Mar Cabra stories from The Center for Public Integrity

Traceability elusive in global trade of human parts

2012-07-19T13:05:40-04:00

The Kentucky man died in an off-road vehicle accident last year. His liver and kidneys helped save three dying patients in his home state. Musculoskeletal grafts taken from his heart, skin and bones were used in medical products used to improve the lives of 15 people around the country.

But soon after the transplants, the U.S. Centers for Disease Control and Prevention (CDC) learned the organ recipients had contracted hepatitis C. It turned out the Kentucky donor had a history of substance abuse and had served prison time. The tissue bank that recycled his remains, the CDC said, had screwed up the usual testing done to verify that tissues and organs were safe.

The CDC's Office of Blood, Organ, and Other Tissue Safety deployed a team of “shoe-leather epidemiologists” to track down the tissue before someone else got sick. Unlike hearts and other organs — or blood products that come with a unique barcode — there’s no easy way to track down tissue.

Instead the team found tissues one-by-one, calling hospitals and chasing down doctors. It took nearly a month to locate all the surgeons who had implanted tissue into 15 people. A child, later found to have hepatitis C, had received an infected heart vessel patch before the tissue recall began.

In some cases, inconsistent or non-existent recordkeeping prevents medical sleuths from ever finding potentially infected tissues. In one major case that played out in 2006, the U.S. Food and Drug Administration and five tissue companies moved to recall 25,000 tissues taken illegally from U.S. donors without proper consent or testing. Eight hundred of the tissues shipped overseas were never found.

The trade in human tissues is virtually untraceable at a global level. Poor accountability and inadequate safeguards have prompted concerns among medical experts that products made from bone, skin, tendon and other tissues taken from the dead could spread disease to the living — putting patients who receive tissue implants in dental surgery, breast reconstruction and other procedures at risk.

Little has been done to address this problem, despite U.S. government reports that have raised red flags for the past 15 years — and despite continuing concerns by the CDC and the World Health Organization.

IMPACT: Key vote clears way to stop fish plundering in the South Pacific

2013-04-29T14:42:17-04:00

An almost unanimous vote by Chilean legislators has cleared the way – after a six-year effort – for legally binding international measures to protect jack mackerel and other threatened fish across the southern Pacific, once among the world’s richest waters.

Chile’s Senate voted 26 to 0, with two abstentions, on June 14 to ratify the convention that governs the South Pacific Regional Fisheries Management Organization (SPRFMO), the organization charged with protecting fish stocks in the southern seas. The act now goes for signature to the Foreign Ministry and President Sebastián Piñera.

Chile was among the founders of SPRFMO in 2006 but did not ratify it. Without the support of eight countries, including an eastern coastal state, the organization’s quotas and directives were only voluntary, allowing a free-for-all among large industrial fleets from Asia, Europe and Latin America.

An investigation by the International Consortium of Investigative Journalists in January showed that stocks of jack mackerel, after dropping from 30 million tons to less than 3 million over two decades, were plummeting beyond collapse.

Jack mackerel might not be familiar at the supermarket fish counter, but you have probably eaten it unaware in bites of farmed salmon. Much of jack mackerel is reduced to feed for pigs and aquaculture. It can take more than 5 kilos of jack mackerel to raise a single kilo of salmon.

The ICIJ investigation – published in The International Herald Tribune and Le Monde, among other media – revealed that national interests and geopolitical rivalry had blocked efforts since 2006 to ratify the convention that could impose binding regulations. After a crucial SPRFMO meeting early this year in Santiago, under worldwide scrutiny, governments finally took action.

Korea and Russia, both major players in the jack mackerel fishery, ratified the accords in April and May. The Chilean parliament debated for months and then took the deciding step. When the convention enters into force –thirty days after the ratification documents from Chile are received by SPRFMO officials – quotas will be mandatory and vessels that flout the rules will be penalized.

Greenpeace, which has campaigned hard for years in Chile, issued a triumphant statement under the large headline: “Victory.”

Duncan Currie, an international environmental lawyer who has militated at SPRFMO meetings since its beginnings, said Chile’s accord would likely force Peru to ratify. That would give SPRFMO more leverage over the world’s largest factory ship, Lafayette, Russian-flagged but owned by Pacific Andes of Hong Kong, which has substantial operations in Peru.

The first meeting of the ratified SPRFMO will be in late January 2013 in Auckland, New Zealand.

Video: 'Missing' fish in Peru simply not counted

2012-04-23T13:17:49-04:00

'Missing' fish in Peru simply not counted

Fishing nations fail to stop plunder in the South Pacific

Chile — 2012-02-08T20:45:15-05:00

Fishing states meeting in Santiago, Chile, left the way open for fleets to catch jack mackerel far beyond the 390,000-metric ton limit that scientists say is vital to protect the already decimated species. In all, the actual catch could reach a whopping half-million tons.

Asian, European and Latin American nations agreed to limit catches to 40 percent of 2010 levels, a total of about 300,000 metric tons in 2012. But Peru claimed rights to an extra 120,000 metric tons within its exclusive 200-mile zone.

In addition, Chile might not be able to honor its proposed limit because government and industry had already agreed on a much higher quota. And nobody knows what Ecuador will do. The country landed almost 70,000 metric tons in 2011 but took no part in the recent South Pacific Regional Fisheries Management Organization (SPRFMO) negotiations in Santiago. The SPRFMO — an intergovernmental organization charged with protecting fish stocks — has not been ratified, so it cannot impose binding limits.

The International Consortium of Investigative Journalists (ICIJ) reported on Jan. 25 that fleets in an essential free-for-all have reduced jack mackerel from around 30 million metric tons to less than three million in two decades. The bony, bronze-hued jack mackerel is a key component of fishmeal for aquaculture. It can take more than 5 kilos of jack mackerel to raise a single kilo of farmed salmon.

The world’s largest trawlers moved south after depleting other oceans, where local fleets have over-fished for decades. Now, scientists say, the jack mackerel breeding stock is down to 5 percent of its original level.

ICIJ’s investigation found that Peru imposed little control over jack mackerel landings, and under pressure from industry the government allowed fleets to target juvenile fish crucial for reproduction of the stock. It also revealed that fishing companies in Peru had rigged scales to underreport at least 630,000 metric tons of anchoveta — another important species for fishmeal — over two and half years.

In reaction to the ICIJ investigation, the Dutch parliament is scheduled to debate overfishing in the southern Pacific next week. One of the key players in the jack mackerel fishery is the Dutch-based Pelagic Freezer-Trawler Association (PFA), which represents nine companies and 25 European Union-flagged vessels.

Some SPRFMO delegates who took part of the Santiago meeting reported fresh pressure from their governments to take firmer action. But conservationists who had seen the meeting in early February as a chance to reverse the downward curve expressed bitterness.

“Industrial fishing fleets have destroyed this fishery,” Duncan Currie of the Deep Sea Conservation Commission said afterward, “and despite clear scientific evidence that the catch must be reduced … the fishing nations have insisted on driving the stock further into oblivion.”

Bill Mansfield, SPRFMO chairman, told ICIJ he was deeply disappointed. But, he added, he expects the organization to be ratified in 2012, after more than six years of taking shape. That would give its decisions and quotas the force of law.

At the outset, Mansfield told the 18 delegations that both high seas and territorial waters had to be managed cooperatively according to scientific data. “Otherwise,” he said, “collapse is inevitable and everyone will lose out.”

But some delegates pushed to extremes. South Korea, with a large fleet in place, proposed uncontrolled fishing until all states collectively caught 500,000 metric tons. Last year, South Korea refused to join others in a voluntary quota cut and, instead, it caught 1,000 metric tons more than the previous year.

In the end this year South Korea agreed with the others on the limits. China, which resisted the cutback last year, accepted the new lower limit as well. The holdout was Peru.

European Union representatives told ICIJ that Peru’s position was so “negative” and “disappointing” that it should face trade sanctions.

Although jack mackerel normally swims in large schools beyond Chilean and Peruvian waters halfway across the southern Pacific, in 2011 much of the catch was near the South American coast.

Peru caught almost 260,000 metric tons in 2011, and its delegation argued that its proposed cut — around half that amount — was substantial.

In Lima, fisheries authorities insist that Peru is entitled to exploit its own water apart from SPRFMO quotas in the high seas. They argue that Peru has its own separate jack mackerel stock within its exclusive 200-mile zone, a theory scientists are still studying.

“For the Chileans, Peru is the bad guy in the film, and they follow all the rules,” Gladys Cárdenas Quintana, scientific director of the government-backed research institute, Imarpe, told ICIJ. “They say they have a rational control, but that’s not true. Chileans caused the collapse of jack mackerel.”

Under increased international pressure, last week Peru temporarily suspended jack mackerel fishing in its territorial waters after local fleets caught the full quota for the first trimester of the year in less than 20 days.

At times, the week-long Santiago meeting took on a circus air. Greenpeace activists dressed as jack mackerel unfurled a large banner demanding that SPRFMO states protect the endangered fish.

Samuel Leiva, the Santiago-based Greenpeace campaigner who has monitored SPRFMO meetings since they began, urged a limit of 260,000 metric tons in 2012 with more energetic measures to enforce compliance.

“While the Chilean fleet has reduced their catch internally, the Peruvian fleet captured nearly six times more than it promised to capture,” Leiva said in a briefing. He told ICIJ that if the stock decrease continued, next year Greenpeace would push for a total ban, something some scientists have already proposed.

But Chile, which caught more than 28 million tons of jack mackerel in the 1990s before cutting back sharply, also faced criticism. It now totals about half of all jack mackerel landings in the South Pacific, and it’s unclear whether the country will be able to modify its 2012 quota to meet the cutbacks proposed in the SPRFMO meeting.

Looking ahead, Mansfield said that more public awareness of the environmental dangers, and legislative debate such as the one scheduled in the Netherlands, offer cause for optimism. He told ICIJ: “Once we enter the stage of formally binding legal obligations the ability to manage [stocks] successfully should be greatly enhanced.”

Milagros Salazar (Peru) and Steve Bradshaw (Chile) contributed to this story.

Sin control, gigantes pesqueros diezman el Pacífico Sur

Chile — 2012-01-26T13:52:28-05:00

TALCAHUANO (Chile) — Eric Pineda se asomó a la bodega del Achernar y sólo vio diez míseras toneladas de jurel después de haber estado faenando durante cuatro días. Hace un par de décadas, las aguas del Pacífico Sur eran tan ricas en pescado que se podía llenar ese barco de casi 18 metros de eslora en apenas unas horas.

Este agente marítimo, como cualquier otro habitante de esta vieja ciudad portuaria de Talcahuano situada al sur de Santiago, creció conviviendo con ese pescado lleno de espinas y de tonos bronce llamado jurel chileno, una especie que deambula agrupado en bancos por las aguas del Pacífico Sur.

“Se está acabando muy rápido”, admitió Pineda, “tenemos que pescar lo más posible antes de que se agote todo”. Cuando se le pregunta qué le dejará a su hijo, se encoge de hombros: “Tendrá que buscar otra cosa”.

Pero, ¿queda algo por buscar?

El jurel, rico en ácidos grasos, es un verdadero maná para un planeta hambriento, un producto de primera necesidad en África. En otros lugares, la gente lo come sin darse cuenta, ya que la mayoría del jurel capturado se transforma en harina de pescado para ser consumido en la acuicultura y en las granjas de cerdos. Se necesitan alrededor de cinco kilos de jurel para producir un kilo de salmón de criadero.

En tan sólo dos décadas, el stock de jurel ha caído en picada: de unas 30 millones de toneladas a menos de tres millones en la actualidad. Los barcos arrastreros más grandes del mundo, después de haber esquilmado otros océanos, ahora ponen rumbo hacia las aguas cercanas a la Antártida para disputarse lo poco que queda.

Un trabajo realizado en ocho países por el Consorcio Internacional de Periodistas de Investigación (ICIJ, por sus siglas en inglés) sobre la industria pesquera en el Pacífico Sur revela por qué el estado crítico en el que se encuentra el humilde jurel presagia de forma clara el alarmante y progresivo deterioro de las especies marinas en todos los océanos.

El caso del jurel es reflejo de un panorama mundial desolador: décadas de pesca sin controles fomentada por rivalidades geopolíticas, corrupción, mala gestión e indiferencia de la ciudadanía.

Daniel Pauly, eminente oceanógrafo de la Universidad de Columbia Británica, ve en la grave situación del jurel del Pacífico Sur una señal de alarma. “Éste es como el último de los búfalos” contó al ICIJ en referencia a la época de la colonización de Norteamérica. “Cuando se haya ido, entonces todo lo demás habrá desaparecido con él… Marcará el final de los territorios conquistables”, añadió Pauly. La pesca será una cosa del pasado.

Grandes flotas pescan sin control

Delegados de al menos 20 países se reunirán en Santiago la próxima semana, 30 de enero, para intentar avanzar en el difícil objetivo de frenar el saqueo de los recursos del Pacífico Sur.

La Organización Regional de Ordenación Pesquera del Pacífico Sur (más conocida por sus siglas en inglés, SPRFMO) se fundó en 2006 gracias a la iniciativa conjunta de Australia, Nueva Zelanda y Chile, un país éste último que suele evitar su participación en los organismos internacionales de pesca.

Su propósito original era proteger el estatus de las pesquerías, particularmente la del jurel. Sin embargo, hicieron falta casi cuatro años para que 14 países adoptaran 45 artículos provisionales que respondieran a ese plan. Hasta la fecha, sólo seis países han ratificado el acuerdo.

Entretanto, las flotas industriales, sólo sujetas a restricciones voluntarias, se afanan por pescar lo más posible en los confines del mundo.

Los científicos calculan que entre 2006 y 2011 la población de jurel disminuyó un 63 por ciento.

La convención de la SPRFMO necesita ocho firmas para ser vinculante, incluida la de un Estado costero sudamericano. Chile, que en un primer momento fue determinante para constituir el grupo, aún no la ha ratificado.

En sus comienzos, la SPRFMO decidió que en el futuro asignaría cuotas anuales para los Estados miembros en función del tonelaje de arqueo bruto de los barcos desplegados por cada uno de los países entre 2007 y 2009.

Con el fin de aprovecharse de esa decisión, varias flotas pesqueras se dirigieron a toda máquina hacia las aguas del Pacífico Sur. Los barcos de arrastre chinos llegaron en masa, así como lo hicieron otros procedentes de Asia, Europa y Latinoamérica.

Uno de los primeros en llegar fue el que por aquel entonces era el mayor barco pesquero del mundo, el Atlantic Dawn, un buque de 14.000 toneladas construido para armadores irlandeses. La empresa holandesa Parlevliet & Van der Plas lo compró y le dio el nombre de Annelies Ilena. Este tipo de “super arrastreros” capturan jurel con redes que al desplegarse superan los 25 metros de anchura por 80 de longitud. Cuando las redes son recogidas, el pescado es introducido en la bodega mediante tubos succionadores similares a aspiradoras gigantes.

Gerard van Balsfoort, presidente de la Asociación de Grandes Arrastreros Congeladores de Pelágicos (PFA, por sus siglas en inglés), con sede en Holanda y que representa los intereses de nueve compañías y 25 barcos de bandera europea, confirmó algo obvio: los holandeses, al igual que el resto, fueron a marcar territorio. “Era una de las pocas zonas a las que podías acceder libremente”, admitió Van Balsfoort. A lo que añadió: “Parecía evidente que una gran cantidad de barcos iba a tomar rumbo sur, pero no había otra opción. Si te retrasabas en tomar la decisión de ir allí, te podían cerrar la puerta”.

En 2010, la SPFRMO contabilizó 75 barcos faenando en el área de su competencia.

La frenética carrera por pescar jurel también atrajo el interés de uno de los mayores actores del mercado mundial, la empresa con sede en Hong Kong Pacific Andes International Holdings: PacAndes.

Esa compañía invirtió 100 millones de dólares en 2008 en transformar un petrolero de 228 metros de eslora y de cerca de 50.000 toneladas de peso en un buque factoría.

El Lafayette, de bandera rusa, tiene una longitud superior a dos campos de fútbol americano juntos. Succiona el pescado con una manguera gigante de barcos de arrastre auxiliares encargados de las capturas, para más tarde congelarlo en bloques. Luego, buques congeladores lo transportan a puertos de todo el planeta.

