DAY THIRTY-TWO: Trial Against David Castillo
/NOTE: I skipped Day 31 to keep on track with the day count published by COPINH who counted a short hearing about the health concerns of the lawyers and subsequent suspension as a day in court.
Last update: June 8 at 2 pm
Main Points of the Day
Expert witness presented by the Cáceres family, Harald Waxenecker begins his presentation. Waxenecker outlines the irregular manner in which the Agua Zarca was approved in the post-2009 coup context and the illicit networks of individuals, including Castillo, in the military, state institutions, and business elite, that sought to benefit from influence peddling, corruption, irregularities in the approval process, among other points. On two occasions, the court asked Waxenecker to skip forward in his presentation, forcing him to exclude aspects of his analysis.
The trial is convened again tomorrow at 9 am.
COPINH publishes a short summary of some of the key elements mentioned by Waxenecker.
From top left to bottom right.
“In 2009, David Castillo was in key positions in the Armed Forces and the National Electrical Energy Company (ENEE) that provided him with privileged access to information including documents about the hydroelectric project on the Gualcarque river, through Carolina Castillo, who was the President of the ENEE union.
June 3, 2010: Carolina Castillo signs a contract with Roberto Anibal Lozano, Manager of ENEE.
2010: DESA receives the Agua Zarca hydroelectric project contract in line with parallel processes carried out by Castillo in 2009. David Castillo participated in the meeting where the decision was made to grant the project to DESA.
2009: Castillo intervened to create a standard Power Purchasing Agreement (PPA) establishing a parallel mechanism for companies that did not meet the technical or legal standards to be eligible to bid on a project.
2009: David Castillo was a technical assistance to ENEE’s management and intervened in ENEE decision-making and management.
In just two days (June 21 and 22, 2010), DESA obtained the Energy Generation contract, the Exploitation of National Water Resource for the Agua Zarca hydroelectric dam project contract, and the Operation for the Generation, Transmission and Commercialization of Electric Energy contract.*
*(white writing at bottom right): “The MACCIH [Anti-corruption body] and the Special Prosecutor for Indigenous Peoples have worked together … on possible inconsistencies of the state’s process to grant a concession in such a short period of time, for a hydroelectric project to a company that did not meet the budget and technical capacity to obtain it” (OEA-MACCIH, 2017: 24)
More Details
Harald Waxenecker Presents his Expert Analysis
Titled: “Analysis of Roberto David Castillo Mejía’s position of corporate-institutional power and his involvement in the planning, coordination, and execution of Berta Cáceres’s murder”. The presentation consists of 201 Powerpoint slides and is very dense and detailed. The presentation ended on slide 123 at 5 pm as Waxenecker testifies via Zoom from Austria which is 8 hours ahead of Honduras. He requested to continue his presentation the following day.
Structure of the presentation. Part 1: Introduction, 2: Theoretical and method framework, 3: Socio-historical conditions of the murder, 4. Roberto David Castillo Mejía’s position of power, 5. Castillo Mejia’s relationships and resources of power, 6. Conclusions
1. Introduction: The expert analysis analyzes Roberto David Castillo Mejía’s [RDCM] positions and relationships of power that caused him to materialize Berta Cáceres Flores’s murder in March 2016 through by: 1. Analyzing RDCM’s institutional and business relationships in the context of the adjudication and implementation of energy projects in Honduras, specifically around the Agua Zarca project, which conditioned the motive of the crime, 2. An analysis of the RDCM’s power relations that made the planning, coordination, and execution of the crime possible.
2. Theoretical and method framework, 2.1. Theoretical and conceptual references. Waxenecker outlines the concepts of:
“Politicized nature" - the appropriation of natural resources that occurs within the contradictions of power.
Illicit political and economic networks - relationships and interactions between multiple actors including active and retired military; state actors (ENEE, Ministry of the Environment (SERNA), Armed Forces, National Party, National Congress, mayors, etc); Business actors (Investors and DESA directives, financial institutions, international banks, etc.); criminal actors (assassins, drug trafficking, etc). A mix of these actors get together with shared or common interests. The focus of this specific case is networks which involve the appropriation of natural resources and the materialization of violence.
