Mexican mining chief testifies in Asarco case

BROWNSVILLE, Texas (AP)—One of Mexico’s richest men testified under subpoena Tuesday that he acted in the best interest of an Arizona-based mining company when he shifted its most valuable asset to one of his other subsidiaries.

German Larrea, 54, is chief executive and chairman of Grupo Mexico, parent company of Americas Mining Corp., which bought the controlling stake in two Peruvian copper mines from Asarco, another Grupo Mexico subsidiary.

Asarco, which operates the Mission Mine in Sahuarita, is suing for more than $10 billion in damages because it says the transfer of Southern Peru Copper Corp. was fraudulent and placed Asarco on a course for bankruptcy. The four-week federal trial is scheduled to end Thursday.

Early in his more than five hours of testimony, Larrea was polite and affable, answering U.S. District Judge Andrew Hanen’s questions in fluent, yet heavily accented English.

But Larrea’s testimony that bankruptcy was the last thing that he wanted for Asarco and that the sale of Asarco’s Southern Peru Copper shares was supposed to help Asarco in its cash struggles contrasted sharply with the case laid out by Asarco LLC.

Asarco painted a picture of a cunning business transaction that stripped Asarco of its most valuable asset for less than a fair price, leaving the company unable to pay its bills and on a path for bankruptcy.

Larrea agreed the shares were one of Asarco’s best assets, but said his intent was never to move Asarco toward bankruptcy by transferring the shares to Americas Mining Corp.

Rather, Larrea said, independent directors added to Asarco’s board after the takeover and outside counsel suggested that Chapter 11 bankruptcy protection would be the best solution.

Asked if Asarco’s managers ever came to him and said they had problems paying bills and operating costs, Larrea said “yes,” but chalked it up to a liquidity problem.

“What you’re basically saying is, Asarco, you’re a free-standing company you need to make it on your own?” Hanen said.

“Exactly,” Larrea said.

After the transfer of the Southern Peru Copper Corp. shares, Asarco survived for more than two years before filing for bankruptcy. Larrea said Asarco persisted by finding efficiencies and selling off unnecessary assets, Larrea said.