State Department Keystone XL Contractor ERM Bribed Chinese Agency to Permit Project

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Environmental Resources Management (ERM Group), the consultancy selected by TransCanada to conduct the environmental review for Keystone XL‘s northern leg on behalf of the U.S. State Department, is no stranger to scandal.

Exhibit A: ERM onceย bribed a Chinese official to ram through major pieces of an industrial development project.ย ERM was tasked to push through the project inย Hangzhou Bay, located near Shanghai.

Accepting the bribe landed Yan Shunjun, former deputy head of the Shanghai Municipal Environmental Protection Bureau, an 11-year prison sentence.

Yan โ€œallegedly took bribes of 864,000 yuan (126,501 U.S. dollars), 20,000 U.S. dollars and 4,000 euros from seven contractors,โ€ explainedย Xiuhuanet. โ€œYan was also accused of illegally setting up a channel to speed up environmental impact assessment processes, which are essential for companies wanting to buildย factories.โ€

BP, one of the companies standing to gain if Keystone XL North receives a presidential permit from the Obama administration as a major Alberta tar sands producer, was also mired in the Chinese ERM Groupย scandal.ย 

โ€œTwo firms on ERM‘s bluechip client list, BP and Sinopec, are big investors in a petrochemical complex on the site, but the Chinese authorities apparently saw no conflict of interest in awarding the environmental evaluation to ERM,โ€ explained London’s Sunday Times.

In a sense, history has repeatedย itself.

Hopenhagen toย Paris

Back in 2009 when news arose of ERM‘s bribery and corruption, Chinese environmental campaigners worried the incident could portend a lack of commitment to tackling climate change in the months leading up to the United Nations climate summit in Copenhagen,ย Denmark.

Now, five years later, with the Lima COP20 underway and the criticalย UN climate summit in Parisย looming, the recentย climate deal signed between the U.S. and China has taken centerย stage.

Butย Keystone XL willย soon be front and center once again in early 2015 in the halls of Congress and the Whiteย House.

Environmentalists fear that opening another route between Alberta and the U.S. Gulf Coast for tar sandsย crude would ensure the deal struck between the two carbon-emitting giantsย becomes a moot point, or worse.

Bribery asย โ€œInvestmentโ€

A commenter on People’s Daily, the state-owned newspaper in China, wrote that bribery was merely the cost of doing business and an โ€œinvestmentโ€ ofย sorts.

โ€œForeign firms have quickly learnt the philosophy of guangxi [connections],โ€ wrote the commenter. โ€œTheir rule has become, ‘When in Rome, do as the Romansย do.’โ€

ERM, in turn, denied any wrongdoing on its end, even though it had doled out the payments landingย Yan in jail to beginย with.

โ€œERM Group had no advance warning of any of the alleged payments to the former deputy director of the Shanghai Environmental Protection Bureau,โ€ ERM declared to the Sunday Times.

โ€œTo suggest otherwise is damagingly inaccurate.ย We are committed to: conducting our business with integrity, applying ethical principles to our relationships withย clients.โ€

KXL, ERM: Institutionalizedย Corruption

In the U.S. context as it pertains to Keystone XL, ERM‘s conduct has been far less ham-handed than it was inย China.

โ€œBy procedure and by law, the company applying for the permit gets to help pick, and then pay for the contractor conducting the environmental review on behalf of the Stateย Department.โ€

In other words, the State Department has legalized a de facto form of โ€œinstitutionalized corruptionโ€ for handling environmental reviews for cross-border pipelines like Keystone XL‘s northern leg. Sierra Club attorney Doug Hayes described it as a โ€œbuilt-in conflict of interestโ€ inย a 2013ย Bloomberg Businessweekย article.

ERM Group, with a track-record of rubber-stamping ecologically hazardous projects in places ranging from central Asia to Peruย toย Alaska to Delaware and China, has proven itself once again a key tentacle of the โ€œcarbon webโ€ for Keystone XL.

The question remains, though: will the sordid episode in the city near Shanghai serve as a teachable moment as applied to the tar sands pipeline described as a โ€œfuse to the biggest carbon bomb on the planetโ€?

We’ll find out, and likelyย soon.

Photo Credit:ย Hangzhou Bay BridgeWikimediaย Commons

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Steve Horn is the owner of the consultancy Horn Communications & Research Services, which provides public relations, content writing, and investigative research work products to a wide range of nonprofit and for-profit clients across the world. He is an investigative reporter on the climate beat for over a decade and former Research Fellow for DeSmog.

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