Si operase todos los días, el Lafayette por sí solo tendría la capacidad técnica de procesar a bordo 547.000 toneladas de pescado al año.

En septiembre de 2011, los científicos de la SPRFMO llegaron a la conclusión de que una captura anual por encima de las 520.000 toneladas podría dañar aún más el stock de jurel.

Cristian Canales, científico del centro chileno de investigación pesquera Instituto de Fomento Pesquero (IFOP), manifestó que un límite de capturas más seguro sería de 250.000 toneladas. Algunos expertos discrepan y dicen que la única forma de recuperar esa pesquería es la implementación de una veda total durante cinco años.

Una sobrepesca subvencionada

El Trachurus murphyi o jurel chileno se captura al oeste de Chile y Perú, a lo largo de una franja costera de 6.600 kilómetros, hasta aproximadamente 120 grados de longitud, a mitad de camino con Nueva Zelanda.

Pertenece la familia de los pequeños pelágicos, vitales como fuente de alimentación para las especies predadoras más grandes. Sus bancos se localizan en amplias zonas de aguas abiertas, donde comen plancton y pequeños organismos.

El jurel representa un tercio del total de las capturas mundiales.

La Organización de Naciones Unidas para la Alimentación y la Agricultura señala que la flota pesquera mundial “es dos veces y media mayor de lo necesario”. Esa estimación fue publicada en un informe de 1998. Desde entonces, la capacidad pesquera de las flotas se ha incrementado aún más. Si una pesquería no está convenientemente regulada, pueden esquilmarla rápidamente.

Según afirman los expertos, esa sobrecapacidad se ha visto potenciada por los subsidios estatales, especialmente en Europa y Asia.

Un prestigioso informe realizado por Rashid Sumaila, en colaboración con el oceanógrafo Pauly y otros científicos de la Universidad de Columbia Británica (Canadá), estimó que los subsidios totales mundiales en el año 2003 ─últimos datos disponibles─ alcanzaron un valor de entre 25.000 y 29.000 millones de dólares.

El trabajo demostró que entre el 15 y el 30 por ciento de los subsidios estaba destinado a sufragar el combustible que permite a las naves faenar en todos los rincones del planeta. Otro 60 por ciento costeó la construcción y modernización de embarcaciones.

El estudio calculó que las subvenciones concedidas por China alcanzaban los 4.140 millones de dólares y las de Rusia los 1.480 millones.

Un informe publicado en diciembre de 2011 por la organización ecologista Greenpeace critica con dureza a la PFA, la asociación con sede en Holanda que representa al barco Annelis Ilena. El documento revela que, desde 2006 a 2011, las empresas de la PFA se beneficiaron con exenciones fiscales para combustible cuyo monto anual osciló entre 20,9 y 78,2 millones de euros.

El informe, elaborado por un consultor independiente para Greenpeace, señalaba que, conforme a un cálculo conservador, las ganancias anuales medias de la PFA cercanas a 55 millones de euros serían de tan sólo siete millones sin la ayuda del contribuyente. Haciendo una estimación más liberal, la PFA habría perdido anualmente 50,3 millones de euros.

Los fondos de la Unión Europea ─co-financiados por Alemania, Reino Unido y Francia─, ayudaron a la PFA a construir o modernizar 15 barcos de arrastre, aproximadamente la mitad de su flota.

Según datos oficiales de la Comisión Europea obtenidos por el portal fishsubsidy.org, el arrastrero Helen Mary de la PFA, que empezó a faenar en el Pacífico Sur en 2007, recibió 6,4 millones de euros en subvenciones entre los años 1994 y 2006, más que ningún otro barco pesquero de la UE.

Van Balsfoort, el presidente de la PFA, no puso en duda esas cifras publicadas, pero defendió que las exenciones fiscales al combustible son algo rutinario en la industria pesquera. A su vez, señaló que el Helen Mary y un barco gemelo eran arrastreros de la extinta Alemania oriental que presentaban un estado ruinoso y que fueron reconstruidos gracias al entusiasmo germano surgido tras la reunificación.

Según la regulación internacional, los barcos pueden pescar libremente en zonas marítimas no regidas por acuerdos ratificados. Aún así, la Unión Europea exige a los pesqueros de sus estados miembros que acepten las medidas interinas adoptadas por la SPRFMO como si fueran legalmente vinculantes. Además, los países de la UE están obligados a repartirse la cuota anual colectiva para la pesquería del jurel. Sin embargo, algunos armadores encuentran el modo de sortear la normativa vigente.

Por ejemplo, Unimed Glory, una filial de la compañía griega Laskaridis Shipping, opera tres barcos de arrastre en el Pacífico Sur. La empresa armadora está en Grecia, país miembro de la UE. Pero al estar abanderados en el archipiélago de Vanuatu, ubicado en el Pacífico Sur, escapan al control de Bruselas y pueden extraer mayor cantidad de jurel que lo que les permitiría una participación en la cuota europea total.

El noruego Per Pevik, director de Unimed Glory, dijo al ICIJ que debido a que Vanuatu no cumple con los estándares sanitarios exigidos por la UE, su pescado no puede ser vendido en Europa. Así que comercializa su jurel en África. Preguntado si las autoridades europeas habían planteado alguna objeción a sus banderas de Vanuatu, respondió: “No, no me molestan con esta cuestión”.

Los transbordos de pescado en alta mar también frustran la posibilidad de un control efectivo. Una vez que el pescado es descargado en grandes buques congeladores, su verdadero origen puede ser ocultado.

En el Pacífico Sur, las flotas industriales cada vez encuentran menos jurel tras años de pesca sin control. Los pesqueros abanderados con pabellones de países de la UE extrajeron más de 111.000 toneladas de jurel en 2009; al año siguiente, los barcos capturaron un 40 por ciento menos de pescado; en 2011, reportaron tan sólo 2.261 toneladas.

Echando la vista atrás, el presidente de la PFA, Van Balsfoort, admitió que el jurel tiene ciclos biológicos y que los barcos sobreexplotaron el recurso en un momento en que la población se encontraba vulnerable. “Pescamos demasiado… Toda la flota tiene que sentirse culpable por ello”, reconoció el ejecutivo holandés incluyendo en la acusación a la PFA.

En el interior de PacAndes

La estructura empresarial de PacAndes es como un rompecabezas. Su barco de 50.000 toneladas brutas, el Lafayette, está registrado en Moscú en Investment Company Kredo y enarbola la bandera rusa. Kredo ─por medio de otras cuatro empresas subsidiarias─ pertenece a China Fishery Group, compañía registrada en Singapur, la cual, a su vez, está inscrita en las Islas Caimán.

China Fishery y Pacific Andes Resources Development son propiedad de Pacific Andes International Holdings, con sede en Hong Kong, pero bajo el paraguas de otro holding constituido en Bermudas.

PacAndes, compañía que cotiza en la bolsa de Hong Kong, tiene más de 100 subsidiarias bajo el control de sus numerosas divisiones. Pero su red mundial, parcialmente impenetrable, incluye muchas otras filiales.

Uno de sus mayores inversores es Carlyle Group, de EEUU, que en 2010 compró acciones por un valor de 150 millones de dólares.

China Fishery Group publicó un aumento del 27,2 por ciento en los ingresos del ejercicio de 2011. De los 528,9 millones de dólares en 2010 pasó a 685,5 millones. Esta cifra representa el 55 por ciento de los ingresos de PacAndes. La compañía lo atribuyó a operaciones más rentables de la flota del Pacífico Sur y de la producción de harina de pescado en Perú.

Ng Joo Siang, de 52 años, egresado de la Universidad del Estado de Luisiana (EE.UU.), obsesionado con el golf y de aspecto jovial, dirige PacAndes como la empresa familiar que en realidad es, a pesar de su cotización en el mercado de valores.

Su padre, malayo de origen chino, se mudó junto a su familia a Hong Kong, donde creó su propio negocio de pescado en 1986. Cuando el consejo de administración se reúne en una sencilla sala de conferencias con vistas al puerto, su retrato contempla desde arriba a su viuda, la actual presidenta, a sus tres hijos y a su hija.

“Mi padre me dijo que los recursos de los océanos eran ilimitados”, dijo Ng en una entrevista, “pero era una afirmación falsa. Nosotros no queremos destruir los recursos, no queremos ser acusados de esquilmarlos. No creo que a nuestros inversores les agrade eso. Tampoco les iba a gustar a nuestros hijos”.

No obstante, muy a su pesar, reconoce que PacAndes se enfrenta al difícil reto de mejorar su imagen pública. En 2002, una compañía afiliada a PacAndes fue acusada de practicar pesca ilegal en la Antártida. Ng niega que su empresa estuviera implicada en conductas indebidas o que tuviera relación alguna con los barcos sospechosos de estar involucrados en esos hechos.

En aquellos días, según la versión contada al ICIJ por diplomáticos neozelandeses, un abogado ruso que trabajaba para la compañía supuestamente amenazó a un empresario de la industria pesquera de Auckland mostrándole fotografías de su familia.

Consultado sobre esta cuestión, Ng negó que el episodio hubiera ocurrido y calificó el asunto como una nueva difamación divulgada por gente molesta con el éxito de PacAndes.

Empeñado en ofrecer una mejor imagen, Ng contrató a nuevo ejecutivo para hacerse cargo de la responsabilidad social corporativa y dijo que quiere llevar científicos a bordo de sus barcos para ayudar a proteger los recursos pesqueros.

Sin embargo resopló cuando se le preguntó por el límite de 520.000 toneladas recomendado por la SPRFMO para la captura de jurel. “¿En qué se basan?”, replicó. Alzó un dedo humedecido como si fuera a comprobar la dirección del viento y dijo: “¿En esto?” “No se basan en la ciencia”, recalcó Ng. Y añadió: “La SPRFMO carece de argumentos científicos. ¿Cuánto dinero han aportado Vanuatu o Chile o cualquier otro país para comprender algo sobre las pesquerías?”

Chile, de hecho, invirtió 10,5 millones de dólares en 2011 en el IFOP, su reputado instituto científico, lo que equivale a la cuarta parte de su presupuesto total de pesca. En las intrigas de las políticas pesqueras, PacAndes se alinea con Perú, país en el que opera 32 barcos y donde posee una participación en la cuota de anchoveta, otra especie usada para producir harina de pescado.

Ng dice que el Lafayette enarbola bandera rusa porque así se perfecciona una vieja idea soviética: un buque nodriza que permanece fijo en un lugar aspira pescado llevado por una flota de barcos pesqueros para procesarlo a bordo.

Expertos de la industria sospechan que es otra la razón por la que ese buque factoría lleva pabellón de Rusia: la manera opaca de hacer negocios en ese país.

El Lafayette no puede pescar por sí solo, precisó Ng, pero puede hacerlo junto a otro barco. Según Ng, el sistema consiste en que uno de los dos extremos de la red de arrastre es amarrado al Lafayette y el otro a un segundo barco que finalmente cobra la captura. En enero de 2010, una inspección francesa en Tahití no encontró aparejos de pesca a bordo del Lafayette.

Este asunto ocupa un lugar central en una reciente polémica surgida dentro de la incipiente SPRFMO. La organización está ahora asignando nuevas cuotas voluntarias en función de las capturas realizadas en 2010. En ese año, tanto Rusia como Perú reivindicaron unas capturas de 40.000 toneladas que parecen corresponder a la misma partida. Los rusos dicen que el Lafayette estuvo pescando mientras enarbolaba su bandera. Por su lado, los peruanos defienden que los arrastreros que realmente capturaron ese pescado operaron bajo su pabellón.

El poder cuenta en Chile

La crisis del jurel ha golpeado con extrema dureza a Chile, donde los principales industriales y las autoridades reconocen los graves excesos cometidos durante los años donde no había control, una época que ellos llaman “la carrera olímpica”.

Sólo en 1995, los chilenos pescaron más de cuatro millones de toneladas. Esa cifra es ocho veces superior a la cantidad que los científicos de la SPRFMO recomendaron desembarcar en 2012 para que la pesquería sea sostenible. Entre los años 2000 y 2010, Chile descargó en sus puertos el 72 por ciento del total de jurel extraído en el Pacífico Sur.

Juan Vilches es patrón de pesca. Su trabajo consiste en buscar cardúmenes de peces para una gran compañía. Es también biólogo marino. Se estremece al recordar tiempos pasados. “La matanza era tremenda, increíble”, afirma Vilches.

“Nadie tenía ni idea de los límites”, admite el patrón. “Si las redes subían demasiado llenas y la captura excedía la capacidad de la bodega, arrojábamos toneladas por la borda. Los barcos venían tan cargados que el pescado llegaba apachurrado y su sangre estaba tan caliente que hervía a borbotones”, sostiene Vilches.

Ahora la situación ha cambiado. Sin embargo, el ICIJ, en colaboración con el Centro de Investigación e Información Periodística (CIPER) de Chile, siguió la pista a ocho grupos que conforman un monopolio de facto de la pesquería y que han presionado al gobierno para que estipule cuotas por encima de la recomendación científica. Seis de esos ocho grupos están controlados por poderosas familias. Y en conjunto, las ocho, poseen el 87 por ciento de la cuota de captura del jurel en Chile.

Roberto Angelini, de 63 años, controla el norte. Es conocido como “El Heredero” por haber sucedido a su tío Anacleto, a quien Forbes situó en su ranking de 2007 como el hombre más rico de Sudamérica, precisamente el año en que falleció.

Anacleto había emigrado desde Italia en 1948. En 1976, incorporó el negocio de la pesca a un imperio que a día de hoy incluye la mayor compañía petrolífera de Chile, explotaciones mineras y forestales, además de otros intereses. Las dos empresas pesqueras de Angelini poseen el 29,3 por ciento de la cuota de jurel fijada por el gobierno chileno.

Además suministran el 5,5 por ciento del total de harina de pescado mundial.

Según un informe del gobierno chileno, cerca del 70 por ciento del jurel capturado entre 1998 y 2011 en el feudo norteño de Angelini estaba por debajo de la talla mínima permitida. De acuerdo con la legislación vigente, la mitad de esas extracciones sería ilegal. Pero los funcionarios del gobierno dicen que en el norte las capturas entran en la categoría especial de “pesca de investigación” y, por tanto, están exentas de la ley que regula el tamaño. Angelini rehusó hacer comentario alguno para este reportaje.

En la Universidad de Concepción, el tono suave del biólogo marino Eduardo Tarifeño se agria cuando se habla de la depredación de los océanos.

En Chile, la única especie relativamente abundante es la sardina, según Tarifeño. “Ya no tenemos jurel ni merluza ni anchoveta. Las pesquerías que producían un millón o más de toneladas anualmente simplemente se han agotado debido a la sobrepesca llevada a cabo por las grandes compañías”, criticó el biólogo.

Tarifeño es uno de los dos científicos que forman parte del Consejo Nacional de Pesca chileno (CNP), el organismo que aprueba las cuotas de captura. Allí se vota por mayoría. El 60 por ciento de sus miembros pertenecen a la industria.

Anualmente, el IFOP, instituto oficial encargado de la investigación pesquera, recomienda una cuota a la Subsecretaría de Pesca (Subpesca) dependiente del Ministerio de Economía, Fomento y Turismo, departamento que a su vez propone su propia cifra. Si el CNP la rechaza, el nuevo límite de explotación equivaldría al 80 por ciento de la cuota del año anterior.

En 2009, el IFOP urgió a adoptar un drástico recorte que establecía un límite de capturas de jurel de 750.000 toneladas, según la organización ecologista sin fines de lucro Oceana, que examina las cifras de cuota sin publicar. Subpesca la amplió hasta las 1,4 millones de toneladas y el CNP la aprobó.

Mientras que el stock de jurel se desploma, los funcionarios y los empresarios de la industria se lanzan acusaciones mutuas por no haber adoptado, con mayor celeridad y firmeza, medidas para la reducción de las cuotas.

Se espera que este año se apruebe una nueva ley de pesca que quitará atribuciones al CNP y se las otorgará a un panel de expertos. Sin embargo, Tarifeño insiste en que ya es demasiado tarde para cualquier cosa que no sea tomar medidas drásticas. Comentó al ICIJ: “Si no salvamos el jurel ahora mismo, no seremos capaces de hacerlo en el futuro. Necesitamos que se adopte la total prohibición de su pesca durante al menos cinco años”.

