Canadian mining firms face abuse allegations

Published by MAC on 2009-11-30
Source: Toronto Star

Canadian mining firms face abuse allegations

A private member's bill aims to impose controls on powerful Canadian mining companies that operate overseas

Pawel Dwulit for the Toronto Star

22 November 2009

John McKay, Liberal MP for Scarborough-Guildwood, has introduced a private member's bill designed to put controls on mining companies overseas. Conservatives have vowed to kill the bill, which is opposed by Canada's mining industry. MPs are debating it in a House of Commons committee this week.

A Canadian mine - leads to conflict

Canadian mining companies are facing allegations of abuse and assault on local citizens in dozens of developing nations.

The companies say they have done nothing wrong - mining copper, gold and other metals brings only prosperity to these poor regions.

Yet locals in countries like Ecuador allege some companies have used armed guards to violently trample their opposition to mines that threaten rainforests and their way of life.

The word "Canada" is so reviled in some places that travelling Canadians mask their citizenship by wearing American flags on their caps and backpacks.

In Ottawa this week, at a House of Commons committee, MPs will continue debating a Liberal private member's bill designed to put controls on mining companies overseas.

THE ALLEGATIONS are severe: From Ecuador comes a lawsuit, filed in Ontario, alleging that in 2006 a Canadian company's armed security forces attacked unarmed locals with pepper spray first, then fired guns to dampen protest near a proposed mining site.

In El Salvador, allegations of violent attacks against anti-mining activists. In Mexico, allegations of human rights and environmental abuse that led a Mexican court to close a Canadian-owned mine.

While MPs in Canada consider controls, foreign pension funds have signalled they will not invest in Canadian mining companies unless they adopt firm corporate responsibility rules abroad.

International Trade Minister Stockwell Day says there will be no legislative action because it would not work, and the companies do not need it.

"As you know, one country doesn't develop laws that apply in another country," he said in an interview.

The allegations of human rights abuses come from at least 30 of the world's poorest countries and have named companies of all sizes, from giant corporations to junior mining companies.

Company spokesmen at some firms say they are the target of false allegations that stem from poorly run or corrupt governments where mines are located.

"The biggest challenge out there is a lack of governance capacity in developing countries," says Gordon Peeling, CEO of the Mining Association of Canada, which represents the interests of Canada's largest mining companies.

"If (countries) had the capacity to protect civil rights and live up (to) their international obligations with appropriate justice systems, etc. we wouldn't have much to talk about."

Forty-three per cent of the mining exploration around the world can be attributed to Canadian mining companies.

"In many countries, when foreign investors arrive, it happens too often that local, even national governments will wash their hands of these regions," says Louise Léger, director general of Foreign Affairs Canada's Trade Commissioner Service.

"In other words a company wants to invest, and all of a sudden it becomes responsible for building schools, roads, setting up health-care services, and providing basic services that all governments must ensure their citizens."

But watchdog groups like MiningWatch Canada and the Halifax Initiative, both based in Ottawa, allege some companies spend money buying guns, employing paramilitaries, bribing officials and forcefully relocating entire communities.

Allegations like these caused John McKay, Liberal MP for Scarborough-Guildwood, to introduce the private member's bill being debated in committee.

"Not only is there a behavioural risk to an individual company, but there is also a risk to our national reputation."

Mining companies are big business in Canada and, with about 200 active lobbyists, a powerful voice in Ottawa.

So powerful that McKay is cautious in talking about his bill outside of chambers.

"I have to watch what I say," he says.

"On specific (allegations) I would probably duck because I don't have parliamentary immunity with respect to anything that I might say to you."

POLITICIANS HAVE long squabbled over how best to deal with the accusations of abuse.

Debate kicked up in 2002 after a United Nations report called on the Canadian government to investigate the actions of seven Canadian companies accused of illegally exploiting resources from the Democratic Republic of the Congo, which has been in a state of civil war since 1996.

The Canadian government didn't investigate.

Then in 2004 came reports of bloodshed.

From Africa: Where the UN says 73 people were killed in Kilwa, a fishing town in the Congo. Killed, according to a UN report, by the Congolese military, which used vehicles, supplies, pilots and drivers from a Canadian-Australian mining company to transport them to the site of the massacre. The company, Anvil Mining, says its vehicles were confiscated by the military and that it had no choice but to comply under Congolese law.

