The Narco News Bulletin
Name of Our Country is América"
at AP Bolivia Bureau
AP's Peter McFarren Surveys His Empire
from High Atop La Paz (Photo: Christian Science Monitor)
AP Correspondent Peter McFarren Violates the APME Code
Uses AP to Defend the Banzer Regime as He Lobbies Bolivian
Congress for a $78 Million Dollar Water Export Project
Insists that AP "Knows All About" his Lobbying
of Deteriorating Standards at AP and Among US Media Correspondents
in Latin America
Special to The Narco News Bulletin
I in a series
In this poorest of South American nations, where
the "water wars" of last April have now exploded into
full scale insurrection throughout Bolivia, Peter McFarren is
covering events for the Associated Press (AP) that, through
his unethical activity, he helped to provoke.
AP's Bolivia correspondent, instead
of covering today's historic news events, is covering them up.
The Narco News Bulletin has learned that on September
14, 2000, just days before recent protests exploded into nationwide
road blockades - by social movements that have now united and
paralyzed the country - Peter McFarren made a presentation in
the hall of the federal Senate.
There, McFarren lobbied
the Bolivian Senate as a representative of the "Corporación
Boliviana de Recursos Hidricos, S.A." or COBOREH, the Bolivian
McFarren offered a slide
show for government officials, urging them to support the $78
million dollar private industry plan. COBOREH seeks permission
to export 3,000 liters-per-second of Bolivian water to mulitinational
copper mining companies in neighboring Chile.
The McFarren slide show
is now available on the Internet:
McFarren, who was born
in Bolivia in 1954, enjoys dual US citizenship and studied in
the States, made his pitch to government officials in Spanish.
McFarren told The Narco
News Bulletin that his lobbying activities do not constitute
a conflict-of-interest because he is working for the multi-million
dollar private sector project "pro bono."
And yet, McFarren's lobbying
presentation directly asks for Bolivian governmental approval
of the mega-project.
And the project, if approved
by the government, will provide direct financial benefits to
a foundation headed by McFarren.
"What does the Project
Need from the Government?" asks one of the slides in McFarren's
McFarren's slide show
answers: "A decision that defines the State gifts (that
would be) product of the exportation of water and subterranean
sources to neighboring countries." The presentation also
lobbies for passage of, "a specific law."
is a Conflict-of-Interest?
According to the Associated Press web pages,
"the AP subscribes to the code of ethics written
by the Associated Press Managing Editors Association," or
The APME "works in
partnership with AP to improve the wire service's performance,"
according to its own publicity. "APME is on the front line
in setting ethical and journalistic standards for newspapers."
are a model against which news and editorial staff members can
measure their performance," reads the preamble to the APME
Code of Ethics. "They have been formulated in the belief
that newspapers and the people who produce them should adhere
to the highest standards of ethical and professional conduct."
"The good newspaper
is fair, accurate, honest, responsible, independent and decent,"
according to APME's Code of Ethics. "Truth is its guiding
principle. It avoids practices that would conflict with the ability
to report and present news in a fair, accurate and unbiased manner."
"The newspaper should
serve as a constructive critic of all segments of society. It
should reasonably reflect, in staffing and coverage, its diverse
constituencies. It should vigorously expose wrongdoing, duplicity
or misuse of power, public or private. Editorially, it should
advocate needed reform and innovation in the public interest.
News sources should be disclosed unless there is a clear reason
not to do so. When it is necessary to protect the confidentiality
of a source, the reason should be explained."
"The newspaper should
report the news without regard for its own interests, mindful
of the need to disclose potential conflicts," says the APME.
AP Failed to Disclose Conflicts
AP has never disclosed the conflicts - potential and real - of its Bolivian
correspondent Peter McFarren to its readers nor to its member
If AP had followed
its own Code of Ethics, it would have been duty bound long ago
to disclose its correspondent's conflicts, which predate his
September 14 lobbying presentation. The Code of Ethics is very
specific on this point. The newspaper, it says, "should
report matters regarding itself or its personnel with the same
vigor and candor as it would other institutions or individuals."
"The newspaper and
its staff should be free of obligations to news sources and newsmakers,"
says the AP Code of Ethics. "Even the appearance of obligation
or conflict of interest should be avoided."
by staff members or other outside business interests that could
create the impression of a conflict of interest should be avoided."
On the most basic fact of this case - that AP
Bolivia correspondent Peter McFarren lobbied that nation's congress
on September 14 for approval of a private-sector water export
project - McFarren has committed a serious conflict of interest.
McFarren has not committed
merely an oversight leading to "the appearance of conflict."
He has committed a blatant unethical conflict that no news agency
would never tolerate inside the United States by one of its correspondents
-- that is, lobbying before Congress.
Now it touches upon Associated
Press, to quote again from its own Code of Ethics, to "report
matters regarding itself or its personnel with the same vigor
and candor as it would other institutions or individuals."
What are the "outside
business interests" represented by Peter McFarren as he
lobbies the Bolivian Congress?
