LONG ARM OF THE LAW

B.C. min­ing com­pa­nies face for­eign ac­cusers at home

BC Business Magazine - - Front Page - by AN­DREW FIND­LAY

MIN­ING COM­PA­NIES IN B.C. AND ACROSS THE COUN­TRY ARE BRAC­ING FOR THE FALL­OUT FROM A LE­GAL DE­CI­SION THAT LETS FOR­EIGN AC­CUSERS SUE THEM IN CANA­DIAN COURTS FOR AL­LEGED CRIMES. AS THIS NEW RE­AL­ITY TAKES HOLD, THE IN­DUS­TRY ALSO FACES PRES­SURE FROM AC­TIVISTS AND CON­SUMERS TO RAISE ITS STAN­DARDS FOR COR­PO­RATE SO­CIAL RE­SPON­SI­BIL­ITY

In April 2013, a group of Gu­atemalan farm­ers, among them Adolfo Agustin Gar­cia, con­verged out­side the front en­trance of Van­cou­ver-based Ta­hoe Re­sources’ Es­cobal mine. Lo­cated in south­east Gu­atemala near the com­mu­nity of San Rafael Las Flores and op­er­ated by Ta­hoe sub­sidiary Min­era San Rafael, the project was al­ready con­tro­ver­sial even though it hadn’t yet be­gun pro­duc­tion.

Canada is the undis­puted pow­er­house of the min­ing in­dus­try, home to an es­ti­mated 75 per­cent of its com­pa­nies. But with the clout of be­ing the global leader in min­ing and min­ing tech­nol­ogy some­times comes un­com­fort­able scru­tiny, es­pe­cially when Cana­dian play­ers build op­er­a­tions in coun­tries where the rule of law is weak

Gar­cia and fel­low pro­test­ers

faced off against pri­vate se­cu­rity per­son­nel work­ing for Alfa Uno, the firm that Min­era San Rafael had con­tracted to guard Es­cobal, which went on to be­come the world’s sec­ond-high­est-pro­duc­ing sil­ver mine in 2016, ac­cord­ing to Van­cou­ver-head­quar­tered data provider Min­ing In­tel­li­gence. Lu­cra­tive as it po­ten­tially was, the mine was plagued by protests by the lo­cal Indige­nous Xinca, small-scale farm­ers and com­mu­nity lead­ers, many of whom fear its im­pact on wa­ter and land.

That day, un­der the or­ders of the head of se­cu­rity, a Peru­vian named Al­berto Ro­tondo, per­son­nel guard­ing the mine al­legedly fired on pro­test­ers with rub­ber bul­lets as they fled the en­trance. Seven were in­jured. Five years later, this skir­mish is re­ver­ber­at­ing through­out the Cana­dian min­ing in­dus­try and has the at­ten­tion of the coun­try’s le­gal sys­tem.

In June 2014, seven Gu­atemalan plain­tiffs, in­clud­ing Gar­cia, launched a civil suit against Ta­hoe Re­sources in B.C. Supreme Court, al­leg­ing neg­li­gence and bat­tery at the hands of Es­cobal mine se­cu­rity. Then, in Novem­ber 2015, Jus­tice Laura Gerow ruled that a Cana­dian court didn’t have ju­ris­dic­tion, agree­ing with Ta­hoe that the case should be heard in Gu­atemala.

How­ever, the plain­tiffs ap­pealed a year later, and in 2017 the B.C. Court of Ap­peal over­turned Gerow’s de­ci­sion, sup­port­ing the ar­gu­ment that the Gu­atemalans prob­a­bly wouldn’t get a fair trial in their own coun­try. Gu­atemala ranked 96th out of 113 coun­tries in the 2017-18 Rule of Law In­dex pub­lished by the in­de­pen­dent World Jus­tice Project, com­pared to No. 9 for Canada.

Ta­hoe asked the Supreme Court of Canada for leave to ap­peal, but the re­quest was de­nied that June. Gar­cia vs. Ta­hoe had cleared its fi­nal le­gal hur­dle, and this po­ten­tially game-chang­ing case is set to pro­ceed in a Van­cou­ver court­room. It’s a shot across the bow of cor­po­rate Canada, warn­ing com­pa­nies that when it comes to overseas op­er­a­tions, they can no longer pawn off re­spon­si­bil­ity for hu­man rights vi­o­la­tions to in-coun­try sub­sidiaries. It also marks a le­gal mile­stone: the first time a Cana­dian court has agreed to al­low for­eign plain­tiffs to seek jus­tice in Cana­dian courts for in­ci­dents al­leged to have oc­curred abroad.

Joe Fio­rante, a part­ner at Van­cou­ver law firm Camp Fio­rante Matthews Moger­man, rep­re­sents the seven plain­tiffs, three of whom set­tled out of court with Ta­hoe. “In terms of set­ting prece­dent, it is very im­por­tant for there to be a pub­lic trial,” Fio­rante says. “Our goal is to make the par­ent com­pany re­spon­si­ble at the high­est level,” he adds. “If a board of di­rec­tors knows that it will be re­spon­si­ble for the con­duct of its sub­sidiaries abroad, that will have a pro­found im­pact on cor­po­rate re­spon­si­bil­ity.”

As of this Oc­to­ber, the case was still at the ex­am­i­na­tion and dis­cov­ery phase, and no trial date had been set.

