(The following story by Marla Dickerson appeared on the Los Angeles Times website on July 12.
MEXICO CITY — It’s the end of the line for Henry Posner.
The Pittsburgh millionaire who spent $15 million to revive Guatemala’s once-defunct railroad said this week that the freight trains would stop rolling Oct. 1.
His company, Railroad Development Corp., is locked in a legal battle with the government that Posner said has made it impossible to keep operating the money-losing service.
“Enough is enough,” Posner said. “It’s clear that at every level of Guatemalan society there is, at best, a lack of respect and, at worst, an outright hostility to everything that we have been trying to accomplish.”
Posner said the company would continue running trains through the end of September to meet previous commitments to freight customers.
The company also will press ahead, he said, with a legal action seeking $65 million in compensation from the government of Guatemala for allegedly damaging its business. Guatemalan officials did not respond to a request for comment.
Posner’s company in 1998 won a 50-year concession to get the freight trains rolling after the national railroad ceased functioning in 1996. It reopened a 200-mile stretch of track running from the capital of Guatemala City to the Atlantic port of Puerto Barrios, a feat hailed by train buffs but which never turned a profit.
Posner, 51, has made a career out of salvaging troubled railways in far-flung places, including Malawi, Mozambique and Estonia. But Guatemala has proved a tougher haul than any of them. Scrap-metal thieves routinely plunder the tracks.
Thousands of squatters have taken up residence in the right of way. Washouts ravage the rails during the rainy season.
But Posner said his biggest stumbling block in Guatemala has been the government. He claims Guatemala failed to honor its agreement to contribute $3 million for track improvement and to evict squatters from the most potentially profitable lines.
When the company pressured the government to live up to its end of the bargain, Posner said, it retaliated with a rare and powerful legal maneuver to repossess its locomotives and rail cars.
That 2006 action is still tied up in court. But Posner said the threat alone scared off customers, sending his company into a downward spiral from which it has not been able to recover.
The company is now suing Guatemala for damages, invoking an investor protection clause in the Central American Free Trade Agreement, which includes the U.S. and Guatemala.
That pact forbids governments from expropriating assets of foreign investors. RDC filed a claim in Washington in June before a special international dispute panel.
A decision could take two years.
Some say Guatemala may end up the real loser.
“The implications for foreign investors are not good,” said Carlisle Johnson, a political analyst and host of a popular radio program called Good Morning Guatemala. “Who is going to come in after this fiasco?”