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RECO Odyssey Comes to Conclusion by Thomas Tomczyk

More ups and down expected before smooth waters.

Steven Guillen shows the ballot boxes prior to the vote.
In a convoluted and drama-filled vote, several hundred RECO shareholders put their faith in their community leaders and cast ballots in cardboard boxes of Kleenex and Bleach. They decided to sell 52% of Roatan Electric Company to an American Billionaire Kelcy Warren.
The process remains in question as some dispute the wisdom and legality of disregarding a national committee which gave Kelcy Warren the third highest score of six participating bidders.
The heart of the matter is whether the Honduran government committee was only evaluating who the winner should be, or whether it was selecting who the winner would be. We will never know "what could have been," as under pressure from local politicians, the Honduran government washed its hands from the determination of most islanders to sell the shares to Warren. "It took time for the government to realize that the evaluation committee recommends, but the shareholders will decide," said Evans McNab, president of RECO board.

Many energy customers on Roatan still take their energy prices for granted. The current price of energy paid by Roatanians is less than half what Utilans and Guanajans are paying. While the RECO price of Lps. 3.6/Megawatthour has remained the same since 2006, on Utila it is 128% more expensive, or Lps. 8.2, and on Guanaja Lps. 7.4.
Two entities created the failure of RECO and its subsequent placement under emergency government control in early 2007: the old RECO board's poor administration and the patronatos leaders' mortal grip on RECO to maintain fuel surcharges even though world fuel prices skyrocketed. As recently as a year ago, patronato leaders and RECO board members held one another at a standstill through mutual accusations of endangering the future of Roatan's electricity--a standstill which by February 2007 could only be remedied through government intervention.
13 months later, after the government saved Roatanians from this failure, patronatos and RECO board have decided to disregard the findings of a government-sponsored evaluation commission. Instead, they have decided to give the right of a 52% share purchase to someone who already once passed on the share-purchasing opportunity.
In October 2007 Warren, a businessman with experience in natural gas pipelines, demanded a 60-day due diligence without guarantying purchase. The government decided that 60 days was too long and began a bidding process that lasted 141 days and was expected to finalize somewhere around March 31. "It was the biggest mistake for the government and Warren. Maybe if he [Kelcy Warren] had asked for 30 days we wouldn't have had to go through the bidding process," said Evans McNab, current RECO board president.
After receiving six bid offers, the national evaluation committee decided that Punta Cana, an energy producer from Dominican Republic, had the highest number of points in the bid. Honduran Fredy Nasser's Terra Group came in second, and Warren's offer was ranked third.
After much drama, meetings and voting, on March 5 the government finally gave in to the demands of the local leaders and RECO board. Honduran officials wanted to wash their hands of any legal consequences that could follow. "We went through this process, but it was complicated and convoluted. … We are not intervening in the board of shareholders. You will decide this [who will win the bid], but under your own responsibility," said Aristides Mejilla, Minister of Defense and President of the RECO intervention commission.
Mejilla made it clear that the Honduran government reserves a right to intervene in RECO in case of mismanagement, natural disasters, etc. as energy production and distribution is a strategic enterprise vital to Honduras' economy and image. "This company has an enormous importance to the economy of the country," said Mejia.
So began the RECO shareholders' meeting that would conduct two votes: to accept or reject the evaluation committee's results, and then, if the vote was to reject, to whom to award the 52% share buy-out option.
The quorum of 43,500 shares could not be produced and another meeting on the following day was called.

ENERGY COSTS IN HONDURAS
Roatan
$ 0.19/kwhr
Utila
$ 0.43/kwhr
Guanaja
$ 0.39/kwhr
La Ceiba
$ 0.16/kwhr

