Current and Former Officials Intervene on Billionaire's Behalf in Battle With Peru

Facing a battle with the Peruvian government over a smelting operation that has caused severe environmental damage, the Renco Group and its owner have assembled a formidable lobbying team.
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Facing a battle with the Peruvian government over a smelting operation that has caused severe environmental damage to a town in the Andean mountains, the Renco Group and its owner, billionaire Ira Rennert, assembled a formidable lobbying team in a matter of months that includes eight former government officials from five different Washington firms, and has succeeded in getting members of Congress from both parties and the Obama administration to aid it in its cause.

Renco Group's hiring spree, uncovered using Sunlight's Lobbying Registration Tracker, shows how private interests strategically employ lobbyists with insider connections to current officials to influence public policy. However, because lobbyists are not required to disclose which members of Congress they've contacted, and because none of Renco Group's lobbyists would comment for this story, we can only note the connections between the lobbyists and the members of Congress who acted on the company's behalf.

Among its hires, the Renco Group retained the services of a pair of lobbyists with ties to Rep. Donald Payne, D-N.J., and House Financial Services Committee chairman Spencer Bachus, R-Ala. In January, both lawmakers wrote letters to the Treasury Department about Doe Run Peru (DRP), Renco's subsidiary, and its dispute with the Peruvian government, Treasury letters responding to the congressmen show.

In February, eleven days after his former chief of staff, Kerry McKenney, registered to lobby on Renco's behalf, Payne had a letter entered into the Congressional Record addressed to Treasury Secretary Timothy Geithner and Secretary of State Hillary Clinton in which he expressed a "serious concern" about Lima's treatment of Doe Run Peru and the Renco Group.

"Secretary Geithner has indicated that they have approached the Peruvian government about the issue," Laverne Alexander, Payne's current chief of staff, said.

At issue is a complicated financial and environmental dispute involving a metal smelter that began operations in 1922 in the town of La Oroya, Peru. The Blacksmith Institute, an organization that focuses on industrial pollution in the developing world, called La Oroya one of the ten most polluted places on earth in 2006--a 2005 study found that nearly all of the children in the town of 35,000 under six suffered from lead poisoning. When it purchased the facility in 1997, Renco promised to remediate some of the contamination, but has received numerous extensions from the Peruvian government, and has yet to complete the work.

The company claims that Lima has failed to uphold its own obligations under the environmental cleanup agreement that was part of the terms under which the smelter was sold to Renco.

The Renco Group is no stranger to environmental controversy--in 1998, the Environmental Protection Agency rated its MagCorp subsidiary, based in Utah, as one of the biggest polluters in the country, and in 2010, its Doe Run subsidiary, based in St. Louis, agreed to spend $65 million to bring the operations of its Missouri facilities into compliance with environmental regulations, and agreed to a $7 million civil penalty for breaking a series of environmental laws.

In the dispute with Peru, members of Congress sided with the company, and pressured the Treasury Department to do the same. In response to the letters from Bachus and Payne, Marisa Lago, the Assistant Treasury Secretary for International Markets and Development, wrote on February 15 that, "Our embassy has been in touch with the Government of Peru on a number of different occasions with respect to this case, emphasizing that we expect it to make a good faith effort to work with DRP to resolve the pending financial and environmental issues."

Those issues are daunting. Operations at DRP's smelter in La Oroya, Peru, have been shut down for two years as the company has unsuccessfully sought to borrow money to resume work there. Meanwhile, the Renco Group still faces a lawsuit filed on behalf of bondholders who allege the company misrepresented the environmental liabilities of its MagCorp subsidiary.

Lima's bankruptcy agency is now considering whether to restructure the idle company or liquidate its assets; Doe Run Peru has filed its intent to commence arbitration through the U.S.-Peru Trade Promotion Agreement. That trade deal allows for a neutral resolution of disputes though an international arbitration court, a fact mentioned by Lago in her letters to Payne and Bachus.

In its lobbying effort, Renco Group hired Palmer C. Hamilton, a former Treasury official and banking lobbyist who hosted a fundraiser with and contributed $18,000 to the campaigns of fellow Alabaman Spencer Bachus. The company also hired former Ways and Means Chairman Jim McCrery, R-N.J., who, as ranking member in the 109th Congress, was instrumental in securing passage of the U.S.-Peru free trade agreement, and Timothy Keeler, the former chief of staff of the United States Trade Representative office, whose responsibilities included overseeing the implementation of free trade agreements. Over a span of 82 days beginning in November 2010, Renco Group hired eight former government officials working at five different Washington firms. So far, those firms have reported receiving $245,000 to lobby.

Renco Group's headquarters are in New York, as is Fair Field, the largest mansion in the United States and the home of the company's owner, billionaire Ira Rennert, ranked by Forbes in 2010 as the 144th wealthiest man in the world, with a fortune estimated at $5.3 billion.

For more on this story, read the complete report and background information at the Reporting Group site.

Written by Keenan Steiner of the Sunlight Foundation.

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