Desde la secretaría de pesca de Valparaíso, Italo Campodónico reflexiona sobre este asunto y añade: “Como biólogo marino, tengo que estar de acuerdo. Deberíamos establecer una veda de cinco años. Pero como funcionario, debo ser realista. Por razones socioeconómicas, no va a suceder. La realidad es que los extranjeros pueden ir a pescar a otras aguas. Nosotros no”.

La 'evaporación' de la anchoveta del Perú

El Perú es la segunda potencia pesquera mundial, sólo superada por China. En el destartalado puerto de Chimbote, el mayor del país, se descarga más pescado en un año que lo que toda la flota española captura en ese mismo periodo.

El problema no radica exclusivamente en la sobrepesca del jurel, sino también en la sobreexplotación de la anchoveta, un pez que se parece a una sardina con el tamaño de una anchoa y que es un recurso fundamental para elaborar las harinas de pescado usadas en la acuicultura.

La anchoveta peruana es la mayor pesquería mundial. Si las exportaciones de harina de pescado son un gran negocio en Chile ─cerca de 535 millones de dólares anuales─, en el Perú representan el triple de ese valor: 1.600 millones de dólares al año.

Puedes oler Chimbote mucho antes de verlo. Hieden las nubes de humo negro grasiento que emanan de un bosque de chimeneas. Barcas artesanales se balancean sobre el agua en un trasiego continuo alrededor de los maltrechos muelles.

La legislación nacional vigente define claramente lo que supuestamente tiene que ocurrir cuando los barcos arriban a puerto con pescado a bordo. Pero cuando se le pregunta a un par de viejos pescadores cuándo fue la última vez que vieron inspectores, se miran uno a otro y se ríen.

El ICIJ, en colaboración con el grupo de periodismo de investigación peruano IDL-Reporteros, obtuvo una serie de documentos de la base de datos oficial de capturas que revelan el alcance real del fraude que se comete al otro lado de las puertas de las fábricas.

El análisis exhaustivo de más de 100.000 descargas entre 2009 y la primera mitad de 2011 halló que la mayoría de las compañías peruanas que elaboran harina de pescado sistemáticamente hacen trampas en la mitad de los desembarques. En algunos casos, declaran capturas por un valor inferior al 50 por ciento del real.

Este fraude permite a las compañías pescar más de lo autorizado por las cuotas establecidas, además de darles la posibilidad de evadir el pago de impuestos y de los aranceles establecidos por tonelada, o de abonar menos salario a los pescadores que reciben un porcentaje sobre las capturas.

En total, al menos 630.000 toneladas de anchoveta ─con un valor de casi 200 millones de dólares en harina de pescado─ “se evaporaron” en el proceso de pesaje en un periodo de dos años y medio. Simplemente no fueron contabilizadas. Los principales infractores son de nacionalidad peruana, pero la lista también incluye a la empresa China Fishery Group de PacAndes y a otras tres compañías con capitales noruegos.

Richard Inurritegui, presidente de la Sociedad Nacional de Pesquería, la principal asociación de industriales, minimizó los hallazgos de la investigación y aseguró que un cálculo a ojo del patrón no se puede comparar con la balanza. China Fishery Group denegó cualquier tipo de entrevista.

Patricia Majluf, vicepresidenta del prestigioso Instituto del Mar del Perú (Imarpe), hizo una descripción a ICIJ de lo que ella asegura son innumerables métodos usados por los pescadores y las plantas de harina de pescado para cometer fraude en el pesaje, evadir impuestos, reducir costes y violar la legislación vigente.

Si acaso se las descubre en infracción, precisó Majluf, las compañías pueden demorar el pago de las sanciones durante cuatros años y finalmente sólo abonan una fracción de las multas impuestas.

A pesar de su sólida reputación, las recomendaciones del Imarpe para lograr una disminución monitorizada de la actividad pesquera siguen siendo ignoradas.

¿Salvar a los peces o a la industria?

Roberto Cesari, jefe de la delegación de la en la SPFRMO, que se reúne la semana próxima, manifestó al ICIJ que espera que la convención se ratifique en 2013, no antes. En ese caso, esto sucedería después de siete años de un vertiginoso deterioro del stock de jurel.

La SPFRMO recortó las cuotas voluntarias en un 40 por ciento para 2011. Sin embargo, China, entre otros países, no aceptó el acuerdo. A posteriori Pekín acordó reducirlas en un 30 por ciento.

Cesari apuntó que la UE intenta ejercer presión para alcanzar un necesario consenso o para resolver el conflicto, pero su influencia es limitada. “Hemos venido expresando oficialmente nuestra decepción a China o Rusia, pero como puedes entender, estos no son actores menores en el mundo… Son gigantes”, admitió Cesari.

Bill Mansfield, un abogado neozelandés que preside la SPRFMO desde 2006, manifestó que las restricciones voluntarias no han protegido las poblaciones de peces, por lo que ha llegado el momento de que la convención entre en vigor. Recalcó que la reunión de Santiago debería limitar las capturas de 2012 a 390.000 toneladas o menos. “La realidad es que todos necesitan tomarse en serio las restricciones si quieren que esta especie regrese”, dijo al ICIJ sin mencionar el nombre concreto de ningún país que haya obstaculizado la adopción de reducciones drásticas.

Los funcionarios públicos evitan señalar con el dedo a nadie, pero dos excéntricos ex marineros que viven enfrascados en sus ordenadores en islas diminutas situadas en polos opuestos del mundo ─no se conocen el uno al otro─ no tienen reparos en denunciar los efectos de las grandes flotas subvencionadas. No se conocen, pero su discurso es el mismo.

Gunnar Album vive cerca de la ciudad noruega de Bodø, situada por encima del Círculo Polar Ártico. Desde allí dirige la Fundación TM y hace trabajos de consultoría para The Pew Charitable Trusts*. Cuando no está de viaje en encuentros internacionales, compagina su tiempo entre el cuidado de sus pollos y la llama que tiene para ahuyentar a los zorros y el análisis de datos obtenidos vía satélite para rastrear la actividad de los barcos pesqueros.

Album dice que las ayudas estatales han creado tanta capacidad pesquera que los grandes arrastreros están obligados a pescar lo máximo que pueden para recuperar la inversión realizada.

“Estos buques recorren los océanos en busca de cualquier pescado disponible, originando sobrepesca y ejerciendo una presión insoportable sobre los gobiernos que intentan gestionar los recursos”, afirma Album.

Martini Gotje hace más o menos lo mismo que Album pero desde la idílica isla neozelandesa de Waiheke, cerca de Auckland. Es un expatriado holandés que formaba parte de la tripulación del Rainbow Warrior de Greenpeace cuando fue hundido por los servicios secretos franceses en 1985.

Gotje elabora una lista negra de barcos para Greenpeace que ayuda a los ecologistas y a las autoridades. Al igual que Album, critica sobre todo la sobrecapacidad ─que es legal pero devastadora.

Señala que la prioridad debería ser salvaguardar la vida de las especies marinas, no la industria pesquera. “El Lafayette ha subido el listón a un nivel increíble, y Holanda está muy involucrada en ese juego”, señala Gotje. Y concluye: “Hay demasiados barcos, simplemente hay demasiados barcos”.

Al final, argumenta el oceanógrafo Pauly, esta tendencia mundial no cambiará a menos que una gran potencia ─la Unión Europea o los Estados Unidos─ adopte medidas resolutivas. “Alguien tendrá que asumir esa autoridad moral y otros le seguirán”, observa Pauly.

Duncan Currie, abogado medioambientalista residente en Nueva Zelanda que trabaja en la Coalición para la Conservación de los Fondos Marinos, ve en el caso del jurel un buen ejemplo para explicar lo que está sucediendo. Esta especie se agrupa en cardúmenes en áreas marinas bien definidas. Además, no son muchas las flotas que lo persiguen.

Currie concluye: “Hay que plantearse una cuestión obvia, si no podemos salvar esta especie, ¿qué podemos salvar entonces?”.

Milagros Salazar (Perú), Juan Pablo Figueroa Lasch (Chile), Joop Bouma (Holanda) e Irene Jay Liu (Hong Kong) han colaborado en la redacción de este artículo.

*En el pasado, el ICIJ recibió una ayuda económica de The Pew Charitable Trusts.

'Free-for-all' decimates fish stocks in the southern Pacific

Chile — 2012-02-17T14:16:44-05:00

TALCAHUANO, Chile — Eric Pineda peered deep into the Achernar’s hold at a measly 10 tons of jack mackerel after four days in waters once so rich they filled the 57-foot boat in a few hours.

The dock agent, like everyone in this old port south of Santiago, grew up with the bony, bronze-hued fish they call jurel, which roams in schools in the southern Pacific.

“It’s going fast,” Pineda said. “We’ve got to fish harder before it’s all gone.” Asked what he would leave to his son, he shrugged: “He’ll have to find something else.”

But what else is there to find?

Jack mackerel, rich in oily protein, is manna to a hungry planet, a staple in Africa. Elsewhere, people eat it unaware; much of it is reduced to feed for aquaculture and pigs. It can take more than 5 kilos of jack mackerel to raise a kilo of farmed salmon.

Yet stocks have dropped from an estimated 30 million metric tons to less than 3 million in two decades. The world’s largest trawlers, after depleting other oceans, now head south toward the edge of Antarctica to compete for what is left.

An eight-country investigation by the International Consortium of Investigative Journalists of the fishing industry in the southern Pacific shows why the plight of the humble jack mackerel foretells progressive collapse of fish stocks in all oceans.

Their fate reflects a bigger picture: decades of unchecked global fishing pushed by geopolitical rivalry, greed, corruption, mismanagement and public indifference.

Daniel Pauly, the eminent University of British Columbia oceanographer, sees jack mackerel in the southern Pacific as an alarming indicator.

“This is the last of the buffaloes,” he told ICIJ. “When they’re gone, everything will be gone ... This is the closing of the frontier.”

Big Fleets Fish Unchecked

Delegates from at least 20 countries will gather next week, January 30, in Santiago for an annual meeting to seek more progress toward the elusive goal of curbing the plunder.

Negotiations to establish the South Pacific Regional Fisheries Management Organization (SPRFMO) began in 2006, at the initiative of Australia and New Zealand along with Chile, which often shuns international bodies.

Its purpose was to protect fish, particularly jack mackerel. But it took almost four years for 14 countries to adopt 45 articles aimed at doing that. So far, only six countries have ratified the agreement.

Meantime, industrial fleets bound only by voluntary restraints compete in what amounts to a free-for-all in no man’s water at the bottom of the world.

From 2006 through 2011, scientists estimate, jack mackerel stocks declined by 63 percent.

The SPRFMO convention needs eight signatures to be binding, including one South American coastal state. Chile — prominent in getting the group together in the first place — has yet to ratify.

SPRFMO decided at the outset it would assign future yearly quotas for member countries based on the total annual tonnage of vessels each deployed from 2007 to 2009.

To stake their claims, fleets hurried south. Chinese trawlers arrived en masse, among others from Asia, Europe and Latin America.

One newcomer was at the time the biggest fishing vessel afloat, the 14,000-ton Atlantic Dawn, built for Irish owners. Parlevliet & Van der Plas of the Netherlands bought it, renaming it the Annelies Ilena. Such “super trawlers” chase jack mackerel with nets that measure up to 25 meters (82 feet) by 80 meters (262 feet) at the opening. When they are hauled in, fish are sucked into the hold by suction tubes, like giant vacuum cleaners.

Gerard van Balsfoort, president of the Dutch-based Pelagic Freezer-Trawler Association (PFA), which represents nine companies and 25 European Union-flagged vessels, confirmed the obvious: the Dutch, like others, went to mark out territory.

“It was one of the few areas where still you could get free entry,” van Balsfoort said. “It looked as though too many vessels would head south, but there was no choice … if you were too late in your decision to go there, they could have closed the gate.”

By 2010, SPFRMO tallied 75 vessels fishing in its region.

The mackerel rush also attracted the leading commercial player, the Hong Kong-based Pacific Andes International Holdings: PacAndes.

The company spent $100 million in 2008 to rebuild a 750-foot, 50,000-ton oil tanker into a floating factory called the Lafayette.

The Russian-flagged Lafayette, longer than two football fields, sucks fish from attendant trawlers with a giant hose and freezes them in blocks. Refrigerated vessels — reefers — carry these to distant ports.

The Lafayette alone has the technical capacity to process 547,000 metric tons a year, if it operated every day.

In September 2011, SPRFMO scientists concluded that an annual catch beyond 520,000 metric tons could further deplete jack mackerel stocks.

Cristian Canales of Chile’s fisheries research center, Instituto de Fomento Pesquero (Ifop), said a safer limit would be 250,000 metric tons. Some dissenting experts say the only way to restore the fishery is to impose a total ban for five years.

Subsidized over-fishing

Trachurus murphyi, Chilean jack mackerel, are fished west of Chile and Peru, along a 4,100-mile coastline, to about 120 degrees longitude, halfway to New Zealand.

They are known as small pelagics, vital to larger species. They range widely in open waters, eating plankton and small organisms, and are food for bigger fish.

These forage fish represent a third of the total global catch.

The U.N. Food and Agriculture Organization says that global fishing fleets “are 2.5 times larger than needed.” That estimate was based on a 1998 report; since then, fleets have expanded. If unregulated, they can quickly devastate a fishery.

Much of that overcapacity has been driven by government subsidies, particularly in Europe and Asia, experts say.

A landmark report by Rashid Sumaila, along with the oceanographer Pauly and others at the University of British Columbia, estimated total global subsidies in 2003 — the latest available data — at $25 billion to $29 billion dollars.

Between 15 and 30 percent of subsidies paid for fuel to allow ships to range widely, it said. Another 60 percent went to increase size and upgrade equipment.

The study calculated China’s subsidies at $4.14 billion and Russia’s at $1.48 billion.

A report by the environmental group Greenpeace released in December 2011 looked hard at PFA, the Dutch-based association that represents the Annelies Ilena. It found the group received fuel tax exemptions of between €20.9 million and €78.2 million from 2006 to 2011.

The report, produced by an independent consultant for Greenpeace, said that by a conservative calculation PFA’s average yearly profit of around €55 million would be €7 million without taxpayer support. At the other extreme, it said, PFA would have lost €50.3 million.

EU funds — and financial support from Germany, Britain and France — helped PFA build or modernize 15 trawlers, nearly half its fleet.

PFA’s Helen Mary, which began fishing in the South Pacific in 2007, received €6.4 million in subsidies from 1994 to 2006, more than any other EU fishing vessel, according to European Commission data on the website fishsubsidy.org.

Van Balsfoort, the PFA president, did not dispute the subsidy numbers but said fuel tax exemptions are routine in the fishing industry. He said the Helen Mary and a sister ship were decrepit Eastern German trawlers, rebuilt with Germany’s encouragement after reunification.

Under international practice, vessels can fish freely in areas not governed by ratified accords. Still, the European Union requires ships of member states to accept SPRFMO interim measures as legally binding. And EU countries must divide up a collective annual quota for jack mackerel. But ship owners find ways around the rules.

For instance, Unimed Glory, a subsidiary of the Greek company Laskaridis Shipping, operates three trawlers in the South Pacific. They are owned in Greece, an EU member. But, flagged in the Pacific island of Vanuatu, they operate outside Brussels’ control and can catch more jack mackerel than a share of the EU quota would allow.

Per Pevik, Unimed Glory’s Norwegian manager, told ICIJ that since Vanuatu does not meet EU sanitary standards his fish cannot be sold in Europe. Instead he sells jack mackerel to Africa. Asked if European authorities objected to his Vanuatu flags, he said, “No, they don’t bother me about that.”

Transshipment at sea also thwarts effective control. Once fish is unloaded onto long-range refrigerated vessels, its origin can be obscured.

In the southern Pacific, industrial fleets find fewer and fewer jack mackerel after years of aggressive fishing: European Union-flagged vessels collectively caught more than 111,000 metric tons of jack mackerel in 2009; the next year, the ships hauled in 40 percent fewer fish; by last year, vessels reported just 2,261 tons.