According to RECO constitution, shareholders can decide and vote without a quorum a day after the original meeting. On March 6, the final day of the meeting turned into a melee as hundreds of voters and spectators turned in to cast their RECO votes.
Not everyone could vote as they were hoping or even expecting to do. Six years ago Sandra Segarich, for example, an American property owner in Sandy Bay, bought her Sandy Bay property along with one RECO meter and has been paying her electric bill ever since. Effie Tatum, 82-year-old seller of the Sandy Bay property, died in 2006, but according to RECO it is the deceased islander who has the right to cast her vote in the assembly not Segarich. "They told me that RECO assets are not transferable," said Segarich.
While a line of several hundred people queued to cast their votes, president of the Bay Islands patronatos agitated the voters. "Vote 'no' and vote for Kelcy Warren," Rosa Hendrix shouted through a loud speaker. Regarding Hendrix's conduct, Governor Thompson said, "This is not right."
Three of the Punta Cana representatives present at the meeting were visibly upset. The Punta Cana reps were shouted at, booed and waved at not only by some angry RECO shareholders, but even by RECO board members themselves.
"We won the bid, we are the winners," said Punta Cana representative Oscar San Martin. "I don't understand why the same people who bankrupted this company are now deciding about its future," said San Martin. "We might have to come back in two-three months to save you," San Martin told the RECO board.
Amongst the 142 votes ultimately cast for Punta Cana was Jerry Avarado, Mount Pleasant patronato member. "The patronatos are divided on who to support. We want the decision of the government to be respected," said Avarado, wearing a Che Guevara t-shirt to the meeting.
Even some local political leaders were skeptical of Kelcy Warren but hesitant to go on record. The politicians who were vocal and outspoken praised Warren and tried their best to present him as the "best choice for Roatan." "We are confident that we have found a partner who could be a part of this community," said Evans McNab about Kelcy Warren. Few people have challenged this or questioned the logic of going with an individual rather than a company.
Warren has no personal experience in energy production or distribution and no experience in third world country projects. While Warren is seen as a rescuer of Roatan, a knight in shining armor, it is far from certain how things will turn out. Warren is a businessman. For business reasons, not for the community's benefit, he asked the government for a 60-day review of RECO books.
When the votes were counted the decision looked like a landslide: 22,146 shares went against evaluation committee recommendation, with only 142 for Punta Cana. It was decided. But as Punta Cana representatives headed to their hotel rooms, they threatened legal action to claim potential profit from an "awarded bid."
In the days following the vote, Warren began paying off the $1.6-2 million RECO debt to Banco Atlantida. By end of March he is expected to pay off the debt to ENE, National Energy Company, estimated at $8-11 million. The entire purchase price of around $15 million also specifies investment over time. The 52% RECO shares were purchased for $3 million, or $122.75 a share. In 1992, each RECO share could be purchased for Lps. 100, or $15.40. Over 16 years, that translates to a gain of 800% and averages 13.85% cumulative interest gain a year.
When during Semana Santa holiday RECO GM Humberto Mesa took his holiday and went to the coast, the de facto management of the company was left in the hands of Matthew Harper, chosen by Kelcy Warren as RECO's interim GM.
Harper, who owns his own electrical contracting company, started his career with RECO in 1991, the year the company started. "In short term I feel that I am the right person for the job. I am an electrical engineer by profession, I know the company and the RECO system, I have a good rapport with people, I speak both languages," said Harper. "I know how RECO used to work when it worked well and I am trying to get it back to that," added Harper. "I am doing this for four reasons: I love RECO; Kelcy trusts in me; as a citizen of the island I also need dependable power; and I know that I can make a difference."
During Semana Santa RECO ran on 9.8 Megawatt of power. A majority of the power, 4.9 Megawatt, came from rented units from Nacional de Inginieros company. "For the first time in a long time we didn't have to ration power," said Harper. The disruptions and power cuts came when a northern weather front and strong winds brought down several power lines.
Harper said that Kelcy Warren has specified a four- and 12-month plan for the company: "We are sticking to technical proposal and due diligence." In the first several months the plan is to rent additional generators and perform corrective maintenance. A first machine bought by RECO will run on more efficient and cheaper bunker fuel (HFO). "In this type of company we need a profit margin of around 10%-15% and by September we should have around 6%-7% [profit] margin," said Harper.
Another crucial issue is the structure of the company. RECO employees have not received raises for several years, the morale is low and the organizational structure of RECO is inefficient. According to Harper, after reorganization and with additional machines, the work of the current 60 RECO employees could be done by 40 to 50. "We want for people to see RECO as a place to work until retirement," said Harper.

