Private Power

Private Power

December 18, 2001

By Simon Divecha (please also see articles posted on ZNet)

In Papua New Guinea a quiet revolution has just taken place, demonstrating the power of major transnational companies, and writing into law what has long been the defacto, and until now not publicly acknowledged, relationship between this country's government and the resource corporations.

With legislation presented to the PNG parliament and passed on the same day, PNG has sacrificed its sovereign right to protect its citizens through its legal system, and has passed the power to resolve disputes directly to a company.

It has also agreed to deprive PNG people of their rights to choose their own representatives and allow people, who can be handpicked by a company, to make decisions on behalf of everyone, whether or not the individuals, villages, clans or communities have agreed to this.

The PNG government at the same time granted a full legal indemnity for world scale damage, in return for the modern equivalent of some beads and blankets.

An extraordinary precedent is set for companies to take away the already difficult to enforce rights of poor communities, to privatise even further their profits, and socialise the costs and pain onto some of the poorest people in the world. Today the only things that stand in the way are two court challenges.

Many people may be familiar with BHP Billiton, the world's largest mining/minerals company, and its Ok Tedi copper mine in PNG. In 1984, BHP was allowed to open the mine and to dump 80,000 tonnes of waste directly into the Ok Tedi River every day. This then flows into PNG's second largest river, the Fly River.

Not surprisingly the waste is having a devastating impact and the company acknowledges it will kill over two thousand square kilometres of forest along the Fly/Ok Tedi, and cause a possible total collapse of the fishery, in addition to the 70 to 90% of fish that are already dead in the Ok Tedi River.

The damage will force villagers to hunt and fish over larger distances and so make it difficult for them to get enough food to eat. It will probably lead to protein deficiencies, while destroying every sago tree, the staple food, for at least half of Fly River.

The damage is increasing, the waste continues to go into the river every day, and the devastation will last for the better part of this century at least.

In 1996 30,000 villagers living along the river won a significant victory. After two years of legal action in Australia, during which they had to establish their right to sue in an Australian court, they settled out of court for compensation and the company's commitment that it would stop dumping its waste into the river. By April 2000, with the waste dumping continuing, the villagers were back in court suing BHP for breach of the out of court settlement.

At the same time BHP was looking for the best option, which would minimise its costs. It decided to quit its share of the mine and effectively use the 52% it owns, of a mine which closes in 2010, to buy its way out of trouble by putting it into a 'development trust'.

While much of the decision making processes about how BHP gets out were conducted behind closed doors, a leaked World Bank report found the company review looked at "a limited set of technical options ... that minimises overall risk to shareholders".

It was presenting the least risky options for its shareholders - not, unsurprisingly, options that produced the lowest risk for the people of PNG. As the legal action in Australia jumped over procedural hurdles, BHP merged to become BHP Billiton and remembered some of its old tricks. During the first legal action, the PNG government had passed a law that makes it illegal for PNG nationals to take action against a resource company in an overseas court.

The law, however, had been written by BHP and the electronic word document properties revealed the BHP lawyers as the authors. BHP was found guilty of contempt of court in Australia, although they subsequently squashed the conviction on a technicality.

Back to the present day and two secret documents were in preparation. The first was the Community Mine Continuation Agreement, to be signed by people living along the river.

The second the Mine Continuation Act to be passed by the PNG Parliament. These two documents are BHP's golden payoff, and remove the fundamental right of a country to protect its citizens from the actions of a foreign organisation.

Specifically the Act provides that "neither the State nor any Government Agency may take, pursue or in any way support Proceedings against a BHP Billiton Party in respect of an Environmental Claim relating to the operation of the Project" and that it "may be pleaded by a BHP Billiton party as an absolute bar and defence to any Proceedings taken by the State or a Government Agency in breach of its terms."

At the same time the Community Agreement deprives people living with the impacts of the waste of the same rights.

The agreement "is the complete, final and binding basis on which they agree to support the continuation of the Mine" and they "hereby release and discharge the Company, BHP, the Company's Shareholders and their respective associated corporations, directors, officers, employees and agents and former directors, officers, employees and agents from all and any demands and claims arising directly or indirectly from the operation of the Mine..."

Nobody in the west would sign such an agreement, and certainly would not sign without independent advice. But the two documents go further ensuring that not only do they deprive people of their common law rights but also will be recognised, whoever signs the agreement, no matter what the status of the person is.

"The signature ... by a person representing or purporting to represent a Community or clan, or that person's delegate, binds all of the members of that Community or clan". This is true even if "there is no express authority for that person to sign or execute the Community Mine Continuation Agreement on behalf of the members of the Community or clan concerned"

This signature also serves to destroy the rights of future generations. It binds "each existing and future member of that person's Community or clan, including, without limitation children and persons who are subsequently born into, or who subsequently join, that Community or clan". In effect the mining company has been able to handpick people to sign away all the rights of everyone living in the area and any future generations.

And just in case anyone suspects bribery or the like, if it happened "representations, inducement or warranties that may have been so given are hereby denied and negated"!

BHP Billiton has pulled of an extraordinary and unprecedented shift by removing the sovereign rights of the PNG state to act for its citizens. It has done so while setting up system for making agreements with anyone the company can choose that are binding, indefinitely, on everyone. In this case a couple of hundred or so people supposedly representing 30,000 plus is regarded as consent for a massive redistribution of rights.

The legislation and agreements also shift responsibilities of the state to a private company. For Ok Tedi Mining, with BHP now removed from directly managing it, the Agreement and Act provides for the "establishment of a regime of environmental monitoring and compliance with which the Company, in the opinion of its Board of Directors, can comply."

In other words the company gets to choose what it wants to monitor and comply with, not the state. Also if damage exceeds the very general criteria in the documents, the company effectively gets to decide the merits of any such claim.

What stands in the way of all this constitutional challenge to the legislation by PNG's first Prime Minister, Sir Michael Somare, and an interim injunction in Australia stopping Ok Tedi mining from getting any more of the needed signatures to the agreement. Both are due to be heard on Tuesday 18 December.

The constitutional challenge rests on the basis that the legislation has removed peoples rights, through unjust deprivation of property, unreasonably justifiable law, breaking the provision for the equality of PNG citizens, removing power from the PNG parliament to legislate, and that it is unjustifiably harsh and oppressive.

The injunction is on the basis that by one person signing the Agreement, all of the people in that community are supposed to opt out of the legal action in Australia, that is the action against BHP for breach of the 1996 settlement.

Ok Tedi is an extraordinary case not just for the scale and impact of one company's damage, but for the excellent documentation and knowledge of a process that has seen a major corporation take as many liberties as it can create and are granted.

From the early days, 1978 and on, there is an excellent record demonstrating that no one should be in any doubt of the problems the mine would cause. While the scale is more massive than imagined, some of the predictions are remarkably accurate.

The ability of the company to circumvent the people within the PNG government trying to hold it to account is also detailed by people involved at the time.

What it could now also represent is the corporation that has slipped from sovereign control - enabling national legislation that specifically recognises and mandate this.

Preventing it is an extraordinary resilient community, a community which signed over 1300 affidavits in just 3 days, stating that the individuals never consented to have their rights removed.

These are also communities where people from remote villages, with no power, phones, faxes, email, newspapers or TV are well aware of the injustices being perpetrated on them.

Three weeks ago, at a meeting in a remote village, hardly anyone was present. Then came a murmur, and the rumble grew louder, until the entire local community poured over the hill in full war paint and traditional dress chanting 'BHP its right to sue, BHP its right to sue...'