Positions and relationships of power - Within positions and relationships of power, there are sub-systems and systems of interactions which can be direct or indirect which connects individuals within the networks to people in power (social capital).
2.2. Methods and data - Wexenecker used a combination of methods; data sources; company registries, and telephone data analysis.
3. Socio-historical conditions of the murder: Berta Cáceres was murdered in the context of the social contradictions provoked by the implementation of the Agua Zarca project. Waxenecker discusses the context of this murder, including:
The liberalization of the energy market in Honduras - There was an energy crisis in the 1990s which began a process of liberalization through the Sub-sector Electricity Law (Decree 158-1994) which allowed for the private generation of electricity via fossil fuels. Then in 2007, the Incentive Law for Electrical Energy Generation (Decree 70-2007) which granted higher contracts for renewable energy generation. And a reform to Decree 138-2013 which provides additional incentive ($0.03 USD) for solar energy generation; the Industrial Electrical Law (Decree 404-2013) which outlines the importation and exportation of electric energy to commercialize energy, and the distribution and transmission of the electrical system in Honduras [aka. full blown privatization]. In 2013, bank trusts were set up to four private national banks (Banco Atlántida (received two trusts), Financiera Comercial Hondureña, Banco Continental) with the purpose of resolving the “technical and financial losses” of ENEE.
The post-coup context - Many academics and the UN via the resolution to condemn the coup on July 1, 2009, agree that a coup took place. Quoting the Truth Commission (2012), Waxenecker outlines how the coup exacerbated historical barriers established by powerful groups to limit the possibility of developing democracy for all in Honduras. Also how the coup deepened social and political polarization. The coup was characterized by and began on-going processes (that continue today) of: a concentration of political power; distortion of the economic competitiveness; and the remilitarization and patterns of human rights violations including excessive use of force, criminalization, selective repression, and the disfunction of the judicial system. The coup leads to the following contextual factors and characteristics:
Changes in the Honduran electrical sector - the post-coup national circumstances influence the complex composition of economic, political and military power that reduces competitiveness and politicizes the sector and also, assists in the formation of illicit networks. The reduced competitiveness are caused by tax rates, criminality, government inefficiency, corruption and political instability.
Remilitarization and patterns of human rights violations - the clear transgression of the separation of civil and military duties influenced by the strengthening of the power of the military. New laws were approved that permitted the militarization of public security including: Military Amnesty (2-2010); Constitutional reform to Article 274 (233-2011); Creation of the TIGRES police force (103-2013); Creation of the Military Police (168-2013), and others.
The deformation of the Honduran electrical sector - The energy sector followed an international tendency to increase investments to renewable energy projects. This occurs in the context of the international tendency for offshore production and the externalization of socio-environmental impacts. This allows for an “absolute disassociation” between economic growth and the environmental impact of projects. There is an influx of investment towards energy projects. Some focussed on the reduction of C02 emissions which provokes conflicts related to the appropriation of natural resources.
In the context of post-coup Honduras, at least 185 Power Purchasing Agreement (PPA) contracts were signed by ENEE between 2010 and 2014 growing from contracts with 59 companies for a total of 789.8 MW of energy in 2010 to contracts with 100 companies for a total of 2,043.5 MW in 2014 (source: TSC, 2018).
Of the contracts granted in 2010 (including the contract to DESA), 26 companies did not fulfill their contractual clauses and despite this, they were not rejected by ENEE. In 2010, via 043-2010, DESA was granted the contract for the Agua Zarca dam. Individuals involved in the contract process are being investigated for fraud, abuse of authority, mismanagement, falsification of documents, etc.
[NOTE: Around this moment of the presentation, the court interrupts Waxenecker and asks him to skip forward to the parts about the planning and coordination of the murder. Waxenecker briefly skips through a series of slides to accommodate the court’s request]
ENEE signed contracts with 23 companies in January 2014 despite 21 of those companies not fulfilling the established requirements to bid for state contracts. One of these companies is PRODERSSA [linked to David Castillo].