Looking back, PFA’s van Balsfoort said jack mackerel numbers go up and down in natural cycles, and vessels fished too hard at a time when they were vulnerable. “There was way too big an effort in too short a time … the entire fleet has to be blamed for it,” he said, including PFA.

Inside PacAndes

PacAndes is the proverbial puzzle within an enigma. Its 50,000 gross ton flagship, the Lafayette, is registered to Investment Company Kredo in Moscow and flies a Russian flag. Kredo — via four other subsidiaries — belongs to China Fishery Group in Singapore, which, in turn, is registered in the Cayman Islands.

China Fishery and Pacific Andes Resources Development belong to Pacific Andes International Holdings, based in Hong Kong but under yet another holding company registered in Bermuda.

PacAndes, which is publicly traded on the Hong Kong stock exchange, reports more than 100 subsidiaries under its various branches, but a partly impenetrable global network includes many more affiliates.

One of its major investors is the U.S.-based Carlyle Group, which purchased $150 million in shares in 2010.

China Fishery Group reported a 2011 revenue gain of 27.2 percent to $685.5 million from $538.9 million, 55 percent of PacAndes’ earnings. The company attributed it to stronger operations from the South Pacific fleet and the Peruvian fishmeal operations.

Ng Joo Siang, 52, a jovial Louisiana State University graduate who is hooked on golf, runs PacAndes like the family business it is despite its public listing.

His Malaysian Chinese father moved the family to Hong Kong and started a seafood business in 1986. When the executive board meets in its no-frills conference room overlooking the harbor, his portrait gazes down at his widow, who is chairwoman, his three sons and a daughter.

“My father told me the oceans were limitless,” Ng said in an interview, “but that was a false signal. We don’t want to damage the resources, to be blamed for damage. I don’t think our shareholders would like it. I don’t think our children would like it very much.”

But he ruefully acknowledges that PacAndes faces a serious public relations challenge. In 2002, a company affiliated with PacAndes was accused of illegal fishing in the Antarctic. Ng denies any wrongdoing or connection with the suspect boats, but his critics are harsh.

Back then, New Zealand diplomats told ICIJ, a Russian lawyer working for the company allegedly threatened an Auckland fisheries executive by showing him pictures of his family.

Asked to comment, Ng said that did not happen, and he dismissed it as yet another smear by people who resent PacAndes’ success.

Bent on forging a better image, Ng hired a new corporate social responsibility officer and says he wants to put scientists aboard his ships to help protect fish stocks.

But he snorted when asked about the SPRFMO recommended limit of 520,000 metric tons for jack mackerel. “Based on what, on this?” he replied, thrusting a moistened finger into the air as if checking the wind.

“There is no science,” he said. “The SPRFMO has no science. How much money has Vanuatu or Chile or whoever put in to understand about fisheries?”

Chile, in fact, spent $10.5 million in 2011 on Ifop, its highly regarded scientific institute — one-fourth of its fisheries budget. In the intrigues of fish politics, PacAndes sides with Peru, where it operates 32 vessels and has a share of the anchoveta quota, another species used for fishmeal.

Ng says the Lafayette flies a Russian flag because it perfected an old Soviet idea: a mother ship that stays put, sucking in fish to process from a fleet of catcher vessels.

Industry experts suspect another reason is the opaque manner in which official Russian business is done.

The Lafayette cannot fish, Ng said, but can pair trawl: hold one end of a net attached to another ship, which hauls in the catch. A French inspection in Tahiti in January 2010 found no fishing equipment on board.

This point is at the heart of fresh controversy within the fledgling SPRFMO.

The organization now sets new voluntary quotas based on the 2010 catch. But in that year both Russia and Peru claimed what seem clearly to be the same 40,000 metric tons.

The Russians say the Lafayette was fishing, and it flies their flag. The Peruvians say the trawlers that actually caught the fish were under their colors.

Power Plays in Chile

The jack mackerel crisis has hit hardest in Chile, where industry leaders and authorities admit to serious excesses during the unregulated years in what they call “the Olympic race.”

In 1995 alone, Chileans fished more than four million tons. That is eight times the amount SPRFMO scientists said could be landed in a sustainable way in 2012. From 2000 to 2010, Chile landed 72 percent of all jack mackerel in the southern Pacific.

Juan Vilches is a patrón de pesca, whose job is to scout fish for a large company. He is also a marine biologist. Vilches shudders when recalling the old days.

“The slaughter was tremendous, unbelievable,” he said. He used the Spanish word for massacre, matanza, similar to the Italian, mattanza, used to depict the bluefin tuna plunder.

“No one had any idea of limits,” he said. “Hundreds of tons were thrown overboard if nets came up too full for the hold. Boats came in so loaded that fish were squashed, their blood so hot it actually boiled.”

It is different now. Yet ICIJ, with the Chilean investigative center CIPER, traced how eight groups with a near monopoly have pressured the government to set quotas above scientific advice. Six of these groups are controlled by powerful families. And, together, the eight of them own rights to 87 percent of Chile's jack mackerel catch.

Roberto Angelini, 63, rules the north. He is known as “The Heir,” succeeding his uncle, Anacleto, who Forbes ranked as tied for South America’s richest man in 2007, the year he died.

Anacleto came from Italy in 1948. In 1976, he added fishing to an empire that today includes Chile’s largest fuel company, mines, forests, and other interests. Angelini’s two fishing companies have 29.3 percent of the jack mackerel quota set by the Chilean government.

They supply 5.5 percent of the world’s fishmeal.

About 70 percent of jack mackerel caught from 1998 to 2011 in Angelini’s northern fiefdom were under minimum size, a government report shows. According to the law, half of those catches would be illegal. But government officials say catches in the north fall under a special “research” category and are exempt from size regulations . Angelini declined to comment for this story.

At the University of Concepción, marine biologist Eduardo Tarifeño’s gentle tone hardens on the subject of ocean plunder.

Chile now has only sardines in relative abundance, he said. “We have no more jack mackerel or hake or anchoveta. Fisheries that produced a million or more tons a year have simply run out from overfishing by big companies.”

Tarifeño is one of only two scientists on the CNP, Chile’s national fisheries council, set up to advise on quotas. It votes by majority, and 60 percent of its members are from the industry.

Each year, Ifop, the official research institute, recommends a quota to Subpesca, the Economy Ministry’s fisheries unit, which then proposes its own figure. If the CNP rejects that, the new limit is 80 percent of the previous year’s quota.

In 2009, Ifop urged a sharp cut to 750,000 tons, according to the non-profit environmental group, Oceana, which examines quota figures not made public. Subpesca raised that to 1.4 million metric tons, and the CNP approved it.

As jack mackerel stocks plummet, government officials and industry executives each blame the other for not taking earlier, firm action to reduce quotas.

A new fisheries bill expected to pass this year gives this CNP role to a handpicked panel of experts. But Tarifeño insists it is now too late for anything short of drastic action.

He told ICIJ: “If we don’t save jack mackerel today we won’t be able to do it later. We need a total ban for at least five years.”

At the fisheries secretariat in Valparaiso, Italo Campodónico reflected on that. “As a marine biologist, I have to agree,” he said. “We should have a five-year ban. But as a civil servant, I must be realistic. For economic and social reasons, it won’t happen. Outsiders can go fish in other waters. We can’t.”

Peru’s 'Vanished' Anchoveta

Peru is the world’s second largest fishing nation after China. The ramshackle port of Chimbote – the country's biggest – lands more fish than the entire Spanish fleet catches in a year.

Here the issue is not just the over-fishing of jack mackerel but also anchoveta, which looks like an anchovy-sized sardine, a crucial source of fishmeal for aquaculture.

Peru’s anchoveta is the largest global fishery. While fishmeal exports are big business in Chile — about $535 million annually — in Peru they are three times bigger: $1.6 billion a year.

You smell Chimbote long before you see it. Reeking oily dark smoke billows from a forest of chimneys. Artisan boats bob in every direction around the battered wharves.

Nationally imposed rules define what is supposed to happen when vessels tie up with fish. But when asked when they last saw inspectors, a pair of aging fishermen looked at each other and laughed.

ICIJ, with the investigative reporting group IDL-Reporteros in Lima, obtained records from the official database of catches, which shows the extent of fraud shielded behind factory gates.

An analysis of more than 100,000 weighing records from 2009 to the first half of 2011 found that most of Peru’s fishmeal companies systematically cheated on half of the landings— in some cases, underreporting catches by 50 percent.

This fraud allows companies to catch more fish than quotas allow, to save on taxes and per-ton levies, and to pay less to fishermen who earn a percentage of the catch.

In all, at least 630,000 metric tons of anchoveta — worth nearly $200 million in fishmeal — “vanished” in the weighing process over two and a half years. They simply weren’t counted. Top offenders are Peruvian, but the ranking also includes PacAndes’ China Fishery Group and three companies with Norwegian investment.

Peru’s deputy fisheries minister Jaime Reyes Miranda acknowledged in an interview with ICIJ that there are “serious problems” with scales at fishmeal plants and said the government is trying to find a solution to make sure anchoveta numbers are not manipulated.

Richard Inurritegui, president of the National Fisheries Society, the leading industry group, downplayed the investigation’s findings and blamed the masters’ visual estimates for the discrepancies between fish declared by vessels and fish weighed in the plants. China Fishery Group refused to comment despite numerous requests.

Patricia Majluf, vice president of Imarpe, Peru’s highly regarded oceans institute, described what she says are countless ways for fishermen and fishmeal plants to cheat on weight, evade taxes, cut corners and break rules.

If caught, she said, companies are able to delay penalties for four years and end up paying a fraction of fines levied.

Despite its solid reputation, the recommendations of Imarpe for a monitored decrease in fishing continue to get ignored.

Saving Fish or Industry?

Roberto Cesari, chief EU envoy to SPFRMO, which meets next week, told ICIJ he expects ratification only in 2013. This would be after seven years of precipitous decline for jack mackerel.

SPFRMO cut voluntary quotas by 40 percent for 2011, but China, among others, opted out. Beijing later agreed to reduce by 30 percent.

Cesari said the EU tries to exert pressure to reach a needed consensus or resolve conflict, but its clout is limited.

“We have been expressing our disappointment officially to China, Russia,” he said, “but as you understand these are not minor players in the world … they are giants.”

Bill Mansfield, a New Zealand international lawyer who has chaired SPRFMO since 2006, said that voluntary restraints have not protected fish stocks, and it is time to put the convention into force.

He said the Santiago meeting must limit the 2012 catch to 390,000 metric tons or less.

“The reality is that everybody needs to take a deep step of restraint if this species is to come back,” he told ICIJ, declining to name any country that balked at sharp reductions.

While public officials avoid pointing fingers, two eccentric ex-sailors who pore over computers on tiny islands at opposite extremes of the world — neither knows the other — excoriate the big subsidized fleets.

Gunnar Album, near Bodø above the Arctic Circle in Norway, directs his TM Foundation and now consults for The Pew Charitable Trusts*.

Between feeding his chickens and the llama he keeps to scare off foxes, he uses satellite data to track fishing vessels. He travels often to international meetings and distant ports.

Album says government support has created so much capacity that super trawlers must fish to their maximum for return on investment.

“These vessels roam the oceans for any available fish, causing overfishing and unbearable pressure on governments trying to manage resources,” he said.

Martini Gotje, a Dutch expatriate who crewed aboard the Greenpeace Rainbow Warrior when French agents sank it in New Zealand’s Auckland harbor in 1985, does much the same from the idyllic island of Waiheke, near Auckland.

Gotje compiles a Greenpeace blacklist, which helps activists and authorities. But, like Album, he mostly faults overcapacity — legal and yet devastating.

The first priority, he said, should be saving fish, not the fishing industry. “The Lafayette raised the game to an incredible level, and Holland is very much involved,” he said. “There are way too many boats, just simply way too many boats.”

In the end, oceanographer Pauly argues, this global trend will not change unless a major power — the European Union or the United States — takes firm action. “Somebody has to take the high ground,” he said, “and others will follow.”

Duncan Currie, a New Zealand-based environment lawyer with the Deep Seas Conservation Coalition, sees jack mackerel as a clear case in point. They school in a well-defined range and relatively few fleets pursue them.

“You have to ask the obvious question,” he concludes. “If we can’t save this, what can we save?”

Milagros Salazar (Peru), Juan Pablo Figueroa Lasch (Chile), Joop Bouma (The Netherlands), Irene Jay Liu (Hong Kong), Nicky Hager (New Zealand), Roman Anin (Russia) and Kate Willson (US) contributed to this report.

*ICIJ received a grant from The Pew Charitable Trusts in the past.

‘Pirate’ fleet owner convicted of fish fraud

2011-11-18T07:45:10-05:00

A Spanish ship-owner with a voluminous record of skirting international laws – and who swears he has never fished illegally – has been sentenced in Spain to one year and eight months in prison for trying to unload fish caught by one of his vessels.

An Australian patrol boat spotted the Hammer, owned by Manuel Antonio Vidal Pego, fishing without authorization in protected Antarctic waters in December 2005. In an attempt to mask the source of those fish, Vidal Pego twice renamed the vessel, finally settling on Chilbo San 33 and registering the ship in North Korea. The shipment of 240 tons of Chilean sea bass was confiscated by South Korean authorities after it was sold for more than $2.7 million to Uruguay-based Coast Line S.A., an affiliate of the Spanish seafood company Freiremar.

According to the sentencing documents, Vidal Pego masked from his trade partners that he had used a boat blacklisted for having previously circumvented international regulations. Once a boat lands in a black list it is banned from fishing in protected Antarctic waters.

Vidal Pego's lawyer said in court that the charge stems from an error on the company’s import declaration and has appealed the case. “We’re sure we will win, because we’re right,” said Foro Hernández, spokesperson for Vidal Pego, in an interview with the International Consortium of Investigative Journalists.

In October ICIJ detailed how Vidal Pego, his companies and affiliates have been repeatedly pursued by government agencies and international regulators for their role in a decade-old network of vessels that entered remote and protected waters of the Antarctic and targeted toothfish – also known as Chilean sea bass – in violation of an international convention.

Since 1999, international fisheries regulators have linked vessels owned by Vidal Armadores – a company owned by Vidal Pego and his father – or its affiliates to more than 40 cases of alleged illegal fishing, ranging from using banned fishing gear to targeting protected kitefish shark.

Trafficking in fish is a thriving global black market. It fuels organized crime and the rapid disappearance of the oceans’ most valuable species.

Many officials claim that in this trade Vidal Pego has been one of its most infamous players.

Before this conviction, countries from Mozambique to the U.S. had fined the company or its affiliates five times for a total of more than $5 million. Vidal Armadores or its affiliates have landed in court seven times in criminal or administrative cases related to alleged illegal fishing. Vidal Pego pleaded guilty to obstruction of justice in a U.S. federal court in a 2006 case involving an illegal importation of toothfish by a Vidal Armadores affiliate.

But Vidal Pego still has never been found guilty in a criminal court of fishing illegally. That includes the current case.

Despite Vidal Armadores' record, Spain and the EU have granted at least €8.2 million ($12 million) in subsidies to the family’s companies since the mid-1990s, the ICIJ investigation showed.

IMPACT: Fishing industry rep calls ICIJ investigation an 'explosive cocktail that damages the Spaniards'

Spain — 2011-10-27T18:04:54-04:00

MADRID — The latest investigation of the International Consortium of Investigative Journalists is part of an “international campaign against Spain and its fishing industry," representatives of the Spanish fishing industry announced at a press conference held today in front of the Spanish Fishing Secretariat in Madrid.

ICIJ’s investigation published earlier this month in leading international media outlets, including Spain's El Mundo and El País, exposed how the Spanish fishing industry has received more than $8 billion (€5.8 billion) in subsidies since 2000 to expand its capacity and global reach. The analysis showed that nearly one-in-three fish caught on a Spanish hook or raised in a Spanish farm is paid for with public money. That public fortune supports a fleet with an extensive record of flouting regulations and breaking the law. It also spurs the depletion of threatened fish stocks.

After the publication of ICIJ’s investigation, the European Union’s top fisheries official, Commissioner Maria Damanaki, said her office is investigating Spanish shipowners’ involvement in illegal fishing and possible misappropriations of EU funding. The probe into the Spanish fishing industry has also prompted a parliamentary question in the Dutch Parliament and moved Europe’s largest department store, El Corte Inglés, to pull out a batch of more than a ton of mislabeled fish from its shelves. The series is the latest installment of Looting the Seas, an ongoing investigation into the forces that are rapidly depleting ocean resources.