The McFarren lobbyist
"slide show" was made publicly available on the internet
because a courageous citizen surreptitiously videotaped his presentation.
The slide show presentation does not reveal who are the "business
interests" or officers of the COBOREH corporation.
However, the McFarren
slide show does reveal which "outside business interests"
want Bolivia's water: precisely, Chilean mining companies.
According to the McFarren
presentation in the halls of the Bolivian federal senate, "Phase
One" of the mega-project would pump Bolivian water a distance
of 29 kilometers to the copper mine in Chile known as Empresa
Minera Doña Ines de Collahuasi.
The Doña Ines copper
mining operation (largest in the world, supplying 3.6 percent
of global copper output) is owned jointly by three foreign companies.
"Canada's Falconbridge Ltd. and London-listed Anglo American
Plc each own 44 percent of Collahuasi, and a Japanese consortium,
headed by Mitsui & Co, owns the remaining 12 percent,"
according to a September 22 Reuters report.
At a projected construction
cost of $17 million US dollars, "Phase One" would pump
800 liters per second of water to the Chilean copper mine in
the project's first year, and, eventually, 2,000 liters per second.
By the time "Phase Three" kicks in, water-scarce Bolivia
will lose 3,000 liters per second to the copper mines of Chile.
Exodus of Water
"For those who have no
idea what those volumes
of water mean, it can be stated that the volume of water that
the SEMAPA agency supplies to the city of Cochabamba as of last
month (August 2000) was 780 liters per second," writes engineer
Juan Carlos Alurralde. "COBOREH S.A. seeks to exploit the
subterranean aquifers of the state of Potosí during Phase
One in greater volume than the water supply of SEMAPA."
of McFarren's project would construct a longer pipeline, 129
kilometers, from the wells in Bolivia to supply the CODELCO (Chile's
state-owned copper company) mine in Chuqulamata, as well as to
the Empresa Essan and the Empresa Minera Río Chilex S.A.,
owned by the Canadian-based Algom LTD. That phase of the project
would cost, said McFarren, $30 million US dollars.
In fact, McFarren's water
grab enters into and impacts a very fast-moving and volatile
copper market, thirsty for Bolivia's water.
Falconbridge LTD is a
company courting Force Majeure (legal shutdown of contracts)
because its efforts to break the Canadian Auto Workers union
in its mines in Sudbury, Ontario, have provoked a strike among
Meanwhile, Chile's El
Diario reports that the Doña Ines mine is seeking
to increase production. Global copper prices, after a long slump,
are rising, in part due to lower supply - conveniently? - caused
by Falconbridge's own union-busting provocations.
Scratch the surface of McFarren's water project, and
the "outside business interests" reveal an even larger
pattern: the looting of América and its natural resources.
The greedy grab underway
is barely touched by the daily news suppliers of Associated Press
in Latin America: McFarren, with his own inadequate coverage
of events in Bolivia, is hardly the only offender. (A review
of McFarren's AP coverage of the drug war and other matters
in Bolivia will be vetted in Part II of this investigative report;
it reveals a slavish promotion of the Banzer regime and of US
policy in Bolivia, with biased reporting that can only help him
gain government approvals for his project.)
Bloomberg reports on October
5th that another of McFarren's "Phase Two" recipients
of Bolivian water, Río Algom, has just been purchased
for $2.7 billion Canadian dollars by the Billiton corp. This,
after Chile's Codelco (another McFarren water project client)
and Canada's Noranda "declined to boost their hostile takeover
bid for Río Algom, clearing the way for Billiton to take
over the Canadian copper producer."
of the mega-project promoted by Peter McFarren on September 14,
before the Bolivian Senate, would supply the Empresa Minera La
Escondida in Chile. At an estimated cost of $30 million US dollars
- this time with a pipeline more than twice as long, at 322 kilometers,
but at the same price as the $30 million spent on Phase Two -
it will raise the total construction price of the project to
more than $78 million US dollars.
The profits, however,
are staggering in their projections. By its fifth year of operation,
the COBOREH water export business will take in an annual income
equal to the $78 millon dollar initial construction costs. McFarren
is offering Bolivian federal and state governments about one-quarter
of those proceeds, but whomever is behind his project stands
to reap an even larger profit.
McFarren also hinted in
his presentation to the Bolivian Senate that COBOREH will look
to other quasi-governmental sources of funding. His slide show
states: "This project can be endorsed by: World Bank/International
Finance Corp., OPIC, the US Overseas Private Investment Corp.,
and CAF, Corporación Andina de Fomento," the regional
Power of Silence
AP has a correspondent in Bolivia who, for business reasons, can't
anger the Bolivian government, nor the World Bank, nor the US
government, nor the top regional development agency, nor the
Chilean copper industry, nor the Chilean government that owns
a piece of his promoted project.
In other words, McFarren
is so deeply in the tank with an interlocking set of governmental
and big business interests in Bolivia that his coverage of this
Andean nation cannot possibly be considered fair or impartial.