To Southeast Asia: Where 15 Canadian-employed mine workers were gunned down in a remote Philippine jungle strip, victims of a feud between Canada's TVI Pacific Inc. and the indigenous peoples of Mindanao.

In 2005, a foreign affairs committee looked at allegations that TVI Pacific was employing paramilitary forces to trample tribal grounds and abuse human rights.

The committee called for an investigation. The Liberal government at the time responded, saying it recognized "the difficulties Canadian companies can face when operating in foreign jurisdictions" and said the TVI case "highlights the complexities of evaluating company activities against standards that may be either unclear or inconsistent between governments."

Again, the government didn't investigate.

The company says it now has "complete support" from the community and that there have been no recent altercations.

BY 2007 an independent foreign affairs committee was hosting roundtable sessions with watchdog groups, human rights organizations, academics and mining companies to review the lack of oversight. They put forward 27 recommendations to the government calling for the creation of a code of ethics for mining companies operating abroad and for an independent ombudsman to investigate alleged abuses. On March 26, 2009 - two years after the roundtable report - Day issued a press release announcing new initiatives to support responsible practices for Canadian businesses abroad.

Immediately, members of the roundtables (other than Peeling) began to ask what happened to the independent ombudsman. The Mining Association's Peeling was one of 17 signatories to the roundtables' 2007 recommendations.

He now says any legislation mandating companies adhere to a set of corporate social responsibilities would not be in keeping with those recommendations.

Peeling was recently named one of the most influential lobbyists in Ottawa by The Hill Times.

According to records kept by the Office of the Commissioner of Lobbying Canada, Peeling, along with two dozen other lobbyists for mining companies and associations, has been actively lobbying MPs over their responses to the roundtable report since its release.

The Liberal Party's McKay and others say the lobbyists have been successful in dissuading the government from creating an ombudsman.

MININGWATCH CANADA and the Halifax Initiative, both roundtable signatories, have criticized Day's response to the recommendations.

But Day says: "They need to get a real look at what is going on. They need to see the high quality of work that Canadian companies do and how they respect host governments and local communities."

Richard Janda, a law professor at McGill University and co-author of Corporate Social Responsibility: A Legal Analysis, says Day's initiatives are weak and disregard the severity of the allegations.

He also questions Day's appointment of Marketa Evans as Canada's first corporate social responsibility counsellor, a recently appointed bureaucrat who answers to Day and who is the closest thing to an ombudsman the Harper government has produced.

He says Evans' position is "toothless" because, under the mandate given to her by Day, she requires consent from a mining company before she can review any allegations against that company.

He asks what kind of oversight the government expects from an appointee with no real investigative powers charged with enforcing a voluntary code of ethics with no legislation to back her up.

Evans, who took office last month, has no staff and has yet to begin putting together any process for reviewing complaints. But she stands up to her detractors.

Asked how she can be expected to investigate complaints against a company without the company's consent, Evans said: "My hypothesis is that companies will want to participate in a review."

Others have taken their criticisms further, alleging Evans is too close to the mining industry.

Evans was the founding director of the University of Toronto's Munk Centre - named for and funded by Peter Munk, founder of Canada's Barrick Gold.

"This idea that's floating around somewhere in the ether that somehow I have become complicit with an agenda that the mining industry is driving is absolute nonsense," she says.

Bob Rae, Liberal MP and foreign affairs critic, says he doesn't take exception to Evans' background so much as her mandate.

"The roundtables talked about having an ombudsman who would hear complaints and deal with them in an independent fashion," he says. "Instead we have a counsellor who is right at the heart of government, has no legislated mandate and has no powers as defined by law.

JANDA SAYS a Liberal private member's bill, the one tabled by John McKay to regulate the industry, would better serve the 2007 roundtable recommendations. That bill gives the minister of foreign affairs and the minister of international trade the responsibility of holding corporations accountable for their practices by submitting annual reports to the House of Commons and the Senate for review. It also allows transgressors to be publicly lambasted and deprived of investment from the Canada Pension Plan and other government investments.

But as a private member's bill it is not able to create an ombudsman position that would spend taxpayer money to investigate allegations of Canadian-financed abuses in the developing world.

McKay recognizes his bill is flawed in its inability to create an ombudsman. He's also not convinced his bill will ever make it through the House.

The Conservatives have vowed to kill it and McKay says some Liberals are weary of attaching themselves to a bill opposed by some of the richest companies in the country. "The mining industry in Canada is too powerful a lobby," McKay says.

But he won't say much else.

