Are Canadian mining companies abroad bending to demands from terrorists?
- Are Canadian mining companies abroad bending to demands from terrorists?
The FBI is investigating a former mine manager's claims that his Canadian-owned company routinely gave weapons, medical aid and food to known terror groups -- plus payouts totalling as much as $2.4 million
Saturday, October 01, 2005
CREDIT: Adrian Wyld, Canadian Press Files
Canadian mining companies operating in volatile areas can find themselves drawn into local conflicts.
October 1995. The jungles of Mindanao in the Philippines are seething with communists, Muslim separatists and -- most feared of all -- Abu Sayyef, an Islamic terrorist group with direct ties to al-Qaida.
Abu Sayyef's specialty: Extortion and kidnapping.
The area is so dangerous outsiders rarely venture there; foreigners are virtually unheard of.
There is one exception: Canadians who have come here to mine the gold and copper that lie beneath these remote mountains.
Soon the terrorists come calling. One group demands $10,000. Others want food, supplies, weapons.
And the Canadians pay up, according to Allan Laird, a former manager for the project, called the Kingking mine.
Food. Weapons. Medical aid. Money. For two years, the Kingking mine secretly funneled as much as $2.4 million to five different terrorist groups, including Abu Sayyef, Laird claims.
"I was told, 'Go with the flow; this is the way you do business in the Philippines,'" says Laird, who managed the joint-venture project by Echo Bay Mines Ltd. and Calgary-based TVI Pacific Inc. from August 1996 until it closed in 1997.
The FBI is investigating Laird's allegations to see whether anti-terrorism laws were violated, the Ottawa Citizen has learned.
Former Echo Bay chairman Robert Leclerc has called the allegations "absolutely insane," saying Laird is out for revenge after he was laid off in 2003.
"I never saw any reports regarding payoffs to any such groups," says TVI's president and CEO, Clifford James.
"There is no way that I would have been a party to paying terrorist groups or to any other 'questionable' groups or individuals," he stresses.
Laird insists TVI senior staff were at meetings where he raised the issue, and received the reports in which he described the alleged dealings.
Echo Bay was absorbed in 2002 by another Canadian firm, Kinross Gold Corp., that also says it has no knowledge of the alleged payoffs.
The Kingking case is just one in a series of explosive controversies over mining ventures that involve Canada.
Relatively low-profile here, Canadian mining is a titan in the global industry: Canadian firms account for more than half of all mining companies globally, and 40 per cent of all mineral exploration in the world.
More than 1,000 mining firms are listed on the Toronto Stock Exchange and TSX Venture Exchange, more than in any other country.
With a host of developing countries from the Philippines to Ghana counting on their mineral wealth to lift them out of poverty, it's small wonder Canadian mining is in the world spotlight.
The industry's defenders say overall Canadian mining companies are a force for good in developing countries, bringing in millions of dollars in much-needed development money and millions more for charitable efforts.
But the list of countries where allegations of human-rights abuses have been linked to Canadian projects includes Guatemala, Peru, Romania, Philippines, Honduras, Ecuador, Bolivia, Ghana, Suriname, the Democratic Republic of Congo, Papua New Guinea, Tanzania, India, Indonesia, Zambia and Sudan.
One Canadian company is facing court charges of collusion in genocide; another faces allegations of complicity in a massacre in which as many as 100 people were killed. Both companies strongly deny the allegations.
In June, an Australian TV documentary revealed that a Canadian-Australian mining company loaned a plane and vehicles to Congolese government troops dispatched to suppress a rebellion last October in Kilwa, near the firm's copper mine in a remote part of the country.
According to a UN report, the soldiers massacred 70 to 100 unarmed civilians, including women and children; at least 28 of these killings were summary executions.
Anvil Mining Ltd., which is incorporated in Canada, has confirmed it loaned its vehicles to the army, but says it "had absolutely no choice" but to accede to the government's request for logistical support.
