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Cablegate: Criminal Investigation of Wastewater Violations Highlights

VZCZCXRO9727
RR RUEHAST RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD RUEHTM
DE RUEHHI #1261/01 3180905
ZNR UUUUU ZZH
R 130905Z NOV 08
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC 8724
INFO RUEHHM/AMCONSUL HO CHI MINH 5290
RUEHBK/AMEMBASSY BANGKOK 6505
RUEHUL/AMEMBASSY SEOUL 3379
RUEHGP/AMEMBASSY SINGAPORE 2674
RUEHKO/AMEMBASSY TOKYO 5931
RUEHIN/AIT TAIPEI 1627
RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RHMFIUU/HQ EPA WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEAWJA/DEPT OF JUSTICE WASHINGTON DC

UNCLAS SECTION 01 OF 04 HANOI 001261

SENSITIVE
SIPDIS

DEPT FOR EAP/MLS, OES AND INL
DEPT PASS USAID TO LAC/RSD, LAC/SAM, G/ENV, PPC/ENV
JUSTICE FOR ENVIRONMENT AND NATURAL RESOURCES (JWEBB)
EPA FOR INTERNATIONAL (MKASMAN)
COMMERCE FOR ITA/MAC/HONG-PHONG PHO

E.O. 12958: N/A
TAGS: SENV TBIO ECON POL SOCI VM
SUBJECT: CRIMINAL INVESTIGATION OF WASTEWATER VIOLATIONS HIGHLIGHTS
VIETNAM'S ENVIRONMENTAL CHALLENGES

REF: HANOI 981

HANOI 00001261 001.2 OF 004


1. (U) Summary. The recent targeting of Vedan Vietnam, a
Taiwanese-owned manufacturer of monosodium glutamate for illegal
discharges of untreated wastewater into the Thi Vai River in
southern Dong Nai province, highlights the growing scope of
environmental degradation in Vietnam resulting from unchecked
industrial growth. However, the case may serve as a tipping point
in the Vietnamese approach to environmental protection, as central
and local authorities, prompted by vigorous public and media
criticism, plan tough penalties for the company and plot a larger
enforcement strategy. However, the Vedan case also highlights the
many challenges facing Vietnamese environmental enforcement,
including lax punishments, unclear authority, constant demand for
economic growth, and suspicions of financially-compensated collusion
between members of local governments and industries to look the
other way. End Summary.

Foreign-Owned MSG Manufacturer Caught
Illegally Discharging Wastewater
-------------------------------------

2. (U) On September 15, 2008, the Ministry of Natural Resources and
Environment (MONRE) announced that Vedan Vietnam, a Taiwanese-owned
manufacturer of monosodium glutamate (MSG) had illegally discharged
tens of thousands of meters of waste into the Thi Vai River in Dong
Nai province every month for the past several years, saving the
company tens of billions of dong (millions of dollars) by evading
waste water processing limits. Responding to ongoing complaints
from locals, the Environmental Police Department (within the
Ministry of Public Security) led an inter-agency team that
apparently staked out the facility for three months to gather proof
of alleged violations, eventually discovering that the company had
secretly installed pipes to bypass waste-water treatment facilities
and by which it pumped up to 5,000 cubic meters of effluent
containing post-fermentation molasses waste and solid substances
into the river daily. MONRE eventually charged Vedan with failing
to comply with hazardous waste management regulations, illegal
discharges, failure to conduct an environmental impact assessment,
and improperly increasing processing capacity.

Environmental Agencies had Looked the Other Way
--------------------------------------------- --
3. (U) Despite the eventual inter-agency response to reports of
pollution from the Vedan facility, it appears that regulators failed
for years to respond to growing complaints from residents in Dong
Nai province. In a recent press conference, MONRE Minister Pham
Khoi Nguyen confirmed the serial nature of Vedan's violations, which
polluted residential water supplies, while destroying the nearby
shrimp farming industry. Local scientists claimed to have reported
the ill-effects from Vedan's pollution to provincial environmental
authorities in 1997, to little avail. Over the years, the Dong Nai
Department of Environment and Natural Resources (DONRE) fined the
plant over 20 million dong (approximately USD 1,250) for three
breaches of pollution laws. In 1995, fishermen living near the Thi
Vai River sued Vedan for wiping out their livelihood. Eventually,
according to press reports, in 2005, Vedan paid 15 billion
Vietnamese dong (approximately USD 930,000) to support aquaculture
in Dong Nai and Vung Tau provinces.