The Bolivian people have
already paid a high price for McFarren's conflicts of interest.
They continue to pay that price in the present. That an online
journal like Narco News has reported on the present Bolivian
crisis more extensively than AP is to be expected. Yet
compare even the Reuters coverage in recent days of the earthshaking
events underway right now in Bolivia - Reuters has been reasonably
fair and timely in its reporting - and it becomes clear that
AP has been AWOL.
What little reporting
McFarren has done on the events that shake his friends in government
has only sought to disqualify the Bolivian people and their social
movements and to defend the status quo.
And it is precisely the
silence, the lack of coverage by AP of Bolivia's social
movements, that has allowed McFarren to best serve the interests
of Power. McFarren - the gatekeeper of information from Bolivia
to the English-speaking world - engages in a selective censorship
of the news events that have placed the Banzer regime and the
US-imposed drug war in check. This non-active "journalism"
by McFarren helps the very governmental and business interests
upon whom McFarren must rely to get his project approved.
There are other potential
conflict-of-interest issues regarding Peter McFarren and Associated
Press that The Narco News Bulletin will explore in coming
days and weeks. Some of these issues are long established and,
according to McFarren's own private email communiqué to
a reader, obtained by Narco News, the AP has long
known about other potential conflicts and approved of them.
Later in the series, when
we address other longstanding issues surrounding McFarren's work
for AP in Bolivia, we will publish that correspondence
We also welcome McFarren,
the Associated Press, and the AP Managing Editors Association
to respond to this story, and offer to publish their responses.
Indeed, we believe that all three parties owe separate explanations
to the international public.
wrote McFarren in his email to one of the citizen-journalist
readers of Narco News, that "AP and any other
news organization depends on the moral integrety (sic) of whomever
works for them and if there exists any possible conflict of interest,
the editors should be made aware of it."
A US correspondent in
any Latin American country has inherent power: he is the filter
of information to the developed world. Governments and industries
rise and fall based on how and whether news is reported internationally,
as we are reporting in Bolivia today.
As Narco News has
reported on unethical activity by other US correspondents in
Mexico and Colombia, that power is systematically abused. But
this is the first case we have encountered in which a journalist
for a US press agency actively lobbied a government for a private-sector
"My Boss is Aware of It"
Narco News reached Peter McFarren on his
cellular telephone on October 5th. McFarren confirmed that he
is a "pro bono" (unpaid) "promoter of the water
export law" that would pave the way for this $78 million
dollar pipeline mega-project.
He acknowledged that the
mega-project would also "set up a fund for culture, and
Quispus will receive the profits." The Quispus Foundation
has as its president Peter McFarren, and has constructed museums
He insists that he has
not committed any conflict of interest. "I've made the point
of never writing about anything that I am involved with."
And yet he continues to write about the Bolivian government,
most recently the October 1, 2000 AP story, "Bolivia
Farmer Talks Break Down."
McFarren says of his work for COBOREH corporation, "My boss
is aware of it. As a citizen I have a right to do nonprofit and
pro bono work." Asked if his boss was an editor at the AP
Latin American desk, McFarren stated that he disclosed this information
not to New York or Washington, but to AP correspondent
Eduardo Gallardo in Santiago de Chile.
McFarren said he is not
an owner or officer of the Corporación Boliviana de Recursos
Hidricos S.A. (COBOREH). Asked to identify the officers and financiers
of COBOREH, he said he would answer in writing, via email, and
Narco News has sent him that request.
The conflict of interest
remains blatant and serious. McFarren is in violation of the
Code of Ethics of the AP Managing Editors Association.
McFarren works for "outside business interests," lobbies
the government that he reports on, and, his powerful media position
creates fear among opponents of the water mega-project that McFarren
represents. Every source on this story who lives in Bolivia asked
not to be named. "McFarren is very powerful," said
one. "I want to keep living here," said another.
Indeed, Peter McFarren
Deutsch has parlayed his press pass into his role as a near mythical
player in the highest levels of Bolivian society. It's not unusual
for him to be the subject of press coverage himself as he rubs
elbows socially with the Divine Caste of La Paz, the foreign
diplomatic corps, the commander of the Bolivian armed forces
and other officials, as the social pages of the daily La Razon
in La Paz have reported.
McFarren's role in Bolivia
is a throwback to the old Viceroy system of the Spanish Conquest;
the conquering world's journalist-power broker.
A journalist with these
conflicts of interest is incapable of reporting the truth of
what is happening right now in Bolivia, and it shows in both
his coverage and his silence on key developments in the battle
If it is true that the
Associated Press knows about all of McFarren's "outside
business interests" and lobbying activities, then the AP
in Latin America has reached a new low point in corrupted journalism.
Associated Press gave
Peter McFarren an inch, and he took 322 kilometers of pipeline.
Former Boston Phoenix
political reporter Al Giordano is publisher of The Narco News Bulletin, reporting
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