Once again, the railroad system is under scrutiny. Last week, the Minister of the Interior and Transportation, Florencio Randazzo, announced that the country’s largest freight train, the Belgrano Cargo, would now be managed by the State. This week, it is Latin America Logistic Center’s turn, also known as ALL Central, they are responsible for the operation of the railways linking Buenos Aires and the state of Santa Fe. The General Auditor's Office (AGN) revealed that All Central is the company with "the most derailments, they are also five times larger than any other goods train".

That is just one of the alarming observations made by the federal watchdog. Between 2004 and 2011, "there were 642 accidental derailments and 90% of the accidents were caused by a lack of railroad track and rolling stock maintenance.”

To top it all off, "rolling stock that disconnects from the rest of the train is not reconnected or discarded by ALL Central, on the contrary, it is left in total abandonment where the rolling stock broke off.”

It all started some time ago

According to the audit, “the fee has not been paid” since ALL Central took over the concession in 1993. Up to June of last year, the debt, including interest, amounted to $237.5 million pesos. The Commission of Transport Control (CNRT) sent intimations in 1997, 2001, 2003, 2004, and 2012; however they didn’t do any good.

Since 30% of the proceeds in monthly fees were supposed to go to the Social Security System (ANSES), the company owes ANSES about $22.6 million, not counting interest.

And, while we are on a numbers topic, during 2011 ALL Central had revenues of about $370 million.

The butterfly effect 

Initially, ALL Central defined an investment plan for $349 million dollars, to be completed by the end of 2008. AGN, after analyzing the 2004/2011 period, found that "only 9.75% had completed" the work. They specifically highlighted "the failure in the infrastructure of roads, where out of 935 kilometers that needed heavy repairs, they only partially did it in 162 km, and out of the 197 km of light repair, no fixing was performed, not even a mile”.

According to the report, "the failure of investment and maintenance plans are a direct cause of the high level of deterioration of the roads." The federal watchdog also provides hard data: when the contract was first signed out of the 5,584 kilometers of roads, 95% was in perfect working order. In 2011, only 47% was in working condition while the rest of the roads were “out of circulation".

The report states that it found "railroads with high degree of deterioration, exceeding the end of its useful life and loose fasteners". In the branch that links the provinces of San Luis and Mendoza together, they found that "the facilities were in poor condition and derailments primarily occur due to the lack of maintenance".

Apparently, it is not by chance that this firm is the one with the record number of derailments, which is "five times more than the rest of the companies".

The report, published in 2013, by the federal watchdog said that "the level crossings that are located along the railway show safety deficiencies by the company’s ineffectiveness." In fact, "of the 150 automatic barriers that had to be incorporated, only 20 were installed". It was also observed that "the existence of weeds and shrubs that obstruct vision and lack of proper signage are also a problem, since they increase the risk of accidents at intersections".

In this situation, a quite alarming one, the fact is that at the end of the audit "31% of the fleet was out of order, and this is because of ALL Central’s poor administration.”

And now, ¿the sanctions?

Between 2004 and 2011, the CNRT "issued 71 resolutions sanctioning nearly $ 23.5 million, faults classified as "very serious". Despite this, AGN reports that "to be effectively applied, the deadlines will be extended." In fact, the auditors took a sample of 11 records of fines and "only in one case was the penalty effectively implemented." The rest of the cases "have a delay of up to three years".

The CNRT also filed two lawsuits against the company for "breach of contract". In either case, the agency cited "lack of care, custody, and maintenance of the network" that caused "damage to property of the National Government."

The report states that "despite the breaches of ALL Central causal matches are provided for the termination of the contract (which has been renegotiated since 1997)". Although serious violations were repeated year after year, in October 2009 they signed an Agreement Memorandum". It is quite clearly, that there are "repeated irregularities" so AGN recommended "to evaluate the continuity of the renegotiation" as these situations caused "damage to the property of the Federal Government."

Coming to an end

The daily newspaper, Página 12 published in its May 22nd edition that the train destinations that ALL Central is responsible for are “practically abandoned” and that “the company wants to leave the country”. This story better end soon or they might even have to pay their debt to the State.