"I have to be extremely careful because the mining companies have made it very plain to me that, `We will sue your ass off if, in fact, you make any allegation of our companies and cause reputational damage.'

"But I will say, if they think they can treat a Canadian MP this way, you can imagine what they say about Third World countries where they can walk in and say, `How much to buy you?'"

CANADA'S MINING INDUSTRY

1,373: Number of mining companies listed on the TSX (2007)

79 billion (valued at $482 billion): Number of mining shares traded on the TSX (2007)

43%: Percentage of total world mining exploration attributed to Canadian mining companies

60%: Percentage of world's mining companies registered in Canada

$21 billion (U.S.): Total value of Canadian mining companies' assets in Africa

20%: Percentage of the total Canadian-owned African mining assets located in the war-ravaged Democratic Republic of the Congo.

193: Number of registered mining lobbyists in Canada as of Nov. 3, 2009

30: Number of countries where Canadian mining companies have allegedly violated human rights

0: Number of Canadian laws that regulate mining companies abroad

Sources: The Mining Association of Canada, Committee of Foreign Affairs and International Development, The Office of the Commissioner of Lobbying of Canada, L'Entraide missionnaire

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Proposed Canadian law would police miners abroad

By Cameron French, Reuters

26 November 2009

TORONTO - Canada's top mining companies have lined up against a proposed law that would withhold federal investment dollars from companies found in violation of social responsibility standards in foreign countries.

The private-member's bill, brought forward by opposition Liberal lawmaker John McKay in response to criticism of the behavior of Canadian miners abroad, received preliminary approval in the House of Commons in April.

It has been in committee hearings this month, ahead of a final vote that could come early next year, though as non-government legislation, its chances of being passed by Parliament are low.

In a joint statement on Thursday, Barrick Gold (ABX.TO: Quote), Kinross Gold (K.TO: Quote), and Goldcorp called the bill "unnecessary and damaging to Canadian business".

"The hearings have amply demonstrated how Bill C-300 has become a magnet for false and unsubstantiated allegations from individuals anywhere in the world and do nothing but unduly harm the Canadian mining industry," Vince Borg, a spokesman for top gold miner Barrick, said in the statement.

Barrick has been a lightning rod for critics of mining practices. Protesters flock to Toronto each year for the company's annual meeting, while websites criticize its environmental record and report accusations of shootings and rapes at its mines.

The company typically says such allegations are unfounded.

McKay said such accusations against Canadian miners -- many of which revolve around the use of armed guards at mines where there are land disputes with locals -- prompted him to draft the bill.

"Sometimes where there's smoke, there's fire," he told Reuters in a interview.

"The reality in places like Guatemala, Colombia, Honduras, Chile, is that the reputation of Canada is under siege."

Criticism of Canadian companies has gone beyond protest groups. Last year, Norway's oil fund sold its stake in Barrick due to concerns over the environmental impact of its Porgera mine in Papua New Guinea.

Last week, Mexican authorities suspended the environmental permit for Vancouver-based New Gold's Cerro San Pedro mine, which has been a frequent target of protests.

CANADA WOULD WITHHOLD FUNDING

Under the bill, companies found not to be in compliance with standards would be excluded from investment by the Canada Pension Plan and Export Development Canada, a federal agency that makes loans to domestic companies, including miners.

Critics of the bill say it would force the miners into expensive defenses of unfounded accusations, which would be difficult to investigate in foreign countries.

"The problem with bill C-300 is it's a very quick on/off switch ... you're in compliance or you're out of compliance," said Gordon Peeling, who as chief executive of the Mining Association of Canada has been a leading opponent of the bill.

"There are automatic consequences that that take no account about whether you're willing and working toward better outcomes," he said, adding that the mining companies already adhere to strict standards of corporate responsibility.

He and others also say the bill would drive investment out of the nation's mining sector and would deter Canadian firms from operating in developing countries.

Canada's mining companies account for a huge chunk of global exploration, and more than half of the world's publicly traded miners are listed on Canadian stock exchanges.

While he's upbeat about the legislation, McKay admits the chances of his private-member's bill becoming law are not high. The minority Conservative government is not supporting it, and he notes the mining industry's powerful lobby and deep pockets are lined up against it. "What the issue is here, I think, is good corporate social responsibility is good for business and good business is good corporate social responsibility," McKay said.

(Additional reporting by Randall Palmer in Ottawa; editing by Rob Wilson)