El Salvador Faces New World Bank Lawsuit over Public Electric Company, Ex-president Implicated in Corrupt Deal


On August 13, Italian energy company Enel Green Power filed a claim against the government of El Salvador in the International Center for the Settlement of Investment Disputes (ICSID) for the right to buy out the public geothermal energy company, LaGeo. The move is the latest in the ongoing legal battle over LaGeo, a transnational public-private partnership (P3) gone wrong that has invigorated the debate around the recently-approved P3 Law, which currently faces controversial proposed reforms. The ICSID, the same World Bank tribunal that Pacific Rim and Commerce Group, based respectively in British Columbia and Wisconsin, used to sue El Salvador, unsuccessfully, for denying their gold mining permits, has not yet announced if it will take up the case. Meanwhile, last week the legislative commission convened to investigate the LaGeo P3 contract between the state and Enel released its findings, recommending that former right-wing Nationalist Republican Alliance (ARENA) President Francisco Flores and several other key actors in the deal be investigated by the Salvadoran Attorney General for corruption and acting against the interest of the state. These recommendations now face scrutiny and debate in the Legislative Assembly. If approved by a simple majority of 43 votes, Attorney General Luis Martínez will take up the case. “For the first time in the country’s history we would be prosecuting a former President, and that implies that we are advancing in this democratic process that demands transparency,” said the commission’s president, FMLN legislator Jaime Valdez. Valdez was cautiously optimistic that, despite Martínez’s history working in the previous ARENA administration of Tony Saca, Martínez would duly proceed with the investigation should the recommendations be approved, noting that “Francisco Flores is already being questioned at the request of President Mauricio Funes, who called for an investigation in this same case.” Indeed, calling the LaGeo P3 a “disguised privatization,” Funes has echoed the social movement’s outrage and vowed to do all in his power “not to turn over the patrimony of Salvadorans to foreign hands.” The President’s vehement and outspoken defense of LaGeo draws a strange and stark contrast to his equally outspoken advocacy for the P3 Law—legislation that Jaime Rivera, a LaGeo employee and Organizing Secretary for the Electrical Workers Union (STSEL), warned in January would see that “we as a country would lose the opportunity to own companies that generate resources for social investment.”

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