Pacific project investors turn to CAFTA for relief

Investors and the developer of a residential and hotel project in Esterillos Oeste are threatening to take Costa Rica to arbitration under the free trade treaty with the United States.

The project is Condominio Horizontal Residencial Las Olas, and a warning letter sent by New York lawyers to the Ministerio de Comercio Exterior Sept. 17 alleges official corruption, perjury, inaction by criminal investigators, misstatements and inequitable treatment in a criminal court case.

The lawyers also say that the principal developer, David Richard Aven of New Castle, Pennsylvania, was the target of an attempted assassination while he drove with another investor in Costa Rica.  A man on a motorcycle fired five shots at the car, the letter said.

A resident near the project site contends that the lawyers’ allegations are not as clear cut as they seem to be. The resident has followed the project closely and has taken photos of what he considers to be environmental damage.

The Las Olas project is on 39 hectares, a bit more than 96 acres, on the Pacific coast. Included in this total is a 2.2 hectare maritime concession. Plans call for 300 villas, a hotel and a beach club, the letter noted.

The Central American Free Trade Treaty contains a number of obligations that Costa Rica and other signatories have toward foreign investors. The treaty also provides for arbitration of complaints.

The lawyers claim that the project had all the proper permits but that environmental inspectors closed it down because the project infringed on wetlands that do not exist. The lawyer letter said that the local head of the environmental ministry and also workers of the Municipalidad de Parrita solicited bribes unsuccessfully and that the latter attempt was taped. The letter denies that any wetlands are involved.  Aven reported the bribe attempts but prosecutors in Quepos ignored the case, the letter said.

The Tribunal Ambiental Administrativo of the environmental ministry froze the project. due to alleged environmental damage. That was in April 2011. And a prosecutor,  Luis Martinez, brought  Aven and an employee, Jovan Damjanac, into criminal court.

The lawyers claim that the prosecutor engineered a delay when it appeared he would lose the case. Then a judge became sick and the trial has to be repeated. The New York lawyers consider this double jeopardy.

“The municipal court and the appellate and supreme courts gave the environmental prosecutor, a government agent, a chance to resuscitate a case that should have resulted in the acquittal of Mr. Aven following the prosecutor’s failure to prove any liability,” said the letter.  “This type of harassment is outlawed in Costa Rica and in any rule of law system,” it added.

The Esterillos Oeste resident said that the project workers destroyed 12 hectares of wetlands and cut 400 trees without permission. He also alleged that the workers set large fires to get rid of trees and vegetation and that these fires killed and scattered local wildlife. The expat resident, who has contacted A.M. Costa Rica with complaints for at least a year, said that streams were covered and that the mangroves were contaminated. These are basically the same allegations put forth by the prosecutor.

The expat said that residents have been signing petitions against Las Olas since 2010 and that they have been forwarded to government representatives.

A new trial on the criminal allegations was supposed to start in September, but it was postponed because Aven did not appear. He is believed to be out of the country and may be ill.

The lawyer letter lists eight corporations that were involved in the development of the project as well as a 49 percent interest by the investors in another corporation.

The letter does not specify an amount in money that the investors would be seeking. The law firm is King & Spalding LLP of New York City. The letter lists seven investors in addition to Aven who are pressing the claim. They are from Georgia, Pennsylvania, Florida and upstate New York.

Editor’s note: This news story has been amplified by a subsequent article HERE!

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