"When the army arrives with AK-47s . . . you give them what they want," says Anvil spokesman Robert LaValliere, recalling that troops had commandeered vehicles at gunpoint in a previous clash with rebels. He adds that companies are obliged by law to comply with Congolese government requests.
Anvil says it didn't know what the troops were planning, and has strongly condemned the abuses. A recent internal investigation found "no credible basis" for allegations of complicity in the massacre, Anvil says, adding that the company is working to "improve protocols in dealing with the military."
Anvil employs more than 600 local people, and has built a school in the area, as well as upgrading a hospital and roads. On its website, the company has posted a petition from the local community condemning the allegations of complicity in the slayings.
In August, the World Bank, which provided political-risk insurance to the project, announced it will investigate.
Amnesty International has requested an investigation by Canada's OECD National Contact Point, which looks into complaints that a company is not respecting the Organization for Economic Co-operation and Development's guidelines for multinational companies.
In Sudan, Calgary-based Talisman Energy Inc. is accused of complicity in genocide in southern Sudan, where the company was part of an international oil-drilling venture from 1998 to 2002. In a lawsuit launched in the U.S., the Presbyterian Church of Sudan and other plaintiffs argue Talisman colluded with the Sudanese government's ethnic-cleansing campaigns, during which as many as 250,000 villagers were allegedly cleared from the oil-field areas.
A Canadian government probe found no clear evidence of collusion, but did note that government planes on war missions regularly refuelled alongside Talisman's aircraft. The 2000 report concluded that, while oil was not the cause of the civil war, "oil is exacerbating the conflict," and noted that rebels resented the fact that royalties were pouring in to the government, which was waging a scorched-earth campaign against them at the time.
Talisman sold its 25-per-cent stake in the venture in 2002.
Both parties in the lawsuit are under court orders not to discuss the case. However, in the past, Talisman has called the allegations "completely without merit and entirely untrue," and argued that it was a force for good, providing schools and hospitals. It has shown satellite pictures showing no significant depopulation in the area.
"What we are seeing now is a cycle where extractive industries are feeding into a spiral of violence," explains Bonnie Campbell, a professor at the University of Quebec in Montreal who leads a research team on the impact of mining in Africa.
"The experience of the last 10 to 15 years has shown that ... companies, for mere survival ... (and) to protect their investments, get drawn in" to local conflicts, she says.
Such scenarios, she says, are almost inevitable in high-risk areas such as conflict zones -- where many mining companies have been venturing as demand for metals raises the stakes in the hunt for buried treasure.
Campbell argues companies need "strong rules and guidelines" in such cases.
In June, after a months-long parliamentary investigation, the Commons standing committee on foreign affairs and international trade noted that "Canada does not yet have laws to ensure that the activities of Canadian mining companies in developing countries conform to human rights standards," and recommended the government take action immediately.
Amnesty International has also urged the government to heed the panel's report.
Pierre Gratton, spokesman for the Ottawa-based Mining Association of Canada, says his group, which represents most of Canada's mining heavyweights, acknowledges there have been some "high-profile ... conflicts" recently, and is working hard to find ways to help companies caught in "challenging local circumstances," he says.
However, the group disagrees that there's an urgent need for legislation.
Most Canadian companies voluntarily follow rigorous ethics codes, Gratton says. "Overall ... Canadian mining has a very positive reputation internationally," he says.
Canada is a highly respected leader in corporate social responsibility, he maintains, adding that Canadian mining companies in developing countries typically kick in millions to community development projects.
Last year, the group unveiled an award-winning sustainable-development code.
In a three-month investigation, the Citizen looked at the often lethal conflicts that have ignited around Canadian mining operations overseas.
Of these, the allegations surrounding the Kingking mine in the Philippines are perhaps the most sensational.
Allan Laird has e-mails, cash receipts and reports that he says show the mine was routinely paying off five different terrorist groups, two of which had ties to Osama bin Laden, and that mine staff even sheltered one notorious terrorist wounded in a firefight with government troops.
Laird said terrorist kingpins, such as Kapitan Inggo of the so-called Lost Command, a radical Islamic "dirty tricks/atrocity group," had the run of the mine site.