Nine industry groups present at the press conference said they wrote a letter to the Spanish Prime Minister, José Luis Rodríguez Zapatero, asking for the government’s support. Trade unions initially had been included in the campaign, but those groups were absent from the letter produced by the industry. One trade group announced it did not agree with the campaign's "tone and objectives." A draft of the letter provided to the press does not allege inaccuracy in ICIJ's reporting. Instead, it focuses on some ICIJ’s funding sources – foundations such as Adessium in the Netherlands, Waterloo in the UK and the Oak Foundation in Switzerland. ICIJ is the international arm of the Washington-based Center for Public Integrity, an independent, nonprofit investigative journalism organization. CPI and ICIJ make all their funding information available on their website.

“The figures are tweaked," said Javier Garat, Spain’s main fishing lobbyist and secretary general of the Spanish fishing confederation, Cepesca. "True and false information is mixed in order to have an explosive cocktail that damages the Spaniards.”

When asked to identify inaccuracies in ICIJ’s investigation, the groups did not provide specific examples. Garat said Cepesca is still reading the articles to give a more detailed response. He criticized the inclusion of fuel tax breaks as subsidies.

According to ICIJ’s calculations, since 2000, the Spanish fishing sector has avoided paying $2.7 billion (€2 billion) in taxes on fuel to the Spanish Treasury. Organizations such as the UN Food and Agriculture Organization and the World Bank as well as renowned economists consider this form of public aid a subsidy.

(Read more about ICIJ’s methodology here.)

The industry representatives also criticized recent reports on Spain and EU-wide fishing subsidies by the environmental groups Greenpeace and Oceana.

The European Union is currently revamping its Common Fisheries Policy, a legislation that affects its 27 members and will rule for approximately a decade. At the same time, Brussels officials are determining how much and what types of fishing subsidies to provide the industry. Spain is the EU’s most powerful fishing fleet and has received one-third of all the EU’s direct fishing aid since 2000 –far more than any other member state.

Video: The hake hoax

2011-10-06T08:37:04-04:00

Hake is Spain's most popular fish, but consumers aren't always getting what they think they are buying. A scientific study commissioned by the International Center for Investigative Journalists found that almost one in 10 fish purchased at markets in Spain were mislabeled. This video follows reporters buying the fish and explains why mislabeling can mask bigger problems in the oceans.

Hake hoax in Spanish markets

Spain — 2012-01-24T20:58:12-05:00

Consumers in Spain trust the mild-flavored white flesh of hake, the most popular fish in a country that eats more seafood than almost any other in Europe. Hake is considered safe for pregnant women, and kids crunch into the cod-like fillets as fishsticks.

“There’s trust because of the cultural bond,” said Cristina San Martín, head of quality and food safety at Fedepesca, a trade group representing Spanish fish retailers. “You see it from the time you’re a kid, and it also has a good price.”

What Spaniards probably don’t know is that the fish they take home for dinner might not be hake at all.

The Spanish public is being cheated by a seemingly pervasive and dangerous form of commercial fraud: Different species — including cheaper fish such as catfish from Vietnam and grenadier from the Pacific Ocean — are sold as hake in markets across Madrid. A DNA study commissioned by the International Consortium of Investigative Journalists found in July that nearly one in 10 fish were mislabeled. A study completed last year by the same scientists found mislabeling in nearly 40 percent of samples.

“Some of the revealed cases are really ‘cheeky’ and shockingly blunt attempts to fool consumers,” said the European Commission’s top fisheries DNA expert Jann Th. Martinsohn, who reviewed ICIJ’s methodology and findings. “And worse, they are not unique.”

Hake is big business in Spain, where sales exceed €1 billion a year. Mislabeling could bump the bottom line of companies that pass off cheap fish as higher-quality fillets, and may even mask illegal fishing, marine biologists and economists say. The European Union has strict regulations requiring that a paper trail follow fish from ship to shop. But the law doesn’t require that inspectors implement DNA testing to verify accurate labeling.

“The majority [of mislabeling] is commercial fraud,” said Ricardo Pérez, DNA expert and investigator of the Spanish National Research Council. “In recent years there’s been an increase of it, I think because companies know they’re not being watched.”

Mislabeling seafood is a global phenomenon. The environmental group Oceana reported in May that studies in different countries around the world found between 25 to 70 percent of the fish being mislabeled. In the United States, tilapia was sold as red snapper. In South Africa, mackerel was sold as barracuda. In New Zealand, protected hammerhead shark was sold as lemon shark.

Europe’s top department store El Corte Inglés pulled a batch of more than a ton of mislabeled fish from its shelves when told of ICIJ’s findings. The majority of markets that carried mislabeled fish attributed the problem to human error. And every one of the eight shops where ICIJ found mislabeled samples said it was a one-time occurrence. Authorities in Spain seemed to agree. They said they didn’t think the results of ICIJ’s study were significant enough to show a trend, or present a major threat to the public.

Almost half Spain’s consumers buy their food in or near Madrid. Yet in 2010, regional and city authorities taxed with controlling consumer goods used scientific testing to identify fish species of 59 samples — about a third the number included in the ICIJ study. One thing appears clear: Consumers are largely ignored in the equation.

“What they [authorities] answer, is, ‘will somebody die? No. Well, then it’s only money,’” said Gemma Trigueros, nutritional coordinator at the Spanish Consumers and Users Association (OCU).

What’s on your plate?

Hake is found across the globe — from Argentina and Namibia, to Ireland and New Zealand — and there are at least 12 distinct species of hake in all. Some, like southern African hakes, are cheap. Others, like European hakes, return a higher profit.

Spain imports more than 60 percent of the hake coming to the EU. So scientists at the University of Oviedo in Spain partnered with a Greek university and last December published findings of a multi-year study. Their results showed that more than one in three hake products sold in Spain and Greece were not what they appeared. Researchers identified a trend: Cheap species were sold as higher-priced European or American hake, leading scientists to deduce that companies were committing fraud.

Eva García Vázquez, the primary author, did not publish company names in her report and declined to share those with ICIJ, although she said she would have given the information to the government, had officials asked.

So ICIJ undertook a sampling in Madrid to find out if the mislabeling continued and what companies were involved. In June, reporters collected 150 hake samples from major supermarkets, fishmongers and bulk suppliers. ICIJ commissioned the experts at the University of Oviedo to conduct a blind DNA analysis of those products.

DNA testing is better known for its use in forensic analysis, publicized on TV programs like CSI. Yet the tests are today fairly simple, cheap and quick. And they have a wide range of uses. Thanks to an enzyme-based technique developed in the 1980s, scientists can obtain the DNA sequence from a fish and, by matching it to an online database, identify the species in just one day.

ICIJ’s analysis showed that 8.6 percent of samples were mislabeled. The researchers concluded that the actual level of mislabeling is likely much higher than what ICIJ’s snapshot study has documented.

'Surely Deliberate'

The most worrisome findings involved entirely different families of fish being sold as hake. Long-bodied Patagonian grenadier from the southern ocean, bulbous-eyed Pacific grenadier found off the coast off of California, and striped catfish pulled from rivers in Vietnam look nothing alike when they’re swimming. Yet as a frozen fillet, most shoppers just see white fish.

But the fish dealers can tell.

“They don’t even look alike,” said Gonzalo González, a fishmonger whose family has been selling fish since the 1920s and is president of Fedepesca. “Some are whiter than others — like detergent commercials say.”

This helped experts at the University of Oviedo conclude that swapping species was “surely deliberate.”

When alerted to the ICIJ findings, El Corte Inglés, Europe’s largest department store, took immediate action to independently verify the problem. The high-end market said it conducted its own DNA analysis of seven batches of the mislabeled product and found that the samples from one shipment of 1.4 metric tons were also mislabeled.

“We’ve withdrawn that entire batch from our shops,” said a spokesperson for the store. “We’re in conversations with the provider to take drastic measures.” She declined to share the provider’s identity for “confidentiality reasons,” and said El Corte Inglés has started to carry out genetic testing of fish as part of its routine quality controls.

ICIJ also encountered problems with products sold in top supermarket Alcampo from Spain’s leading fish exporter, Freiremar. Two products of its brand Nakar were mislabeled — one was a different species of hake, the other was a Pacific Ocean grenadier. Freiremar said it doesn’t regularly conduct genetic analysis “unless there’s a well-founded suspicion.” Freiremar asked the supermarket to withdraw the products identified by ICIJ’s study as Pacific grenadier “as a precautionary approach.”

All the experts who weighed in on the study said the most egregious finding was the case of Vietnamese striped catfish sold as hake by a local fishmonger, Pescados El Bierzo. This river species is criticized for higher contamination levels and lower nutritional value than other fish.

The shop is housed in a market serving immigrants in Madrid’s city center. Its manager Vicente — who declined to give his last name — said ICIJ caught a one-time error, not a widespread practice. He said various types of bulk frozen fillets are separated only by plastic sheet. The mislabeling likely occurred by a “fillet of catfish jumping into the hake area.”

Health at stake

Researchers at the University of Oviedo warned that cases where a different fish than expected is sold could cause “severe health problems to unaware consumers.”

Allergist Dr. Beatriz Rodríguez of Madrid’s Getafe University Hospital said that while normally people are allergic to fish generally, it’s increasingly common to develop sensitivity to one particular species group — like catfish. Kids are the most vulnerable.

“If I tell the mother: avoid catfish and then she buys hake thinking she’s safe, the child could have a severe allergic reaction,” she said, causing hives, diarrhea or even problems breathing.

In Hong Kong, more than 600 people became violently ill in 2007 after eating what they thought was “Atlantic cod” — and turned out to be poisonous oilfish, named for the indigestible wax esters in its flesh.

Scientists warn of other health risks with fish mislabeling: pollutants, toxins and other harmful substances like mercury specific to geographic regions or species. Health officials in the EU and Spain said there are currently no health alerts caused by fish mislabeling.

National fish sells

Sergio Sánchez manages Pescados y Congelados Conchi, a bulk foreign fish shop where both of ICIJ’s hake purchases were mislabeled. He said when he buys fish for his shop, he cares about the best-by date and appearance. He said some consumers turn up their noses when told the truth about the origin of fish.

“National species sell. You tell people that hake is from Chile and they don’t want it,”

Sánchez said. “You tell them shrimp is from China — and not from Huelva [in southern Spain] — and same thing.”

Supermarket chains Alcampo, Hipercor, Eroski and Carrefour each blamed a one-time error by an employee. All the markets said they adhere to strict quality controls. Carrefour said it “last year … rejected 188,909 kg (for not being correctly labeled or because they did not meet minimum size requirements).”

In the cases where more expensive European hake was billed as cheaper hake species, Alcampo said the consumer wins. “We were giving the client a product of higher quality than what the label said,” the company wrote in an email response.

Stefano Mariani of the University College in Dublin, thinks cases like this may point to another problem: overfishing. When a boat reaches its quota, it must stop targeting that type of fish. But any additional catch could be laundered into the legal market as a different fillet, Mariani reported in a study published earlier this year.

“Would you accept getting pig meat when you buy beef? Absolutely not,” he said. In a tightly controlled market like the EU he finds the problem alarming.

European hakes are subject to strict catch limits under recovery plans, a result of decades of overfishing. Meanwhile fishmongers have been complaining about the low prices they’re getting for the fish, which leads some vendors to conclude that fishermen aren’t adhering to the quotas. The Ministry of Environment, Agriculture and Fisheries denied Spanish vessels are exceeding hake quotas .

Law and disorder

EU law requires a label follow the fish from net or farm to the final vendor.

The Health and Fisheries ministries are required to verify that imports are really what they appear. The latter is also taxed with inspecting fish landed at Spanish ports. The Fisheries ministry did not provide the number of inspectors, although it said more than 200 people were involved in their entire control operations.

Neither ministry would comment on ICIJ’s findings, saying they could not “draw general conclusions.” They did not respond to questions regarding the earlier multi-year study by the University of Oviedo.

No EU law requires member countries to conduct DNA testing to find out if labels and products match. And most — including Spain — largely do not employ such testing.

Several authorities share control of tracking fish, safety and labeling in Spain. The fractured oversight allows individual authorities to shrug off blame. Regional governments oversee supermarkets, restaurants and factories. The Madrid regional and city governments administer products for a region comprised of more than 7 million people and the world’s second-largest fish market.

Yet officials there scientifically tested just 59 fish to verify the species in 2010. José Manuel Torrecilla, manager of the health authority in the city of Madrid, acknowledged they do very few tests on fish identification, but said the city plans to increase the number in coming years.

“It’s more important what causes a health risk to consumers: contaminants in fish and its freshness,” he said, pointing out that the city labs conducted about 500 tests for freshness and contaminants in 2010.

Scientist Ricardo Pérez has been conducting DNA analysis of fish for more than two decades. He said he feels frustrated because regional governments just aren’t interested in what he offers. “There’s no money for that,” they tell him.

“You develop interesting tools for governments to improve control, and it’s almost impossible to get them to do something,” he said.

The EU Commission research center recently published a study showing how scientific techniques such as DNA testing are vital to fight illegal, unreported and unregulated fishing. Co-author Jann Th. Martinsohn told ICIJ the cost of scientific testing is no longer prohibitive — it can be as low as €35 per sample if you test in bulk.

Martinsohn has spoken to officials across the EU, pushing governments to implement the kind of testing that private industry has been doing for years. Spanish officials told him the Fisheries ministry only does sporadic DNA testing, while the industry group Anfaco has its own private laboratory.

Carlos Ruiz, technical and policy coordinator of Anfaco, told ICIJ its lab conducts 47,000 tests a year — about 1,000 of them being DNA analysis of the species. But they don’t share results with the government unless it’s a commissioned job paid for by officials. And those are rare.

“This is a private lab,” Ruiz said. “We’re not watchdogs of the market.”

Martinsohn lists Denmark as one of the most advanced countries in the EU on the use of DNA analysis in fisheries enforcement. The Danish Fisheries Inspectorate collaborates with the public university to conduct the testing. Inspectors there carry small toolboxes to obtain tissue.

Pérez, the Spanish researcher so frustrated with government’s disinterest, is taking his research a step further. He’s developing a test kit akin to a pregnancy test so inspectors can verify the species within minutes. But he said if governments don’t take the lead, he encourages consumers to speak up.

“I hope that if there are complaints, agencies will start answering them,” he said. “If companies know they’re not being monitored, what they’re going to do is try to make more money.”

Nearly €6 billion in subsidies fuel Spain’s ravenous fleet

Spain — 2013-01-23T14:43:01-05:00

Decades of overfishing have left Europe’s fish stocks in peril and its fishermen in poverty. It’s an impasse paid for by EU taxpayers. Yet a proposed revision of the EU’s fishing law, hailed as sweeping reform, is rapidly losing momentum.

A look at the industry’s biggest player — Spain — shows what officials are up against. Billions of euros in subsidies built its bloated fleet and propped up a money-losing industry. All the while companies systematically flout the rules while officials overlook fraud and continue to fund offenders, an investigation by the International Consortium of Investigative Journalists has found.

“Spain has earned its bad reputation,” said Ernesto Penas Lado, director of policy and enforcement at the European Commission’s Directorate-General for Maritime Affairs and Fisheries. “The problem is others don’t have the reputation and deserve it just as much.”

Spain may not be alone. But as the EU’s most powerful fishing fleet, it is the starkest example of a failed EU policy, critics say.

The Spanish fishing industry has received more than €5.8 billion (more than $8 billion) in subsidies since 2000 for everything from building new vessels and breaking down old ships to payments for retiring fishermen and training for the next generation, an unprecedented analysis by ICIJ shows. Subsidies account for almost a third of the value of the industry. Simply put, nearly one in three fish caught on a Spanish hook or raised in a Spanish farm is paid for with public money.

ICIJ’s analysis is the first in-depth look at just how much public aid Spain has received for fishing — primarily from EU taxpayers, but also from Madrid and regional governments. The country has cornered a third of all the EU’s fishing aid since 2000, far more than any other member state. The central government doles out even more for things such as low interest loans and funding for its largest industry associations, which in turn lobby the EU for more industry subsidies, records show. Since 2000, the sector has avoided paying €2 billion ($2.7 billion) in taxes on fuel to the Spanish Treasury.