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The Western Guilt Complex by Thomas Tomczyk


When Gillian Gibbons, an English teacher in Sudan, apologized for offending Islam by naming a class teddy bear Muhammad, the only discussion in the Western media was whether she should have named the teddy bear and did she knowingly offended Islam.
"No good deed will go unpunished," and as western Europeans try to repay debts to slaves, they fail at making others accountable for their share in the burden of responsibility. Don't expect apologies from Muslims for occupying the Iberian Peninsula for 800 years, for taking Constantinople, or for occupying the Balkans for 500 years. Many societies are unwilling and unable and not expected to exalt expressions of contrition. Americans are more hesitant to apologize, or feel guilt. Don't expect any time soon any US congress or president apologizing for slavery, dropping napalm in Vietnam or using depleted uranium in Iraq. Arabs won't apologize for slave trade, Muslims for destroying the Church of the Holy Sepulcher, Chechens for slaughtering children of the Beslan School, Middle Easterners for honor killings.
Western guilt which has dictated political and military responses is directed towards religious and racial minorities who are perceived as weak, disadvantaged and unable to defend themselves. However, many of these groups are doing quite well in defending and imposing their own interest on the west. They don't hesitate to take advantage of the feelings of responsibility in the western mind. In Jordan I talked to an Arab Muslim man who mentioned that "Western Guilt" concept with a smile. "I know you have it," he said.
Well, I am a bit different. I was born in Easter Europe and don't feel this "Western guilt" as much. Eastern Europeans, for the most part, have not developed sophisticated mechanisms of rationalizing and internalizing the injustices they've committed, but instead have focused on the suffering and wrongs done to them. They are still caught in issues mostly dealing with shame, not guilt. The self flagellation of Western societies is not accepted by their eastern neighbors.
Political correctness has brought a shift in Western self-perception and understanding. The Crusades is a great example of a shift in western thinking over time. While the Crusades was a desperate and ultimately unsuccessful attempt to reopen pilgrimage access to the Holy Land and help an oppressed Christian majority living there (Christians were still a majority in the middle East of the XI century), today many westerners perceive the Crusades as an unholy, greedy land grab.
Guilt and shame are important, valuable feelings that control the actions of individuals as well as entire societies. These feelings are there to keep feelings of anger, revenge and apathy from exploding into destructive violence. What is sometimes ignored is that guilt and shame, if used in excess, can be counterproductive, even self destructive.

Amajority of today's world is not pragmatic, it is emotional. A majority of societies are still based and controlled by shame, not guilt. Japanese society, Muslim societies, and developing Latin countries including Honduras, decided that shame, or getting caught doing something socially unacceptable, outweigh individual's feelings of guilt. What is lawful is more important than what is ethical, or moral. As long as you don't get caught, it's OK.
Shame is triggered when someone finds out about you, or the people associated with you, breaking public norms and accepted standards. Guilt, however, is a much more sophisticated and retrospective thought. Guilt produces a sense of discomfort and responsibility in a person who believes they've done something wrong, whether legal or not, whether anyone else knows about it or not.
Shame is a much more primitive, basic feeling compared to guilt. I can shame my dog into not eating garbage. But I have no illusion that he will ever develop a sense of guilt which will prevent him from eating garbage when I don't know about it.
Some societies suffer from "the guilt complex" to a greater degree: French, English and German lead the way. While the French are still dealing with their responsibility in Algeria, Algerians I've met have no qualms about confiscating French properties, or kicking out and massacring any French wanting to stay in Algeria after independence. The same thing goes for the Italians kicked out from Libya in 1973. While Palestinian occupation is an everyday headline, no one raises an issue of compensation for about one million Jewish properties confiscated and lost when Jews were kicked out of Muslim countries in 1948. If you haven't heard about these injustices, it is because the victims have accepted the results without raising a fuss.
I do feel that there are genuine and good acts of contrition. Over the last 18 months alone Australian Prime Minister Kevin Rudd has delivered an apology to Aborigines for past assimilation policies, the Prime Minister Tony Blair has said he feels "deep sorrow" for Britain's role in the slave trade, and the Polish president has apologized to the 15,000 Jews expelled in 1968.
Pope Benedict XVI apologized for offending Islam in quoting a Byzantine emperor Manuel II: "Show me just what Muhammad brought that was new and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." Yet no one discusses if the Manuel II was right--if Islam is a religious belief based on fear. The discussion is focused on whether Islam was offended and what can be done to not offend it in the future. Every time Islam is mentioned, someone self-flaggingly and with guilt admits: "Christianity has done no better."