VEDAN Faces Severe Penalties . . . or Does It?
--------------------------------------------- -

4. (U) Though the Prime Minister and MONRE Minister threatened to
throw the book at Vedan, punishment remains unclear. Following the
Prime Minister's decision to authorize the Vietnam Environmental
Protection Fund to receive environmental fines and fees, MONRE
asserted that Vedan must pay 127 billion dong (approximately USD 7.7
million) in retroactive wastewater fees (roughly equal to the USD
6,000 per day Vedan saved by not operating wastewater treatment) and
asked the Dong Nai DONRE to suspend Vedan's operations until the
company brought its operations up to standard. MONRE also
recommended that the central police consider criminal charges.
However, enforcement plans quickly floundered as the Dong Nai DONRE
asserted that prior MONRE actions precluded suspension and MONRE

HANOI 00001261 002.2 OF 004


backed down. Additionally, MONRE officials believe that existing
laws provide authority to criminally target a company, but only
allow prosecution of individuals. MONRE officials stated that they
do not want to prosecute local plant officials, whom they
characterized as "just staff."

Full and Frank Media Coverage
-----------------------------

5. (U) An increasingly assertive Vietnamese media has blanketed the
Vedan case, while also beginning to track similar incidents
throughout the country. While frequently quoting high-ranking GVN
officials, who emphasize the government's resolute response to the
pollution crisis, the press has not hesitated to closely question
and criticize those officials about the response to the Vedan case,
highlight alleged lack of prior enforcement, emphasize disputes
between local and central authorities, and quote local residents
condemning government responses. Over the past few weeks, state
controlled television and print media were openly critical of local
environmental authorities, with a VTV report and several major
dailies questioning "the role of local authorities who let [the
illegal discharges to] happen right under their noses." This
follows a growing pattern of harder-hitting stories on the
environment, in which the press has cited "deliberate flouting of
environmental regulations" in favor of economic benefits. Within
the past month, Vietnamese media noted that "environmental pollution
is set to assume monumental proportions" with 70 per cent of
industrial zones in the country without water and solid waste
management systems and 90 per cent of enterprises across the country
discharging untreated waste directly into rivers and canals.

Citizens Increasingly Outspoken
-------------------------------

6. (U) Local citizens, dissatisfied with the response to years of
complaints to authorities, have become much more proactive. Moving
beyond graphic descriptions of the horrific impacts of industrial
pollution to their neighborhoods, and criticism of the government
response, some have taken to the courts. On a recently televised
question and answer session on VTV 6, young Vietnamese peppered the
GVN panelists with questions about the failure to enforce
environmental provisions. (Note: At the same time, no indigenous
NGOs focus on "brown" issues, instead concentrating on "green"
issues like wildlife protection). The Ho Chi Minh City Farmers
Association recently announced that it would file suit against Vedan
for damages caused by its illegal discharges. Angry bloggers have
joined the fray, questioning the competence and motivation of
central and local environmental authorities and asking consumers to
boycott polluters' products. Local press in Saigon reported that
consumers have stopped purchasing Vedan seasonings and many
supermarkets have removed them from the shelves.

Vedan not the Only Polluter on the Thi Vai River
--------------------------------------------- ---

7. (U) Despite enforcement hiccups, the Vedan case has aimed a
spotlight at ongoing, massive pollution threatening waterways
surrounding Vietnam's booming industrial zones (Ref Hanoi 981) Like
many rivers and canals throughout the country, the Thi Vai River
suffered serious contamination from toxic waste discharges over the
past several years. MONRE officials stated that the river receives
over 34,000 cubic meters of untreated wastewater from nearly 200
facilities every day, along with substantial discharges from
residential areas and cattle farms. After complaints from local
residents who claimed that contact with river water caused skin
rashes, VEPA recently reported that a 10 kilometer section of the
Thi Vai River was totally "dead" due to pollution from a nearby
Industrial Park. Local scientists predict the entire 40 kilometer
river may suffer from severe pollution by 2010. Worsening pollution
has also caused losses to enterprises as Singaporean and Japanese
cargo ships, which make up over one-third of total cargo capacity,
refused to dock in June at Go Dau Port where the Thi Vai River meets
the East Sea after several Japanese vessels reported that pollution
(possibly from concentrated organic pollutants or heavy metal salts)
removed paint and decreased hull thickness by eight millimeters

HANOI 00001261 003.2 OF 004


(about one third of an inch) over a five day period.