Public monies also fund a surprising range of services. More than €82 million ($114 million) has been spent to promote the fishing sector through advertising and at trade shows. After fishing vessels were hijacked by pirates in the Indian Ocean, Spain in 2009 changed its law to allow vessels to hire private security forces onboard, and then it helped foot the bill to the tune of €2.8 million.

The root of the problem, regulators say, is that out-of-control subsidies encourage countries to build up already oversized fleets that are rapidly depleting the seas.

“Fish are not an unlimited resource,” said fisheries economist Andrew Dyck of the University of British Columbia. “When the public purse is the only thing propping this industry up, we are paying for resource degradation.”

The European Commission itself recently concluded that “too many boats continue to chase too few fish.” It blamed the situation, in large part, on subsidies.

Fish, not human rights

One of the most controversial forms of public aid pays for foreign fishing licenses. With its own waters increasingly empty of fish, the EU buys rights to the fishing grounds of developing countries such as Morocco, Mozambique and the Ivory Coast.

Green groups, fishing experts and some EU politicians have criticized the agreements, saying European fishermen take advantage of poor countries that often lack knowledge and resources to protect their fish stocks. And key agreements cost more than they return on the value of fish; that is the case with Morocco, where each euro invested returns only €0.65 in value added, according to a study funded by the EU.

The Spanish industry has received more than €800 million ($1.15 billion) in foreign licenses over the past decade — about two-thirds of the EU licenses overall, according to the ICIJ analysis.

The agreements have the support of Carmen Fraga Estévez, the EU Parliament’s most powerful legislator on fisheries issues. A sharp-tongued politician with an encyclopedic knowledge of the industry, Fraga served as fishing secretary in Spain and has held a seat in the Parliament’s committee on fisheries — which she now chairs — for 17 years. Her loyalty to the industry appears to be so deep that when she had to choose between human rights and fish, she voted for the latter.

“The Fisheries Committee has to discuss fisheries issues, not human rights,” she was quoted in the press as saying when in 2009 the committee for the first time voted down a fishing agreement. Days before the vote, 157 civilians died after Guinea’s totalitarian regime opened fire on pro-democracy protesters. The agreement would have handed the Guinean government €450,000 ($639,000) a year for fishing licenses.

Fraga Estévez declined requests for interviews from ICIJ.

Spanish member of the European Parliament (MEP) Josefa Andrés Barea said the subsidized foreign fishing licenses are vital. When Spain entered the EU in 1986, very few Spanish vessels were allowed in the Union’s waters. So fishing in foreign waters was — and still is — the only way for many ship owners to make a living. And if Spain isn’t fishing, she said, less savory global players will scoop up the catch instead.

"There's a fundamental problem here which is that major [fishing] powers like China will be there if we're not. And they don't have any rules,” Andrés said. “They're much more predatory than we are."

Fewer fish, poorer fishermen

EU waters are among the world’s most exploited. Scientists say three quarters of assessed fish stocks are overfished. Eels once served as a delicacy are so depleted scientists doubt they can recover despite a Europe-wide rescue plan. Irish Sea Cod, Baltic Sprat and West of Scotland herring are all on the downfall.

The trend stretches across the globe. In 2006, the UN’s Food and Agriculture Organization estimated that 75 percent of the world fish stocks were fished to the very limit of — or beyond — sustainable levels. In its latest report, from last year, that figure had risen to 85 percent.

“Europe has a long and dark history of overfishing,” said Boris Worm, one of the world´s most renowned marine biologists, working at Dalhousie University in Nova Scotia, Canada. In a 2003 study, Worm showed that industrialized fishing has, since 1950, emptied the oceans of nine out of 10 fish longer than 20 inches such as salmon, cod and halibut.

Fewer fish mean fewer — and poorer — fishermen. Across the EU, the sector often costs taxpayers more than it produces. According to a recent report by the environmental group Oceana, at least eight countries received more money in public aid in 2009 than the value of their landed fish.

The fishing industry was the only segment of Spain’s economy that shrunk in the 2000s. The northwestern region of Galicia more than anywhere else in Europe relies on the industry — and the subsidies — to stay afloat. Yet the area lost a third of its fisheries-related jobs in the decade leading up to 2006.

In the Galician port of Vigo on the Atlantic coast, more fish pass across the docks headed for consumers’ plates than in any other port in the world. Coastal towns are riddled with signs boasting subsidized fishing projects. Politicians include the sector as a central theme in their campaigns.

The industry’s power was propelled by the 1960s push for industrialization by the fascist Franco regime. Franco himself was an avid fisherman and a Galician by birth.

“Economically the [fishing] industry is between the tomato and the potato. But politically it is more important than any other industry,” said EU’s head of fisheries control Valérie Lainé. The sector “has always been protected by the government — without the industry, Vigo would be dead, Galicia would be dead.”

The powerful Galician industry group ARVI, which boasts of its close ties to lawmakers, acknowledged that fishing wouldn’t be viable without public funding. In a recent position paper, it encouraged politicians to support subsidies to modernize outdated vessels, fish in foreign waters and build new on-shore cold storage.

Meanwhile subsidies steadily flow to the region, but sometimes only make things worse.

Víctor Muñiz has relied on fishing for decades. He used to own vessels, as did his father before him. Not anymore. Now they operate a fish processing plant in the Galician town of Meaño. The factory was renovated in 2009 with EU subsidies to process and freeze up to 300 tons of fish per hour; it was expected to employ 100 people. But the brand new machinery stands silent.

“There should be 10 trucks with mackerel here,” Muñiz said in a bitter tone as he walked through the 8,000 square meter plant in April. But within 20 days of the start of the season, most vessels had already scooped up their entire mackerel quota.

Muñiz said the quota is too low, but his major frustration is that too many factories like his were subsidized in the first place.

“You present a €2 million project, and they give you 60 percent. You’ve told them how much fish you're going to produce and what kind. Somebody should have told the processing plants: ‘No, sorry, this is the quota for mackerel.’”

Policy in Shambles

By 2006 it was clear that EU’s fishing policy was in shambles. Fleets were bloated. Stocks were crashing.

Researchers commissioned by the EU drafted a series of reviews of the community’s fisheries law — the Common Fisheries Policy, which will govern the fleet for at least a decade. One little-known document is informally called the “Frankenstein report” because of its damning conclusions. It lays the blame squarely on influence-driven subsidies: The sector would be broke without them.

Swedish Green Party MEP Isabella Lövin said the key problem of the EU fisheries policy is that it was “modeled after agricultural policy. You provide fertilizer and farming equipment, you get more vegetables. So they used the same model in fishing — you increase the number of boats, you get more fish. But it doesn’t work that way,” she said. “You end up with less fish.”

Subsidies over the past decades built a bloated EU fleet that plundered fish stocks. Efforts to reduce the capacity have focused on paying companies to break down old vessels. But that reduction has been undercut by subsidies given to modernize existing vessels, enabling them to catch more and more fish.

According to the 394-page “Frankenstein report”, EU-countries need to cut capacity in half and severely restrict — and adhere to — quotas for fish stocks to recover.

But Spanish Fishing Secretary Alicia Villauriz said policymakers must consider more than capacity. “You cannot make a statement saying: If you reduce the fleet everything will be more profitable. You'll also destroy a lot of employment.” Any transition, she said, would need to happen slowly.

That the European fleet was bloated was nothing new — calls to cut it down began in the 1980s. But the aid kept rolling in to build new ships and modernize old ones. “The sector has managed to attract more financial resources than would be justified under normal conditions,” the “Frankenstein” report said.

The EU researchers also found that groups set up to advise the Commission on a new fishing policy — largely made up of industry representatives — consider the platform “mainly as a channel for political influence, and secondly as a forum for discussion” of the new law.

In short: They were lobbying for their interests instead of trying to find solutions.

The EU-commissioned “Frankenstein” report concluded that EU policy did “not provide the right incentives for responsible fishing, or may even induce irresponsible fishing.”

Turning a blind eye

Protected stocks worth as much as $23 billon (€16.7 billion) are illegally traded worldwide every year — making the black market in fish more valuable than smuggling stolen art. Many of the players in the illicit trade set up shell companies in places that do not adhere to international conventions protecting the oceans.

Spanish nationals register more vessels to “flag-of-convenience” countries than any other besides Panama, Honduras and Taiwan — which are themselves considered nations where a ship-owner can register its boats without having to adhere to strict tax or safety requirements, and can operate without oversight.

It is rare for the Commission to take a member state to court. The EU Court of Justice — Europe’s highest court — has found Spain guilty three times of failing to implement EU fishing laws. Spain has refused to enforce catch limits, police its fleet or impose adequate punishment, the court ruled.

One of Spain’s most widely criticized shortfalls is policing its port of Las Palmas on the Canary Islands off the Moroccan coast. Illegal shipments of fish plundered from West African waters regularly filter into the EU through the port, according to multiple investigative reports.

Fishing Secretary Villauriz said control in Spain is expensive because of the sheer size of its industry — more than 10,000 fishing boats, 3,084 miles of coastline and 47 major ports. “But that doesn't mean we're not taking care of our obligations in control matters” she added.

The Spanish Ministry of Environment, Agriculture and Fisheries told ICIJ that inspections have nearly doubled since 2004 to 9,323 in 2010. That’s still far from the number of inspections other countries are carrying out — the United Kingdom logged nearly 50,000 inspections in 2004.

But some things don’t appear to have changed. The number of inspectors in the port of Vigo — Europe's largest fishing port — remains the same as in 2003, when EU officials blasted Spain for the measly number of national inspectors at its ports. Today four inspectors oversee more than 700,000 metric tons of fish a year — that’s nearly 20,000 kilos of fish per inspector for every hour of every day of the year, including Christmas.

Subsidized offenders

Spanish officials, like those in many other EU countries, do not take into account whether its nationals have been involved in the illegal fishing trade before doling out public aid.

Neither Spain nor the EU will make public information about offenders who have been fined for illegal fishing — also called Illegal, Unreported and Unregulated fishing (IUU). But a sliver of insight can been gleaned from a database of appellate court rulings. ICIJ reviewed every court case adjudicated since 2000 in which subsidized companies unsuccessfully appealed fines imposed by the Spanish government. In more than 80 percent of cases in which the appellant could be identified, firms continued to receive subsidies after the court had upheld penalties, the analysis shows.

There’s only one case in which the ministry of fisheries tried to prevent a company from receiving subsidies, according to ministry officials.

That Spanish ship-owner so exemplifies the quagmire as to make it a near cliché. Government officials and international regulators have repeatedly targeted Vidal Armadores for its alleged involvement in a decade-old international network of pirate fishing vessels, court and law enforcement records show. Brussels demanded multiple times that Spain recover subsidies and “take action against” Vidal Armadores. At least through 2010, however, Spain and the EU continued to pay the firm — at least €8.2 million ($12 million) since 1996. Last year the government finally fined the company and cut off aid, but the case is pending appeal.

In an interview with ICIJ, one of the firm owners, Manuel Antonio Vidal Pego, denied allegations of illegal fishing and said the company was entitled to the subsidies it received.

Like Vidal Armadores has in the past, seafood giant Pescanova targets Patagonian toothfish — sold in the U.S. as Chilean sea bass. Unlike Vidal Armadores, Pescanova is a member of an association that fights illegal fishing. In Spain, it boasts a trusted motto: “Lo bueno sale bien,” translated as “Good things go well.” But the company has its own troubles.

Last year Pescanova’s U.S. subsidiary pleaded guilty to illegally importing $1.2 million worth of toothfish. While that case — nicknamed “Operation Toothless” — was pending, the U.S. Department of Justice launched a second investigation into another allegedly illegal importation. The status of the second investigation is unknown.

Pescanova is one of the Europe’s three largest seafood companies, with a fleet of around 100 boats fishing worldwide and annual sales of €1.53 billion (more than $2 billion). Yet, since 1995 the company has pulled in more than €175 million ($250 million) in subsidies, according to the ICIJ analysis.

Pescanova repeatedly declined requests for interviews from ICIJ. “We've had 50 years of positive history,” said spokesman Angel Matamoro during a brief phone exchange. “I don't think you're asking about themes that will promote our image.”

Regarding the U.S. investigations, he said, “Whatever we had to say, we said it to the U.S. court. The company follows scrupulously the law in every country it’s in.”

Another firm that broke the law and continued to receive aid is Albacora, one of the largest tuna companies in Europe. The company’s boat Albacora Uno last year was fined $5 million — the largest fine in U.S. history — for illegally placing fishing gear in U.S. waters multiple times during a two-year period. The boat was built with subsidies and used subsidized fishing licenses. And even after the U.S. fined the firm, Spain granted Albacora €1.8 million ($2.6 million) worth of subsidies to fish in foreign waters.

The Spanish ministry of fisheries told ICIJ it had fined Albacora but will not deny the company further aid.

Albacora director Jon Uria said the 67 infringements were an “isolated” incident. The company was unaware of the infractions, he said, until the U.S. government alerted executives. In his view, the fine was disproportionate to the offense.

A Radical Reform?

Javier Garat is the Spanish industry’s most visible and eloquent lobbyist. He was born into the family that cofounded Albacora. Garat is now a shareholder of the company, but he says that doesn’t influence his lobbying.

In his meetings with officials, he often requests subsidies for the sector. “That money has generated wealth,” he said. “It’s been used to modernize an obsolete fishing sector” so that today “we have better, more modern, more secure vessels.”

Garat heads Spain’s powerful lobbying group Cepesca as well as the Europe-wide industry group Europêche — both of which operate with EU subsidies. In the halls of the ministry of fisheries in Madrid, the word is that Garat will be appointed Spain’s next fishing secretary.

Following closed-door meetings at the ministry in April, Garat and Spanish Minister of Environment, Agriculture and Fisheries Rosa Aguilar announced that the ministry and Cepesca were devising a “common roadmap to defend Spanish interests” in the overhaul of the EU fishing policy.

After two years of deliberation, the European Commission presented its proposed legislation in July. No one but the Commissioner herself appears satisfied with the draft. But the negotiations have just begun. Political alliances and lobbying will determine the final language to be voted upon before the law goes into effect January 1, 2013.

Garat called the reform draft “cowardly.” He said the Commission succumbed to pressure from environmentalists and biased media “without taking into consideration the repercussions on the fishing sector.” In his view, the state of the fish stocks is not as “catastrophic” as Commission officials appear to believe.

Yet it seems the industry’s efforts have staved off its worst nightmares.

Nothing came of ambitions to make overfishing a crime, as happened in the U.S. under the Magnuson-Stevens Act, or to require quotas be consistent with what scientists say is biologically sustainable. There was no proposal on how to limit the oversized fishing fleet or to implement quotas in the fishing agreements with foreign countries.

EU’s top fisheries official Commissioner Maria Damanaki told ICIJ her proposal is “radical.” She said Brussels will stop directly subsidizing the industry. “Now we are going to give money in a very prudent way and under very strict conditions,” she said. “And we are going to ask for paybacks in the case of illegal fishing.”

Damanaki also highlighted proposed changes in the fishing partnership agreements. “We are going to call them sustainable fisheries agreements because we're going to fish only for the surplus — if there is any surplus,” she said. “Also, we're going to respect human rights in these areas.”

Given the hype, Green party MEP Lövin said, “I had expected a clause on human rights.” But the human rights clause originally in the legislative text was missing from the final proposal.

Lövin ran for office on a ticket pledging to change the fishing policy. She said the proposal is a lot less radical than she had hoped — especially as the coming negotiations will water it down even more. “The law can´t allow for politicians to compromise with the environment when long-term environmental goals clash with short-term profit,” she said.

Ernesto Penas Lado, director of the European Commission’s fisheries policy unit, said the mindset in Spain and among fishing nations globally is that no single country feels responsible for the fate of the fish in the sea.

“It’s the tragedy of the commons,” he said. “Because the resources belong to no one, they belong to everyone.” In the EU, 27 countries have to come to a consensus on a common fishing policy. There’s no mentality of making a sacrifice for preservation, Penas said. “People think: Whatever I do not fish, my neighbor will.”

