SUBJECT: FORBES ENERGY CITES CORRUPTION IN ETHANOL PROJECT DELAYS REF: A. STATE 85047 ¶B. SANTO DOMINGO 1353 Classified By: Ambassador PRFannin for Reasons 1.4 (b) and (d) ¶1. (C) SUMMARY. Executives with Forbes Energy met with the Ambassador regarding the company,s planned USD 700 million sugarcane ethanol project straddling the Dominican Republic-Haiti border. They said that while they have already obtained all needed permits for the project, which will be based in Manzanillo, Montecristi, Dominican Republic, they continue to face unnecessary delays and moving goalposts that they interpret as prompts for bribes from government officials. They also described two overt solicitations from high-level officials for cash payments. The project is currently held up due to delays in finalizing a negotiated land swap with a state entity; the Ambassador has sent a letter to the top official of this entity requesting a status update. END SUMMARY. ¶2. (U) On August 28, the Ambassador met with Forbes Group CEO Lucien Forbes, Director of External Relations Josh Fenton, and Chief Legal Counsel D. Edward Wilson . Also present were DCM Bullen, EconChief, PAO, EconOff and FCSO. The meeting followed a July 31, 2008 meeting between the company and WHA Assistant Secretary Shannon (ref A). ¶3. (U) The Forbes executives said that the company has been working since 2006 to establish operations in the northern border region to produce ethanol from sugarcane stock primarily for export to the U.S. market. Initially, the plant would denature Brazilian &wet8 ethanol for the United States. Subsequently, the company will produce ethanol from locally-grown sugarcane stock for the domestic and export markets as well as generate 50 MW of electricity from bagasse (sugarcane waste) for sale to the Dominican electricity grid. The major part of the project will operate under the Special Duty-Free Zone tax incentive regime. The local affiliate of the company, Forbes Energy Dominicana, S.A., has already received a 20-year renewable permit for a duty-free zone. The executives said that this will be one of the largest private investments ever in the country and the largest commercial venture of its kind in the world. ¶4. (U) The project would also impact Haiti. While the ethanol and electricity production will all take place in the Dominican Republic, Forbes plans to either cultivate land that it buys or else buy feedstock from Haitian producers directly across the border from its Dominican assets. Forbes said he aims to make the project fully operable with an entirely Haitian-Dominican workforce within five years of launch.