Tennessee’s Eastman Chemical subpoenaed by Mexican authorities for alleged cartel connections

By: - January 28, 2021 4:00 am
Eastman Chemical, based in Kingsport, Tenn. (Photo: Facebook)

Eastman Chemical, based in Kingsport, Tenn. (Photo: Facebook)

Eastman Chemical Company, a global corporation headquartered in northeast Tennessee that is among the state’s largest employers, is under investigation by Mexican authorities over alleged ties to cartel-controlled suppliers of raw materials processed at its plant in the state of Michoacán.

A subpoena issued to Eastman Chemical on Oct. 2 by Mexico’s Federal Public Ministry seeks information on Eastman’s relationships with Mexico-based organizations that supply tree resin, which is distilled into turpentine and an industrial substance known as “rosin” for use in manufacturing of adhesives, chewing gum, inks and other products. 

The organizations are all alleged to have been controlled by cartels — organized crime outfits — who have practiced a sustained campaign of violence, robbery and intimidation against indigenous subsistence farmers who earn a living by tapping old growth pine trees to extract sap, according to news reports in Mexico and the United States. The alleged criminal organizations inserted themselves as middlemen between tappers and manufacturers who process and export the rosin, and rosin derivatives, such as Eastman. 

Eastman has operated a rosin derivatives manufacturing plant for two decades in Uruapan, Mexico 

The subpoena is believed to be the first formal action taken against Eastman by Mexican authorities. 

Eastman representatives did not respond to phone messages and emails seeking comment on Tuesday and Wednesday. 

The alleged involvement of Eastman with cartels that have robbed and exploited individuals who, for decades, have tapped old growth pine trees for sap has been chronicled in Mexican and U.S. press.  A 2017 Daily Beast story reported on alleged links between Eastman and cartels, but the conflict has received scant attention from global environmental groups or others outside Mexico.

A report prepared by a consulting firm specializing in advising multinational companies on identifying corrupt practices concluded “Eastman failed to comply with global standards and best practices.”  

“The forest people in Michoacán are tapping old growth trees,” said one advocate who works on behalf of nonprofits in the region and asked not to be identified to protect these organizations from retaliation. “It’s a sustainable practice. It’s not about clearcutting land and international groups aren’t necessarily focused on the fight for justice.”

In 2014, Texas-based T & R Chemicals, the U.S. sister company to a counterpart that is one of the largest pine tree product manufactures in Mexico, turned to Washington, DC-based law firm diGenova & Toensing to examine the threat of organized crime in the region. 

(The law firm has since been in the spotlight for its role in serving as Trump Campaign lawyers, whose principals, Victoria Toensing and Joe diGenova, have appeared on Fox and Newsmax promoting conspiracy theories about election fraud.)

The law firm in turn commissioned a report from The Fairfax Group, a Virginia -based firm specializing in advising multinational companies on how to identify corrupt practices. 

The resulting 16-page report honed in on Eastman’s business practices in the region. The report concluded that “Eastman failed to comply with global standards and best practices.”

The report identified five companies that formed under the umbrella of a resin buying association known as UNORED, that has since been linked to cartels. UNORED organizations forced tappers through threats and violence to sell resin at below-market prices or simply stole resin, the report said. Legitimate resin manufacturing operations “became victims of truck hijackings, roadside robberies, assaults and arson” while companies such as Eastman would make deals with cartel-controlled groups to purchase the rosin at below-market prices, the report alleged.

“Eastman profited handsomely by benefitting from UNORED’s criminal tactics,” the report said. 

Fredo Arias-King, president of T & R Chemicals, said he warned Eastman of UNORED’s illegal conduct, but the company failed to act.  

Arias-King said Wednesday that his company trucks transporting resin were commandeered by “thugs with machine guns” who forced his drivers at gunpoint to drive to a manufacturer that sold product to Eastman.

He said he approached Eastman officials numerous times, and arranged a meeting at their Kingsport headquarters to detail the involvement of cartels. Arias-King, whose first name is “Fredo,” accused Eastman managers and attorneys of dismissing his complaints and mockingly referring to him as “Frito.”

“Eastman must come to a reckoning of how disastrously they have conducted themselves,” he said. “They’ve done a lot of damage, and not only to us, but to indigenous tappers who have suffered for years. They sided with the cartels and their money.”

A former Eastman plant manager in a statement submitted to the law firm hired by Arias-King said he was ordered by his superior at Eastman to do business only with UNORED, the report said.

In 2012, Martin Ornelas Pineda, founding director of UNORED, was arrested and sentenced to six years in prison for possession of illegal weapons and other organized crime related activities, according to press reports.  

The subpoena from Mexican law enforcement officials seeks the names of Eastman’s rosin suppliers between 2006 and 2014, asks Eastman to list its purchase prices and requires Eastman to account for any business relationships  with seven specific companies with possible cartel links. 

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Anita Wadhwani
Anita Wadhwani

Anita Wadhwani is a senior reporter for the Tennessee Lookout. The Tennessee AP Broadcasters and Media (TAPME) named her Journalist of the Year in 2019 as well as giving her the Malcolm Law Award for Investigative Journalism. Wadhwani is formerly an investigative reporter with The Tennessean who focused on the impact of public policies on the people and places across Tennessee. She is a graduate of Columbia University in New York and the University of California at Berkeley School of Journalism. Wadhwani lives in Nashville with her partner and two children.