(Source: McClatchy Washington Bureau)
WASHINGTON _ A federal judge in Texas ruled that a firm with ties to one of Mexico's richest families fraudulently transferred control of Asarco LLC's majority interest in two Peruvian copper mines to another subsidiary as part of a strategy that all but assured the century-old mining and smelting company's bankruptcy.
In the 192-page opinion, U.S. District Judge Andrew Hanen said the directors of Americas Mining Corp. and its parent company, Grupo Mexico SAB, dictated the terms of the transfer in an effort to shield the mines from creditors knowing full well that Asarco was insolvent.
The Peruvian mines could be valued between $8 billion and $10 billion. Hanen has not set damages in the case but has given both sides two weeks to submit additional briefs.
Asarco sought bankruptcy protection in 2005, two years after it lost control of the Peruvian mines.
The decision, filed late Saturday, is the latest twist in the largest environmental-related bankruptcy ever, and one of the most complicated. Asarco had operations at dozens of sites nationwide, including what are now 20 federal Superfund sites.
Under its reorganization plan, Asarco would pay off its major secured creditors and provide nearly $2.4 billion to settle roughly $9 billion in environmental and asbestos-related claims. The environmental claims were filed by more than a dozen states, federal agencies including the Environmental Protection Agency, and several Indian tribes. In addition, 95,000 asbestos-related claims were filed involving Asarco subsidiaries.
Grupo Mexico, which lost control of Asarco when the company filed for bankruptcy protection, filed a separate reorganization plan last week. The bankruptcy judge is expected to rule on the competing plans around the end of the year.
Though the bankruptcy case in Corpus Christi, Texas, and the Peruvian mine case in Brownsville, Texas, are separate, with separate judges, they ultimately will be intertwined.
Asarco filed the Peruvian mine lawsuit against AMC last year, and Grupo Mexico has figured prominently in the case. German Larrea, the chairman and chief executive of Grupo Mexico, testified in Hanen's courtroom. The Larrea family is one of Mexico's richest and most influential.
Asarco filed the Peruvian mine lawsuit because, under federal bankruptcy laws, Asarco's current directors have a fiduciary responsibility to the company's creditors and were required to pursue any possible claims.
Hanen, in his decision, quoted testimony during the trial indicating that no actions involving Asarco could have been taken without the approval of Larrea and Grupo Mexico.
