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The intersection of corruption and the environment

Tom Fox | May 14, 2017

Rarely is the intersection of corruption and environmental impact as clearly seen in the United States as involves a petro-chemical facility just outside of Houston, Texas. The plant in inexorably intertwined with Petrobras and Operation Car Wash. The refinery is located in Pasadena Texas and has been a part of the ongoing Operation Car Wash investigation. The reason is straight-forward. The allegations involve the sale of the petrochemical refinery previously owned by a Belgium company called Astra Oil, who purchased the refinery in 2005 for $42.5 million in 2005. Rather amazingly, Astra Oil then sold the refinery to Petrobras, in a series of transactions beginning in 2006 for $1.2 billion. That is certainly one hefty return on investment. Unfortunately, it appears that Petrobras far overpaid for the purchase and part of this overpayment price was used as funds to pay bribes to corrupt Petrobras officials to facilitate the plant purchase.

Now Petrobras is trying to unload the facility as a part of divestiture of assets to raise cash. The problem is that with the overpayment of upwards of 3,000 percent there was no money available for plant upgrades or even routine maintenance. Reports have indicated the facility is “notorious for its multiple accidents, fires, and emissions releases.” It has been sued by Harris County for repeated violations of the Texas Clean Air Act and by environmental groups who have argued the refinery “routinely its emissions levels of soot, sulfur dioxide, and other pollutants.”

For Petrobras, the issue is that no environmentally responsible company would be interested in such a facility. Moreover, with the lawsuits pending, the company would have to fully disclose all pollution violations to any potential purchaser and both the buyer and seller would have to answer to regulatory officials for the plant’s past, current, and even future conduct. All of this may be of little comfort to the 75,000 who live within three miles of the plant who worry about the pollution and safety issues emanating from the facility.