Indonesia to pass Newmont case to prosecutors

Indonesia to pass Newmont case to prosecutors

By Shawn Donnan in Jakarta, Financial Times

October 6 2004

Indonesian police are expected to pass a controversial pollution case against executives of US-based Newmont, the world's largest gold producer, to prosecutors on Thursday, setting the stage for a possible criminal trial.

The six Newmont managers - including two Americans and an Australian - were detained earlier this month as suspects. Police plan to hand the case to prosecutors in North Sulawesi, the location of Newmont's Minahasa Raya mine, a move that in the Indonesian justice system equates to laying charges against a suspect. Lawsuits against foreign companies are common in Indonesia but it is rare for overseas executives to be detained for extended periods or charged.

The case against Newmont - which hinges on claims that tailings from the Minahasa Raya mine caused chronic illness among villagers living in the area, has become a litmus test for Indonesia's troubled investment climate.

Key evidence in the case is in dispute - independent experts from groups including the World Health Organisation argue there is little evidence of pollution in the bay into which Newmont dumped tailings until August.

But police claim their tests show that the bay's waters contain unhealthy levels of mercury and arsenic.

"Those six suspects have committed a corporate crime," Brigadier General Suharto, the investigator in charge of the case said.

The company's local chief executive and the five other managers face up to 10 years in prison if convicted, he said.

Newmont has claimed throughout that it has done nothing wrong. The miner argues it never used mercury in its extraction process at Minahasa Raya. Any elevated levels of naturally-occurring arsenic and mercury in the tailings were reduced to acceptable levels by special "scrubbers" before the slurry was released into the bay almost a kilometre from shore, company officials claim.

In an August 26 report prepared for the World Health Organisation, Japanese mercury poisoning experts said levels of the metal in the bay were within acceptable international guidelines.

Tests also indicated the villagers had normal levels of mercury in their blood for populations that eat a lot of fish.

In fact, the bigger environmental issue in the area of the mine, the WHO experts concluded, was in the bay next door where they conducted tests as a control. There, mercury levels were "much higher" thanks to hundreds of small-scale illegal gold miners who for decades have used mercury to extract gold and dumped their waste into a river that flows into the bay, they said.

Additional reporting by Taufan Hidayat