The junior security staff themselves were "operating members of leftist insurgency groups, and many remained fugitives," he allegedly told his superiors in his final report on the project.
Clifford James, who was on the board of Kingking's operating company at the time, says, "certainly there is no record of any payoffs being made," adding that he recently reviewed the board's financial reports and saw no sign of large payments to any group, let alone terrorists.
Jack McOuat, a former director of Echo Bay who visited the site in 1996, recalls warning his superiors in a report that the area was teeming with armed guerrillas and that "not to buy insurance" to protect the mine's staff would be "immoral and hypocritical."
McOuat says he was told during his visit the mine's security force was quietly slipping token amounts of food or cash to the terrorists.
"You've got to do some of that or . . . your camp will be pillaged. . . . It's a practical old world out there," he says.
But he insists the company never gave away substantial amounts of cash, let alone the $2.4 million Laird claims was funnelled to terrorists.
"There was money being paid, but that scale of money would have floored me. I would have said, 'Shut the thing down; let's go home.'"
Bob Gilroy, who managed the mine when most of the payments were allegedly made, calls Laird's allegations "ludicrous.
"I absolutely wouldn't open the door to extortion."
Gilroy does recall providing money for medical assistance to an injured rebel for humanitarian reasons. "I can't even remember what threat group (he) may have been associated with. I didn't particularly want to know."
Gilroy and other former Echo Bay executives point out Laird did not go public with his accusations until after he was laid off in 2003. They say Laird, who contested the severance deal he was offered at the time, is out for revenge.
Laird says that, while the deal he got could have been better, he still considers it "a handsome settlement."
Now retired in Denver, Laird says he "never initiated any action to take (Echo Bay) to court," and that there's "not one piece of documentation that suggests in any way that I was blackmailing them.
"I have no wish to discredit the company (moot since it is now non-existent) for personal reasons," Laird insists. "I do wish to draw attention to disreputable and illegal acts that put innocent lives in peril."
Funding terrorism did not become a crime in Canada until 2001 -- well after the Kingking mine folded. However, if payoffs were made, a 1994 U.S. law would still apply, due to changes in the U.S. Patriot Act that extended the statute of limitations for terrorism-related acts.
Many of the venture's former staff now live in the U.S.
Laird says he repeatedly warned his superiors about payoffs.
One e-mail he says he received from supervisor John Antony urged him to be "more discreet" in his reports, as they "could be incriminating under certain scenarios."
Antony did not comment.
Bob Wunder, a former vice-president of Echo Bay, remembers that both Laird and the company's head of security "expressed concerns about inappropriate payments," but "we said specifically that no payments will be made illegally."
Laird says he became increasingly concerned about the
Kingking case after the terrorist attacks on New York City and Washington in 2001. That same year, a U.S. tourist in the Philippines was abducted and beheaded by Abu Sayyef, and another American victim of the group was killed in a firefight between rebels and government forces.
"I was very disturbed because ... I have no doubt that some of the money we paid found its way into that particular circumstance."
Ten years later, mining companies are still struggling to cope with the terrorist threat on Mindanao and other mineral-rich parts of the Pacific Rim.
Eerily, one of their victims has been TVI, which is now operating a gold mine at Canatuan on Mindanao. In 2002 one of the Islamic terrorist groups that allegedly shook down the Kingking mine attacked a TVI truck at the mine, killing 13 and injuring 12.
TVI denied rebels were trying to extort money from the firm, although it acknowledged the threat of extortion is a risk of doing business in Southeast Asia, the Edmonton Journal reported at the time.
"I have been vehemently opposed over all the years that TVI has operated in the Philippines to making 'questionable' payments to anyone," says Clifford James.
"TVI has a very clear and well ... enforced company policy with respect to any such payments."
Wunder says most North American firms know better than to pay off guerrillas.
"No. 1, it's against the law. No. 2, . . . it never stops. If you make a payment it may fix an immediate problem, but the person comes back again with their hand out."
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