Many of these contracts with ENEE in the context described above caused the ENEE’s economic situation to worsen. In 2017, the ENEE calculated a loss of 4,548.8 million Lempiras, 16% higher than in 2016 for a total accumulated deficit of 51,941.5 million Lempiras.
4. David Castillo’s Position of Power: This is broken into: 4.1 A parallel contract model: 043-2010, 4.2: DESA: A history in stages: Stage one (May 2009 to January 2010); Stage two (Jan 2010 to June 2010); stage three (June to October 2011); stage four (2012 to present); the network around PRODERSSA.
4.1 A Parallel Contract Model: 043-2010 - Context 2009-2010: Coup d’état and international public bidding process for renewable energy (No. 100-1293-2009). In this context: Since 2006, David Castillo had worked in the Armed Forces. In May 2008, he was assigned to the ENEE in the position, Coordinator of Management Control. He received two salaries - one from the Armed Forces and the other from ENEE. He was promoted in 2006, then given the position in ENEE in 2008, and then he was demoted on December 1, 2011. In the time he worked in ENEE, he worked with Carolina Lizeth Castillo Argueta, President of the ENEE union.
In 2009, DESA presented a bidding offer but was disqualified on December 18, 2009. Following this, Castillo intervened to develop a Power Purchasing Agreement “standard model” paralleling the bidding process.
The bidding process No. 100-1293-2009 was approved under the governments of Roberto Micheletti Bain and Porfirio Lobo Sosa. Despite being disqualified and being declared as inadmissible, the ENEE authorized the inscription of renewable energy contracts for the perviously disqualified companies.
DESA was favored in this process. On June 2, 2010, David Castillo participated in the ENEE board meeting (session 1079-2010). The contract between DESA and ENEE was signed on June 3, 2010.
According to the MACCIH [anticorruption body], there is sufficient evidence that “ … correspond to the existence of collusion between public officials and outsiders … [..] that favored DESA in an undue manner.…”
4.2.1 First stage (May 2009 to January 2010)
May 20, 2009: DESA filed it’s paperwork and was formally created
November 20, 2009: DESA named Carolina Castillo Argueta as a special representative to participate in the bidding process.
January 21, 2010: DESA receives an operations contract.
Jan 22, 2010: DESA receives a contract for the Agua Zarca project
Jan 22, 2010: DESA receives an operations contract
4.2.2. Second stage (Jan 2010 to June 2011)
June 3, 2010: DESA signs a contract with ENEE
June 22, 2010: DESA names new board members. Carolina Castillo maintains her position as a legal representative.
Oct 26, 2010: National Congress approves PPA contracts including the contract between ENEE and DESA
Nov 23, 2010: PEMSA [another company affiliated with David Castillo] registers as a company in Panamá
March 24, 2011: SERNA grants the environmental license to the Agua Zarca project noting that DESA had to present a document outlining the community consultation and consent for the project.
March 25, 2011: SERNA signs off on the environmental license to DESA
June 14, 2011: Various state institutions sign a “support agreement” with DESA for the hydroelectric project.
August 30, 2012: the National Congress approved 24 agreements which were published on January 26, 2013. This was a critical part of the Agua Zarca project because the PPA contract was formalized, approved by Congress, the construction, operations and environmental license was granted, and a support agreement signed with state institutions and DESA.
August 2, 2011: In an investors meeting, an investment was approved for 563,902.76 Lempiras. Up to that moment, DESA’s start up capital was only 25,000 Lempiras. A total of 598,283.39 was approved to carry out an environmental impact study. In addition, debts to be paid to Digital Communications (DIGICOM) and other companies were approved. DIGICOM is owned by David Castillo.
4.2.3 Third stage (June to October 2011)
June 14, 2011: DESA’s value was listed at a maximum of 4 million Lempiras and a minimum of 1 million Lempiras. The investors were listed as PEMSA represented by Roberto Pacheco Reyes [ex-Minister of Government during Ricardo Maduro government 2002-2006), and Jorge Coreo Lobo.
June 21, 2011: Meetings were held in some villages in Rio Blanco. Former mayor Martiniano Domínguez and community representatives participated. David Castillo was also present despite not having a formal position in the company.
Presentation ended for the day. To be continued when the expert witness is called again