A dispute over a lead smelter in a small Peruvian town has prompted members of Congress and the Obama administration to intervene on behalf of an American billionaire who environmentalists say became one of the richest men in the world while his metal mining companies polluted the environment.
The intervention follows a major lobbying effort by the Renco Group, a U.S.-based private holding company owned by Ira Rennert, to enlist the help of the U.S. government in the company's negotiations with Peru in a dispute over its operations at a lead extraction site in the Andean town of La Oroya.
Rennert, known for building what may be the biggest house in America, a 66,00-square-foot mansion in the Hamptons, amassed a $5.4 billion fortune using junk bonds to finance acquisitions in metal mining companies and other industries in the U.S. and overseas.
His companies have gone up against the U.S. Environmental Protection Agency and state environmental agencies for more than a decade, shelling out tens of millions in fines and clean-up costs for pollution at their U.S.-based facilities. And for years, one of Renco group's plants in Utah was listed as the EPA's number one toxic polluter in America.
Today, Rennert controls one of America's largest privately held industrial empires with interests in mining and metals production, defense equipment and automotive supplies. Rennert is also a major financial backer of Republican candidates, including John McCain and Rudy Giuliani. He and his wife, Ingeborg, have donated more than $500,000 to various political committees over the past five years, mostly to Republicans, according to data available on OpenSecrets.org.
The Renco Group has been flexing its political muscle on Capitol Hill in recent months, spending at least $245,000 since November to hire five Washington firms to lobby members of Congress on its behalf to advocate their point of view in the Peru dispute, according to an analysis by the Sunlight Foundation's Reporting Group, a Washington-based non-profit that tracks political spending.
The push appears to have paid off, with at least two members of Congress writing letters to the Obama Administration on behalf of the company in recent months.
"It really does show that the lobbyist system works. This is why these guys make all this money, and they really do have an impact on policy," said Bill Allison of the Sunlight Foundation.
The fight over La Oroya is the latest in a series of environmental battles for Renco. In 2001, the EPA sued Renco's Utah-based MagCorp over the company's handling of hazardous wastes at a magnesium chloride plant, proposing over $900 million in fines. That year, MagCorp filed for bankruptcy, even as Rennert was in the process of building his $100 million Hamptons mansion. Renco eventually bought back the company under the name U.S. Magnesium. The dispute with the EPA over the Utah plant has been winding its way through federal court for nearly a decade, and remains unresolved.
Renco Group's Doe Run Peru took over the lead smelter in La Oroya in 1997. First built by an American company in 1922, the smelter was seized by the Peruvian government in 1974 before it was turned over to Doe Run Peru, under an agreement that required the company to take specific steps to significantly reduce the harmful contaminants emitted by the facility.