David Cabo (Spain), Fredrik Laurin (Sweden) and Brigitte Alfter (Denmark) contributed to this story.

Spain doles out millions in aid despite fishing company's record

Spain — 2012-07-17T12:12:35-04:00

One of the world’s most controversial fishing operations — a family-controlled company in northwestern Spain linked to more than 40 cases of alleged illegal fishing — is changing tack. Antonio Vidal Pego, co-owner of Vidal Armadores, says the company is folding, and he’s devoting himself to renewable energy and fish oil. But fisheries officials in Brussels are not convinced.

Trafficking in fish is a thriving global black market. It fuels organized crime and the rapid disappearance of the oceans’ most valuable species, including top predators that scientists say are vital to the balance of the marine ecosystem. Nine out of 10 large fish are already gone, marine biologists say.

Many claim Vidal Pego has been one of the most infamous players in this trade – a so-called “pirate” fisherman.

“You can see I don’t have a hook, a parrot on my shoulder or a wooden leg,” the 38-year-old says as he sits down to lunch in a private room at Restaurante Berenguela in Santiago de Compostela, the capital of the Galician region. He says it is his company’s first on-the-record interview.

“We want to erase a story that has never been erased because there’s always someone trying to revive it,” he says. “So much damage has been done by the bad press, we’ve gone from a dynamic company to nothing.”

Vidal Pego — known as “Toño” — says his family business Vidal Armadores, “ship-owners” in Spanish, has been forced to halt operations. He insists that the company has opened a new chapter and moved beyond its controversial past.

When a reporter brings up allegations of his past involvement in the lucrative illegal trade in Patagonian Toothfish — sold in the U.S. under the more appetizing name Chilean sea bass — he says he and his father have only fished legally.

Yet his response leaves room for debate.

The International Consortium of Investigative Journalists has reviewed hundreds of records — including court records, government investigative files and official correspondence — from a half dozen countries. They offer quite another picture – one in which the company has systematically employed legal maneuvers to circumvent international laws.

The ICIJ investigation found that Vidal Armadores or its affiliates have been repeatedly pursued by government agencies and international regulators for its role in a decade-old network of vessels that entered the remote and protected waters of the Antarctic and targeted toothfish in violation of an international convention.

Since 1999, international fisheries regulators have linked vessels owned by Vidal Armadores or its affiliates to more than 40 instances of alleged illegal fishing — more formally referred to by international regulators as Illegal, Unregulated and Unreported fishing — ranging from using banned fishing gear to targeting protected kitefish shark.

While most of the allegations have not resulted in penalties beyond the inclusion of the boats on international “black lists” of vessels, countries from Mozambique to the U.S. have fined the company or its affiliates five times totaling more than $5 million. Vidal Armadores or its affiliates have landed in court six times in criminal or administrative cases related to alleged illegal fishing. Vidal Pego pleaded guilty to obstruction of justice in a U.S. federal court in a 2006 case involving an illegal importation of toothfish by a Vidal Armadores affiliate.

But while accusations of illegal fishing mounted against Vidal Armadores, Spain and the EU granted at least €8.2 million ($12 million) in subsidies to the family’s companies since the mid-1990s, government records show.

The Viarsa chapter

To a large extent the region of Galicia — home to Europe's largest fishing port, Vigo — is still reliant on fish even though the waters of the European Union are among the most exploited in the world. Three out of four European fish stocks are overfished.

It is here in Galicia that a handful of families have pulled the strings of a transnational network of vessels. And it’s the Vidal family that helped many get into the business by navigating the vessel registration process in Uruguay — a base from which many of the blacklisted ships operated. The Vidals set up offices in Montevideo, hired locals to manage and — when legal claims were brought — to take the blame, court records show.

It was one of those Uruguay-flagged vessels, the Viarsa 1, that put the Vidals on the radar of law enforcement officials around the world.

The Viarsa was spotted in a 2003 suspected illegal fishing operation at Heard Island near the Antarctic Peninsula. The Australian patrol vessel Southern Supporter chased the Viarsa for 21 days almost all the way to South Africa — a chase that ended with the Viarsa being escorted back to Australia. Two years and two trials later, the Vidal affiliate that owned the vessel was acquitted in court. The defense had argued that the toothfish in the Viarsa’s hold had been caught before the vessel entered Australian waters.

The Viarsa chase soon became the subject of a critically acclaimed book. “I know that [the author] had to rewrite the end [when we won!]” Vidal Pego said, with an ironic smile.

According to Vidal Pego, after the Australian authorities lost the case, an international campaign started. “There was tremendous pressure against everything that sounded like Vidal Armadores.”

Vidal Pego is now the face of the company. He is dressed in a black suit, a light pink chequered tie, flashing shiny silver cufflinks and buffed black leather shoes. He is obliging and affable. The only one in the room who is losing composure is Vidal Armadores’ press officer, Foro Hernández, who is repeatedly angered when questions get detailed.

The older Vidal — or “Tucho” — does not join the interview. At 59, he is a legend in fishing circles, a pillar of a clan with a long-standing fishing tradition. He went to sea as a kid, long before Spain joined the European Union, when there were few laws governing how much or where he could fish. He has never spoken to the press except to tell them to “get lost” in that traditional language of the region.

Vidal Pego by contrast spent a year studying in Louisiana, carries a Blackberry and zealously guards his well-buffed image. He says he fears seeing his name in Google searches for the next 10 years whenever someone types “illegal toothfish.”

But while Vidal Pego wants to put fishing behind him, Vidal Armadores continues to attract the attention of authorities. Just this February, fisheries inspectors from New Zealand snapped pictures from a plane as two blacklisted vessels, which had long been controlled by Vidal affiliates, plied their trade in the toothfish-rich waters of the eastern Indian Ocean, European Commission records show.

The Xiong Nu Baru and Sima Qian Baru were flying a North Korean flag — a country not party to the Antarctic fishing treaty protecting the area. The Sima Qian Baru used to be the Vidal Armadores ship the Dorita, flying a Uruguayan flag, according to official blacklists maintained by fisheries regulators. Before that it was the Magnus, flagged to St. Vincent & the Grenadines in the Caribbean. Before that it was the Eolo, flagged to Equatorial Guinea.

Fisheries enforcement officials cite a litany of loopholes that allow vessels to operate with impunity: vast waters to patrol; the use of subsidiaries in tax havens and constant renaming and reflagging of vessels. Flagging to countries such as North Korea, which are not party to fishing conventions, render enforcement authorities impotent when those vessels enter protected zones.

“It’s almost laughable that vessels change their names,” said Keith Reid, scientist with the Commission for the Conservation of the Antarctic Marine Living Resources, (CCAMLR), the body charged with enforcing the rules of the Antarctic fishing treaty. “Often you can see the old name underneath. It’s like a child’s graffiti.”

The Vidals operated the Dorita through subsidiaries in Uruguay and Spain, incorporation and vessel registry records show. After it got in trouble, they changed the vessel’s registration — as they did with other boats — to countries such as Sierra Leone and Panama, which are not members of the Antarctic fishing treaty.

Vidal Pego says the company sold both the Dorita and the other ship currently flagged to North Korea around 2006 or maybe 2007. New Zealand and EU officials have their doubts. So this March, fisheries officials in Brussels repeated in a letter what has become a frequent request over the years — that Spain investigate whether Vidal Armadores continues to control a pirate fishing fleet in the Antarctic.

Patagonian Toothfish

One likely reason the Vidals and others started plying the remote and dangerous waters of the Antarctic was the decline of the cod. When seemingly endless amounts of the fish off Newfoundland, Canada, disappeared in the 1990s after decades of intensive catches, the world’s appetite for white fish had to be satisfied with something else. Boats went further south, and dipped their hooks deeper until they found the big-eyed, mud-brown bottom dweller that now turns a huge profit on the U.S. market. Chilean sea bass is sold for upward of $25 a pound, almost twice as much the price of cod. Its stocks have been heavily fished in the past decade.

Spain is home to the most heavily subsidized fishing fleet in the EU, subsidy data shows.

The country also has a long history of failing to enforce catch limits, inspect vessels or punish fishermen who break the law, according to rulings by the EU Court of Justice. And it has continued to fund companies that had been punished for illegal fishing, according to an analysis of court cases and subsidies data by ICIJ. With one of the world’s largest fleets, Spain also ranks among the top five countries whose nationals register their ships in places like North Korea, which allow them to keep real ownership a secret and ignore international conventions governing huge swaths of the world’s oceans.

Vidal Pego has more than his reputation at stake. His latest venture is an Omega 3 oil factory, Biomega Nutrición, which is slated to receive about €4 million ($5.7 million) in subsidies from the local government and the EU.

“I´m looking forward to providing people better health through fish-oil supplements,” he says. But not everyone thinks he should get the money.

NGOs have protested and so has the European Commission. New European fisheries control legislation enacted last year empowers countries to prohibit public aid from flowing to companies with a history of illegal fishing. Ernesto Penas Lado, director of the Commission’s fisheries policy unit, said he is following the case closely to make sure the regional government of Galicia enforces the new law, which may result in the Vidal family not getting the subsidy.

Throughout the years, Brussels officials have repeatedly pleaded with Spain to “take action against Vidal Armadores” and pursue the recovery of public monies.

Penas Lado said Spain has been “too scared” to act against Vidal Armadores, fearing a drawn out court battle, and too worried it lacked sufficient evidence to win a case.

“These people [the Vidals] will fight to the end,” Penas said. “They say, ‘Hey, why aren't you giving me the subsidy?’ And they go to court.”

Lucrative trade

The global black market in fish is worth between $10 billion and $23 billion, more than the illicit trades in gold or stolen art. The United Nations categorizes these sophisticated international networks as organized crime. “Like tobacco, trafficking in black-market fish won’t incur the same punishment as drugs or arms. Nobody is looking. Because it’s fish,” said Lt. Cmdr. Daniel Schaeffer, chief of U.S. Coast Guard Fisheries Enforcement. “Any illicit transnational crime is going to be interesting to organized crime.”

The black market for toothfish is an especially lucrative business. A vessel fishing illegally can bring in 1,500 tons in a single season — a haul worth $83 million at a U.S. fish counter.

CCAMLR, the Antarctic fishing regulatory commission, imposes catch limits and drafts regulations against pirate fishing in the southern oceans. Only member countries are legally allowed to fish in the zone, which covers the waters surrounding Antarctica. Boats must be licensed and abide by catch limits. Vessels cannot resupply or transship with blacklisted vessels. Once on a black list, a vessel will find it difficult to dock at many world ports.

“You basically have to be very fast, to get on them before they destroy evidence,” said Marcel Krouse, a South African expert on illegal fishing who assisted in the Viarsa pursuit. “That’s the fundamental problem: The longer the duration between crime and apprehension, the more evidence gets lost.”

And that’s only if they get caught. Otherwise fisheries management commissions like CCAMLR have to rely on diplomatic pressure. “There are a lot of loopholes in the system,” Krouse said. “How are you going to get any response from North Korea?”

Fished out

Illegal fishing is becoming a major threat to fish-stocks in the world. The UN estimates that 85 percent of all fish stocks in the oceans are fished to the very limit of — or beyond — sustainable levels.

There are no longer plenty of fish left in the sea, and scientists warn that killing off too many top predators such as cod or toothfish upsets the ecosystem the same way that taking out a keystone would affect an archway.

Long-lived and slow to mature, a toothfish may be 20 years old before it can reproduce. It is especially vulnerable as fishermen target the large, old fish that produce the next generation. Scientists believe the stock is holding steady but their assessments are limited. Toothfish swim almost a mile beneath the surface in remote oceans, and researchers have to rely on legal fishermen for their data.

The waiters at Restaurant Berenguela empty the plates; Vidal Pego has had hake cheeks with tagliatelle. His take on the scientific reports of steady decline in the world fish stocks is “nonsense.” He says the quantities of hake in the waters off Ireland are bigger than ever; same goes for cod.

Natives of the remote Galician village of Riveira, a town built around the fishing port, the Vidals are politically connected in the region. They have earned the community’s respect for activities such as sponsoring the local taekwondo club or donating money to charities for people with disabilities.

“To me they have always been gentlemen,” said Manuel Torres, a skipper from Riveira. And in cases when their vessels were seized, Torres said, “he got everyone out [of jail]. He paid for lawyers.”

Luis Pazos, Vidal Armadores’ former Uruguayan associate, agrees. “The Vidals are a family of fishermen. They always have been,” he said. “Those men think differently. If you start talking about [illegal fishing], they don’t understand it; they don’t care. Their goal is to fish and maximize production.”

Vidal Pego says that he hasn’t been in the toothfish business since 2006, the year he and one of his affiliates pleaded guilty to criminal charges in a case involving the importation of illegal catches into the U.S. Based on his entry of a guilty plea to one count of obstruction of justice, the judge gave Vidal Pego probation and ordered him to stay out of the trade for four years or risk spending 20 years in a U.S. prison.

He says Vidal Armadores itself has never been criminally convicted of illegal fishing. That is true. But Vidal Armadores or its affiliated companies have repeatedly been sanctioned in related legal actions, including more than $5 million in fines for five separate cases.

Two New Zealand fishing inspectors remain troubled by this record.

Paloma V

In May 2008 the Paloma V docked at New Zealand’s Auckland port. More than 200 tons of fish weighed down the boat's hold: sea bass slated for U.S. dinner plates, shark fins headed to Portugal and fish liver oil for a Japanese cosmetics company. The fishing master had submitted a required declaration that the ship had not done business with pirate fishing vessels. But fisheries investigators Phil Kerr and Dominic Hayden decided to take a closer look.

The Paloma V was half owned by an Uruguayan subsidiary of Vidal Armadores. And Kerr and Hayden knew that a U.S. judge had ordered Vidal Pego to stay away from the toothfish trade.

After copying the hard drives of the Paloma’s computers as part of the port inspection, Kerr and Hayden discovered evidence that they thought might piece together what law enforcement officials from the U.S. to New Zealand had suspected for years: that Vidal Armadores was a central player in a network of pirate fishing vessels targeting toothfish in the Antarctic.

Records from the hard drive showed blacklisted vessels relied on counterparts with legal licenses from places such as Spain, Uruguay and Namibia, the New Zealand investigators found. Receipts found aboard the Paloma V established that Vidal Armadores paid to provision the boats. Photographs showed transshipments to blacklisted vessels. And numerous emails detailed the sharing of bait, fuel and crew.

One of Vidal Armadores’ partners in the Paloma V was interviewed by the inspectors, and they showed him document after document, including photos of the vessel illegally transshipping supplies to the Chilbo San 33 — an earlier incarnation of the Xiong Nu Baru, one of those North Korean-flagged ships spotted this year. Screen-shots from one of the on-board computers showed multiple blacklisted vessels tracked through an online system called Fleetview, suggesting a close coordination among the vessels in the network.

Questions about the Paloma V are the only ones that visibly upset Vidal Pego. He explains that it all was “completely outrageous.” He says the computer was the fishing master’s personal laptop. But the New Zealand inspection file obtained by ICIJ shows three on-board, stand-alone computers were inspected.

To Vidal Pego this case is just more of the same: “There’s no point in talking about fishing, since I haven’t had anything to do with fishing for a long time now.”

Emails found onboard the Paloma V show the company Vidal Armadores allegedly directing a whole network of vessels.

The computers contained emails to and from mantoniovipe@gmail.com (Vidal Pego’s full name is Manuel Antonio Vidal Pego). Vidal Pego dismisses knowledge of the email account or any network: “I — or nobody I know — is in any type of syndicate.”

Vidal Pego says transshipments are common in the high seas because “you cannot go to the supermarket [there].” To him, vessels meet to trade food or even movies — nothing else.

Corporate records also appeared to tie Vidal Pego to the toothfish business well after he promised the U.S. judge he would get out of the trade. Vidal Pego was one of two managers of Vidal Armadores’ parent company, Viarsa Cartera.

“What Vidal was doing was very organized, well structured,” Kerr said. “He had a legitimate fleet supplying the illegitimate fleet. When we saw this material, we saw he was obviously busier than ever.”

International arrest warrant

Of more than 40 allegations related to illegal fishing, the Vidals or their affiliates only landed in court six times.

