internal investigations ever conducted. The job managing that internal watchdog office has been vacant since September.

Buchanan’s senior management had no prior experience in the rubber sector or in operating a commercial venture in Liberia, the accountability office said. The agency approved the loans despite incomplete background reviews involving key figures at OPIC and parent Buchanan Renewable Energy.

Littlefield called the report “unprecedented” and said OPIC was instituting reforms.

For the laborers lured by Buchanan’s promises, the project’s collapse left a painful legacy.

“The workers are still grieving today,” said Alfred Brownell, executive director of Green Advocates International, a legal advocacy group in Monrovia, Liberia’s capital. “The only thing Liberia got was the massive cutting down of rubber trees.”

Greene reported from Washington.