Orascom Construction Industries (OCI), Cairo, which is building a huge nitrogen plant in Wever, Iowa, has a subsidiary that is involved in long-simmering litigation with the U.S. government. The OCI-owned entity – Contrack International – is accused of fraud in procuring a construction contract in Egypt that was supposed to only go to U.S. companies.
Iowa government authorities said they did not uncover the lawsuit in their due diligence for the plant. Iowa is credited with giving some $200 million in aid to the project, one of the largest such awards in state history. Iowa also shepherded a $1.26 billion federal disaster bond to help fund the project.
“The authority made an award to the Iowa Fertilizer Co., which is a subsidiary of Orascom,” Tina Hoffman, Iowa Economic Development Association spokesperson, told Green Markets. “We don’t have a signed contract yet, but that is in process. What our contract does will put in the number of permanent jobs the organization will be creating, as well the amount of capital investment they promised to make. As part of the application the company signed an affidavit indicating they are not party to any current lawsuits, and so the lawsuit that the AP story is referencing is with a company that is a subsidiary of the parent company that we made the award to. So the company we made the award to, there aren’t any issues with that company.
"The other important thing to point out is that majority of the award is a tax credit, so that is money that doesn’t come out of the state’s pocket. What it means is this company has to make the capital investment. They have to make a profit, and they have to have a tax liability in the state of Iowa to get any of these credits, and that process will be ongoing for several years. So what our contract does, if at any point there are concerns with the company not doing what they say they are going to or if there are violations of law, the state can go back in and relook at the award, and if we need to we can recapture the money or the tax credit.”
Opponents were quick to criticize. “Iowans demand that any time state dollars are given to a company the government does its due diligence,” said Iowa Democratic Party Chair Rep. Tyler Olson. “Someone did not find this information, and now Iowans are left to wonder what else we don’t know about the Governor’s deal.”
This comes shortly after Indiana authorities suspended a nitrogen project (GM Feb. 11, p. 1) sponsored by Pakistan’s Fatima Group after it was discovered that the company had allegedly been less than cooperative with U.S. authorities in thwarting the use of its products for improvised explosive devices (IEDs) that have been used against U.S. troops.
OCI has broken ground on the complex, and as noted above, authorities have downplayed the importance of the revelation. Ironically, just last year, small upstart SynGest Inc., a California-based company that sought to turn corn cobs into anhydrous ammonia, quickly lost its state backing when the IEDA discovered that SynGest failed to note in its application for a grant that SynGest Chairman Serge Randhava had been accused in a federal lawsuit in Illinois of racketeering and fraud (GM May 21, 2012, p. 15).