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2008 Holy Week

A Busy and Eventful Holiday week fills the island with tourists and incidents

Unfortunately the week didn't go by without incidents. On March 19, Barbara Wojtasek, 43, an American cruise ship visitor from Norwegian Spirit died when the metal line of the zip-line ride she was on broke. Wojtasek fell around 20 meters and was transported to the hospital where she died. The incident took place at the Gumbalimba Canopy Tour in West Bay. Preliminary investigation points that neither guide nor Wojtasek were attached to a second, security cable which is a standard practice during the activity. "The guide didn't follow proper procedure," said Marco Galindo, owner of the zip-line, who added that this is the first time a cable has snapped since the operation began service in 2003.
The incident follows another death related to the zip-line tourist activity. In January an employee of another zip-line fell to his death as he slipped out of his harness and fell. On Roatan and in Honduras, zip-line is a growing but unregulated tourism industry. Currently six zip-line tours operate on Roatan.
The week ended with another disturbing event. On Easter Sunday an American 63-year-old retiree living in Brick Bay was raped and robbed by two men in their twenties. The armed men broke into her home around 7:30pm. By March 24 the police had arrested one suspect and are investigating the case.

Passengers wait to board the Utila Princess.

Semana Santa is the busiest time for Honduras and one of the busiest times in the yearly calendar of the Bay Islands. It is an occasion to take holidays, but places stress on tourism and transport infrastructure.
By March 17 Utila, Roatan and Guanaja hotels filled to capacity and stayed filled for the entire Semana Santa week. Galaxy Wave on Roatan and Island Tours on Guanaja added extra trips to and from the islands. Several thousand island residents with families on the coast headed back home while tourists flooded into the islands, filling hotels and rental homes.
On March 18 a northern cold weather front came to the archipelago and stayed for two days. With two of its three propellers damaged, Utila Princess' trips to Utila which are usually no more than one hour and twenty minutes were taking as long as two-and-a-half hours.
Roatan's passenger ferry operated by Safeway Maritime added five days of three trips a day, instead of its usual twice daily schedule. Running at upwards of 90% capacity, the catamaran Galaxy Wave with 470-passenger capacity was bringing to Roatan as many as 1,400 passengers a day.

 
Union College comes to Bay Islands
Volunteer Students Prepare an Emergency Disaster Plan
Thanks to them Utila, and soon possibly other municipalities, can evaluate current resources, preparedness and plan for a disastrous even. As part of the 15-page report the students evaluated shelter locations, medical supplies and warning systems for Utila. "We were looking for something humanitarian to do," said Leroy Archer, a Union College support staff. While the smallest of the Bay Island's municipalities has what looks like the best of the Bay Islands preparedness for a hurricane, few people remember the last time a hurricane came through the island. "The people have the attitude: 'It won't happened to us,'" said Josh Enevoldson, a fourth-year Union College student.
Three other municipalities could receive similar evaluations before the 2008 Hurricane season begins. "We are waiting an official letter from the mayors inviting us to do the study," said Prof Michael Deuhrssen.
For the Union College students the three-month abroad semester is meant to combine taking classes, immersing in local culture and establishing a community volunteering.
There are additional plans to provide badly needed services in the Bay Islands. As soon as August, Union College has a plan to send four Emergency Technician students with enough resources to stock an ambulance. The students could stay for 9-10 months and work with and train local emergency operators already on the island.

Prof. Chuck Franklin teaches a class to two Union College students.

If it wasn't for Hugo Chaves the Union College would never have come to Roatan. The Nebraska University had to end its three year long abroad program in Venezuela, when in 2007 its 19 students and staff were placed under house arrest for three weeks. "They said we weren't welcome there anymore," said Leroy Arches, Union College support staff member.
Union College has decided to relocate its program to Bay Islands and on January 22 landed on Roatan. They plan to stay in the Bay Islands until April 22 and, other than classes, they have volunteered on a number of community projects.
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