U.S. officials seized an illegal shipment of their toothfish in 2002. Nothing ever came of that case. In 2004, however, another Vidal vessel, the Chilbo San 33 sold an illegal shipment to a U.S. buyer, according to court records. A federal prosecutor in Miami charged Vidal Pego and one of his Uruguayan companies with doctoring the records to disguise the origin of the fish.

Vidal Pego became wanted on an Interpol warrant and appeared in front of the Miami judge in 2006. His Uruguayan company Fadilur took the brunt of the blame, but Vidal Pego pleaded guilty to obstruction of justice and also agreed to stay away from toothfish.

Today, behind the wheel of his Porsche in his native Galicia, Vidal Pego says he made “many friends” in Miami and that he pleaded guilty only to make the process faster — and less expensive. Thinking back, he says, he should have fought. He’s sure he would have won.

The judgment said that if he in any way broke the law before November 2010, or engaged in the toothfish business, he could end up in a U.S. prison. So when Phil Kerr and Dominic Hayden of New Zealand Fisheries found evidence onboard the Paloma V that Vidal Pego allegedly was still engaged in the toothfish trade — such as telephone calls and email accounts — they quickly sent a copy of the computer hard drives to the United States.

They were surprised when the United States did not issue a warrant for Vidal Pego’s arrest. “We had email links and conversations. We thought there was enough. But for some reason it never happened in the end,” said Kerr.

Assistant U.S. Attorney Thomas Watts-Fitzgerald, based in Miami, could not recall having received any records. New Zealand court records show copies of the hard drives were sent to U.S. officials, and ICIJ pointed out that Watts-Fitzgerald was listed in official records as having sat in on conference calls to discuss the evidence. Watts-Fitzgerald then said, “any discussions of any nature would be law enforcement sensitive,” and directed further inquiry to the press office. The press office later said that Watts-Fitzgerald had no comment.

Off the hook

New Zealand authorities let the Paloma off with a warning instead of opening a time-consuming and legally-complex case against the ship owner. Since its release from New Zealand, the vessel has been seen fishing in Antarctic waters under a Mongolian, then a Belizean and then Cambodian flag, according to fisheries inspection reports. The European Commission suspected it was still a Vidal Armadores boat and in April 2010 sent another “please investigate” letter to Spain’s director general of fisheries. They wanted to know whether the Spanish company was still illegally targeting toothfish.

Vidal Pego claims the Paloma V is not his boat anymore. As for other cases of alleged illegal fishing, he has explanations: there were facts lost in translation; he had been conned into buying a fake fishing license and, in one case, an Uruguayan official wrote the wrong numbers on a U.S. import form.

He only admits to having three vessels with “a problem like this” — meaning illegal or unreported fishing. But later, in the car, he takes it a step further: “Maybe up until 2005 …” he pauses and thinks. “Maybe there was some activity of ours where it could be that a vessel with a flag from another country was fishing and it was inside the [protected] zone.”

Spain reported to international fisheries regulators last fall that it punished Vidal Armadores for the Paloma V’s involvement in illegal fishing — leveling a €150,000 fine ($214,000) and suspending all aid and fishing licenses in Spain for two years.

But the Vidals filed an appeal, so that penalty has not been enforced. The company has also appealed a separate fine imposed by Spain for illegally fishing sharks in Namibia. Notwithstanding the penalties, last year Vidal Armadores received subsidies from the government — this time not to fish hake and langoustine.

The public purse

Juan Carlos Martín Fragueiro was once a lobbyist for a Spanish ship-owners association. In that role, the gray-haired Galician was often seen in the fisheries ministry petitioning for subsidies on behalf of Vidal Armadores and others, according to sources in the ministry and an official exchange on the floor of Spain’s Parliament. Then, in 2004, Martín Fragueiro was appointed Spain’s fisheries secretary.

In total the Vidals have been granted at least €8.2 million ($12 million) in aid since 1996. They got money to fish in places like Comoros and Madagascar, and for an experimental fishing campaign. They even got money to stay at port.

When reached for comment the former fishing secretary denied any relationship with Vidal Armadores or having lobbied for it in the past. Martín Fragueiro said subsidy allocations were decided by committee. “On no occasion have I told the selection committee how it must make the selection. Never.”

Vidal Pego says the company just got what it was entitled to by law.

During his six-year tenure as fisheries secretary, Martín Fragueiro’s office was requested more than once a year by the European Commission to start investigations of suspected infringements by Vidal ships. Some letters were addressed to Martín Fragueiro personally. But for years no sanction was imposed against the company.

Martín Fragueiro said they initiated investigations every time there was a communication and then “we followed faithfully what the legal department told us.”

One example of a Vidal ships getting subsidies, getting caught, and then getting new subsidies is the Galaecia, built with a €1.5 million ($1.9 million) subsidy granted in 2002. Its monitoring system, which assures a boat is fishing where it should, was tampered with in 2003, according to the Spanish fisheries ministry. Vidal Pego says it simply broke. Spain fined the company €42,000 in 2004 but then paid it €1.3 million to fish near the Antarctic as part of a controversial scientific program.

During that same season, EU fisheries officials later wrote to Spain, the Galaecia was seen supplying the blacklisted Dorita (one of the two spotted this year flying a North Korean flag under the name of Sima Qian Baru). Vidal denied that this transshipment occurred. By 2005, six vessels operated by Vidal Armadores had been added to the Antarctic fisheries commission’s black list, according to official correspondence from the EU to Spain.

In one of the letters to the Spanish ministry, then-fisheries commissioner in Brussels Joe Borg begged Spain “for the sake of the credibility of the [European] Community” to pull the Galaecia’s fishing license. Spain took no action, and soon the ship was spotted again transshipping supplies to a blacklisted Vidal vessel.

The ship continued to get subsidies until 2008. That year, while the Commission was investigating whether it had laundered illegal catches, the boat caught fire and sank.

The Commission warned Martín Fragueiro in 2009 that if Spain did nothing, the EU might take legal action, but it never followed up on the threat.

The current Spanish fishing secretary, Alicia Villauriz, told ICIJ that the country’s regulations didn’t allow them to stop the subsidies to the company until they had enough evidence to impose a severe sanction. Spain determined it could finally act in the case of the Paloma V, 11 years after the first allegations of illegal fishing against the Vidals. With an appeal pending, even that action may not come.

Villauriz also said the government can’t recover previously given subsidies unless there is evidence that the money has been misused. “And we don't have information to think this has been the case.”

Meanwhile, in Mozambique another court ruling is waiting for the Vidals. In 2008 the government seized the Antillas Reefer when it targeted protected kite fish sharks. Mozambique confiscated the boat, converted her to a fisheries patrol boat and imposed a $4.5 million fine. The Spanish government negotiated the crew’s release, but after they had gone home no one wanted to pay the bill. And Mozambique never could collect the fine.

Vidal Pego says his company was a minority shareholder in the Namibian company that owned the vessel.

“Why should Vidal Armadores be responsible for the fine for a Namibian company?” he asks.

As for the two North-Korean flagged vessels spotted earlier this year fishing illegally, the European Commission said that Spain informed it that it is investigating whether the Xiong Nu Baru and Sima Qian Baru belong to Vidal Armadores. But there is nothing new to report. “Given that the investigations usually take time, we will not take additional steps for the time being,” the Commission wrote.

When contacted about this issue, the Spanish fisheries ministry’s reply was a general statement about the country’s commitment to fight illegal fishing. Unfortunately, the email continued, the law doesn’t permit the ministry to talk publicly about sanctions.

Meanwhile in Maputo officials are not giving up as easily. Manuel Castiano, Mozambique’s director of fisheries surveillance is adamant that Vidal Armadores, or Spain, should pay the fines. He is ready for some legal as well as diplomatic action. And he has use for the money.

“$4.5 million is a lot of money, and enough to run my patrol boats a while.”

Nicky Hager (New Zealand), Marcos Garcia Rey (Spain) and Fredrik Laurin (Sweden) contributed to this story.

How nonprofits won special treatment in student lending bill

2011-10-12T16:30:47-04:00

This is the first in a series of articles on student lending reported in partnership with the Stabile Center for Investigative Journalism at Columbia University.

When President Obama unveiled a plan in February to overhaul the student loan industry, nonprofit lenders in dozens of states feared their business was doomed. But now those nonprofits — including some accused of previous misconduct by state and federal authorities — are on the verge of winning a protected position in the higher-education business.

Interviews and a review of documents and e-mails for the Huffington Post Investigative Fund show how nonprofit lenders persuaded the U.S. House to award them the equivalent of no-bid contracts potentially worth millions of dollars each.

The House voted in September to approve the Obama administration’s student loan reform plan. In effect, it would make the federal government the primary lender to college students. No longer would the government subsidize or guarantee loans made by nonprofits or by for-profit lenders such as Sallie Mae. The plan, according to the administration, would save the government billions of dollars a year that would be funneled into direct student aid.

Under the new system, for-profit and large nonprofit companies would still be able to bid on contracts to service some government loans, a job that includes collecting monthly payments and processing loan defaults.

But before the House bill was introduced, the lobbying group for nonprofit education lenders, the Education Finance Council (EFC), worked behind the scenes to craft its own legislative provision. The EFC wanted each nonprofit to receive a guaranteed annual contract to service government loans for up to 100,000 borrowers. The EFC’s document, unearthed over the summer by a higher education blog, was stamped “Confidential” and shopped on Capitol Hill.

In the end, the EFC’s language was included nearly verbatim in the House bill.

Nationwide, 39 nonprofits now stand to benefit from the provision, according to an e-mail from the EFC’s president to a nonprofit lender in Vermont, obtained through a public records request.

In an $85-billion-a-year industry dominated by big for-profit lenders such as Sallie Mae and Citigroup, nonprofit lenders have managed to carve out a lucrative niche, with current EFC members reporting about $3.7 billion in revenue on federal tax forms in 2007. Even as their business has grown, nonprofits continue to promote themselves as public-service organizations dedicated, according to the EFC’s Web site, “to the single purpose of making college more affordable.”

But some of them have a checkered past. In recent years, government auditors, state attorneys general and the federal Department of Education have accused many nonprofits of misconduct such as steering students toward high-interest loans, offering cash to universities to drum up student business, providing questionable compensation and perks to top executives and overcharging the government by a total of about $37 million. [Please see related story.]

Nonprofit representatives say these accusations are isolated problems in an industry otherwise dedicated to helping students. The lenders’ lobbying group has protested that Obama's plan would choke off their primary source of income, endangering thousands of local jobs as well as programs designed to educate students about the dangers of default.

“We like the convenience if you have a student in, say Kentucky, who is able to deal with their local student loan provider who has built up a relationship with them,” said Krista Cole, vice president of communications and industry relations for the EFC. “That’s going to be taken away and they could be calling some 1-800 number.”

Some critics argue, however, that the no-bid loan servicing arrangement for nonprofits could undermine the cost-saving goals of Obama’s reform plan. “If a state loan agency is capable of competing for the contract in a way that objectively is the most beneficial, they should get it, and if they can't, they shouldn't,” said Mark Kantrowitz, publisher of FinAid, a Web site that provides financial aid information to students.

'Hill Day'

During his campaign and upon taking office, Obama took aim at the Federal Family Education Loan program, which has helped finance student lending for more than four decades. Under the program, the government subsidizes students’ interest payments and covers most losses that private lenders incur when students default. Essentially, lenders act as a middleman between students and Washington.

Obama administration officials argue that eliminating the middleman would be cheaper for the government in the long run. The nonpartisan Congressional Budget Office estimates that replacing the subsidized program with direct federal loans would save $87 billion over 10 years.

In treacherous economic times, the argument gained political traction. Nonprofits had to move quickly to secure a role servicing government loans after Obama unveiled his proposal in February. On March 19, the EFC organized a “Hill Day,” hours of meetings with lawmakers and congressional staffers. The council armed 15 participating nonprofits with 10 pages of talking points, which included warnings of “35,000 Expected Job Losses Under Administration Proposal.”

“Please keep in mind that the primary purpose of this week's Hill Day is to oppose the President's budget proposal,” the council’s then-vice president of legislation and coalitions, Katie Bailey, wrote members in a March 17 e-mail.

In late May, the groups pressed their case at a hearing of the House Education and Labor Committee. René Drouin, president and chief executive of the nonprofit New Hampshire Higher Education Assistance Foundation, argued in his testimony that Obama’s proposal would perpetuate a servicing system dominated by large lenders. (Existing Department of Education guidelines require servicers to have the capacity to take on 2 million loans each year—a bar too high for most nonprofits.)

After Drouin's testimony, Rep. Carol Shea-Porter, a Democrat from New Hampshire, grilled a witness from the Education Department, demanding to know whether nonprofits would survive the proposed legislation. Shea-Porter emphasized the importance of making servicing contracts available to nonprofits.

By summer, before the bill’s language had been made public, the EFC was circulating its own proposal.

The unsigned, undated document was obtained and published in June by the New America Foundation’s Higher Ed Watch blog. The document offered lawmakers a plan to guarantee that each nonprofit would service a minimum “annual allocation” of 100,000 borrowers, or the total number of new borrowers within the nonprofit’s state — whichever is less. The document stipulated that the Education Department would pay nonprofits a “market-based rate” for servicing duties.

As a result of the EFC’s plan, for-profit and large nonprofit companies could compete for contracts to service loans beyond the 100,000 mark. But in states where fewer than 100,000 students receive federal loans, nonprofits would have a servicing monopoly, student loan specialists said. Nonprofits are slated to take advantage of this monopoly in at least 15 states. In some of these states, there is only one nonprofit lender.

On Sept. 17, the House passed a bill that included the key aspects of EFC’s proposal. An aide to a member of the House education committee acknowledged that the provisions “came from the people in the industry, quite frankly.”

The Senate is expected to take up the measure after it completes work on healthcare reform.

“Many members of our committee saw the value of including nonprofit lenders in the program because of their longstanding relationships with students and schools in their states, their proven track record in providing high-quality services to students and schools, and to help maintain jobs in their local communities,” said Rachel Racusen, a spokeswoman for Rep. George Miller (D-Calif.), the committee’s chairman and the sponsor of the bill.

Niel Wright, a spokesman for Rep. Thomas Petri (R-Wisc.), the ranking Republican on the House Education Committee, suggested that the nonprofit provision was crucial to passing the bill in the House.

Petri, who supported the legislation, “would not have written the loan servicing provisions the way they are in the bill,” Wright said. “But if protections for certain local institutions was the price necessary to ensure passage of the bill, he thought it best not to make an issue of it at that time.”

Washington Ties

The nonprofits' clout stems in part from the EFC’s connections in Washington.

Peter Warren, the council’s president, previously spent three years as the chief budget analyst for education and labor programs at the House Budget Committee. The council’s senior vice president, Vince Sampson, worked in the Education Department’s Office of Postsecondary Education. And Cole, vice president of communications, was once a senior research analyst at the National Republican Senatorial Committee.

To complement its own lobbying efforts, the council hired lobbying firm, BKSH & Associates, which also represents corporations such as AT&T, Boeing and Coca-Cola, records show. Between payments to BKSH and its own lobbying expenses, EFC has spent more than $145,000 every year since 2005. As of last September, EFC had spent just more than $150,000.

Some nonprofits have lobbied individually as well. The Pennsylvania Higher Education Assistance Agency, which spent $300,000 lobbying in 2009, was cited by a state auditor for failing to report more than $2 million in lobbying expenses from 2004 to 2007. Most nonprofits spend less. At least nine others have recently lobbied on Capitol Hill, but none of these groups spent more than $130,000 in a year.

Those numbers pale in comparison to the millions spent by larger student lenders like Sallie Mae. But Christine Lindstrom, higher education program director for the advocacy organization U.S. Public Interest Research Group, said that the nonprofits’ power extends beyond their checkbooks because they are located “in the backyards of federal lawmakers.”

While many of those lawmakers have supported granting nonprofit lenders a large slice of the new business, other advocates for student loan reform have questioned the wisdom of the idea.

“There’s no reason to believe these institutions are suddenly going to become mendicant Catholic orders,” said Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers. “They’re going to be voraciously focused on taking care of themselves, as they have been.”

Donal Griffin, Cezary Podkul, Jeannette Neumann, Delphine Reuter, and Andrew Tobin of the Stabile Center for Investigative Journalism at Columbia University contributed reporting.