Environmental Agencies Now Finding Pollution Everywhere
--------------------------------------------- ----------

8. (U) Soon after the Vedan case erupted, the media reported on
several other pollution incidents. In mid-September, MONRE found
another two other factories on Thi Vai river, the locally-owned My
Xuan Paper Factory and Tien Dat Seafood Company, also improperly
discharged wastewater directly into the river. In mid-July, police
in the south-central province of Khanh Hoa caught shipyard Hyundai
Vinashin, a joint venture of Korea's Hyundai Group and the Vietnam
Shipbuilding Industry Corporation, attempting to dump waste near a
residential area. In early October, the Dong Nai Environmental
Police Department reported that it discovered the Civic Washing
Company, a Vietnamese-Taiwanese joint venture at Bien Hoa 1
Industrial Park bypassing the park's wastewater treatment plant to
discharge directly into a local waterway. In Hanoi, local media
reported that Miwon Vietnam, a South Korean owned condiments
manufacturer, illegally pumped wastewater into the Red River. The
company acknowledged it had exceeded legal limits but stated that it
had voluntarily reported the discharges and had previously hired a
government-affiliated contractor to build a wastewater treatment
system - which did not work. Following public criticism from the
municipal legislature earlier in the month, in mid-October, the Ho
Chi Minh City DONRE raided the Hao Duong leather company for
releasing untreated carcinogenic effluents into the Dong Dien river
beginning in 2005.

GVN Officials Now Talking the Talk
----------------------------------

9. (U) The recent outcry over pollution has caused some government
officials to question policies centered almost exclusively on
economic growth. During the October Vietnamese National Assembly
sessions, many deputies highlighted the unsustainable burden placed
on the environment from unchecked growth, criticized environmental
officials for lack of responsiveness to public complaints, and
stated that current punishments are insufficient to deter illegal
behavior. Eager to avoid blame, central officials, including MONRE
Minister Pham Khoi Nguyen, publicly criticized local officials for
looking the other way and discussed a possible investigation of
their role in the Vedan scandal. On the GVN website in October,
Prime Minster Dung told local authorities to ensure the
compatibility of economic development and environmental protection
(Note: In an ironic twist, in 2001, the Prime Minister awarded
now-maligned Vedan Vietnam's first "Distinguished Tax Payer of the
Year Award.") Officials at the Vietnam Environmental Protection
Agency (VEPA) stated that excessive focus on economic growth and a
disregard for its environmental fallout was a main reason for the
recent spate of pollution incidents. Yet, at the same time, GVN
officials remain under great pressure to ensure constant economic
growth. Soon after announcing a stronger MONRE enforcement program,
Minister Nguyen noted to the press that he had received many calls
from local officials asking him to lower environmental standards to
attract foreign investors.

Comment: But Will They Walk the Walk?
-------------------------------------

10. (SBU) Now comes the tricky part. Claiming a commitment to
environmental protection is not difficult. Acting on that
commitment is. While Vietnamese officials are sensitive to
increasing public dissatisfaction with environmental pollution,
their top priority has long been economic growth. To date, GVN and
provincial officials have not been willing to sacrifice industrial
development or foreign investment for environmental protection.
Expected tough economic times may make it even more difficult to
upgrade Vietnamese environmental enforcement. And the ever-present
role of corruption further weakens the commitment to mitigating
pollution. Nevertheless, public pressure continues to grow.
Following the path of the Asian Tigers and China, as Vietnam becomes
more affluent, its people will lobby for a better quality of life.
The GVN needs to realize that failure to address these concerns will
have economic, social, and national security consequences.

HANOI 00001261 004.2 OF 004

11. (U) This cable has been coordinated with Consulate General Ho
Chi Minh City.

MICHALAK

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