In the past, Cana­dian com­pa­nies have mounted suc­cess­ful ap­peals in sim­i­lar cases by ar­gu­ing a com­mon-law doc­trine known as fo­rum non con­ve­niens, whereby courts may refuse to take ju­ris­dic­tion over mat­ters where a more ap­pro­pri­ate fo­rum is avail­able. The re­sult: law­suits filed in Canada by for­eign plain­tiffs al­leg­ing wrong­do­ings by Cana­dian com­pa­nies have been dis­missed and sent back to lan­guish or die a quick death in the plain­tiffs’ home coun­tries. But this line of de­fence is show­ing cracks.

Le­gal land­mines

Canada is the undis­puted pow­er­house of the min­ing in­dus­try, home to an es­ti­mated 75 per­cent of its com­pa­nies. But with the clout of be­ing the global leader in min­ing and min­ing tech­nol­ogy some­times comes un­com­fort­able scru­tiny, es­pe­cially when Cana­dian play­ers build op­er­a­tions in coun­tries where the rule of law is weak, democ­racy frag­ile, re­spect for hu­man rights ten­u­ous, cor­rup­tion ram­pant and ac­count­abil­ity non-ex­is­tent.

Ta­hoe isn’t the only B.C. min­ing com­pany fac­ing a pos­si­bly ugly pub­lic trial. In 2014, three Eritrean men filed a suit in B.C. Supreme Court al­leg­ing that they were

sub­jected to abu­sive labour prac­tices by a state-run con­trac­tor en­gaged by Van­cou­ver-head­quar­tered Nev­sun Re­sources for the con­struc­tion of its Bisha mine in Eritrea, on the Red Sea in North­east Africa. The orig­i­nal three plain­tiffs have since been joined by more than a dozen other for­mer Bisha em­ploy­ees, and this mass tort claim over al­le­ga­tions of mod­ern slav­ery is an­other ig­no­min­ious first for Canada’s min­ing in­dus­try. (Nev­sun didn’t re­spond to in­ter­view re­quests.)

Un­like with Ta­hoe, the Supreme Court has let Nev­sun ap­peal a lower court’s de­ci­sion al­low­ing the case to pro­ceed. But lawyer Amanda Ghahre­mani, act­ing le­gal di­rec­tor of the Ot­tawa-based Cana­dian Cen­tre for In­ter­na­tional Jus­tice, be­lieves it would be hard for the com­pany to suc­cess­fully ar­gue that Eritrea is an ap­pro­pri­ate venue for the plain­tiffs to seek jus­tice.

The coun­try of five mil­lion, which fought a pro­tracted war of in­de­pen­dence with Ethiopia that ended in 2000, is a de facto one-party state with a dis­mal hu­man rights record that “con­tin­ues un­abated,” ac­cord­ing to a 2018 re­port by United Na­tions spe­cial rap­por­teur Sheila Keetharuth.

“I hope Cana­dian min­ing com­pa­nies are pay­ing at­ten­tion to these court cases. They should be,” Ghahre­mani says. “It’s im­por­tant for them to un­der­stand that they can­not go into for­eign coun­tries and com­mit hu­man rights vi­o­la­tions and not be held re­spon­si­ble.”

In­dus­try ex­ec­u­tives are likely pay­ing close at­ten­tion to a third law­suit in­volv­ing an­other Cana­dian com­pany, Hud­bay Min­er­als, that as of Oc­to­ber re­mained at ex­am­i­na­tion and dis­cov­ery in On­tario. The com­pany chose not to pur­sue an ap­peal of this suit, filed back in 2011 by 11 Indige­nous Mayan women in Su­pe­rior Court of On­tario al­leg­ing gang rape by se­cu­rity per­son­nel that Toronto-based Hud­bay and sub­sidiary HMI Nickel hired at its Fenix mine in eastern Gu­atemala. (Hud­bay has since di­vested its in­ter­est in this prop­erty.)

Not sur­pris­ingly, many Cana­dian law firms with min­ing in­dus­try clients are also closely fol­low­ing these court­room

“I hope Cana­dian min­ing com­pa­nies are pay­ing at­ten­tion to these cases. They should be. It's im­por­tant for them to un­der­stand that they can­not go into for­eign coun­tries and com­mit hu­man rights vi­o­la­tions and not be held re­spon­si­ble”

–Amanda Ghahre­mani, act­ing le­gal di­rec­tor, Cana­dian Cen­tre for In­ter­na­tional Jus­tice

de­vel­op­ments. In a Fe­bru­ary 2017 blog post, Van­cou­ver­based Mccarthy Te­trault called Gar­cia vs. Ta­hoe “sig­nif­i­cant for both Cana­dian re­source com­pa­nies op­er­at­ing abroad and for for­eign in­di­vid­u­als al­leg­ing that Cana­dian par­ent com­pa­nies are re­spon­si­ble for wrongs com­mit­ted in the com­plainants’ home coun­try.”

Good as gold

Though none have been proven in court, al­le­ga­tions of rape, slav­ery and shoot­ing pro­tes­tors with rub­ber bul­lets don’t bur­nish the im­age of the Cana­dian min­ing in­dus­try, es­pe­cially when it’s try­ing to earn so­cial li­cence for mines in coun­tries that of­ten present com­pli­cated so­cial, eco­nomic, po­lit­i­cal and en­vi­ron­men­tal chal­lenges.

How­ever, min­ing in­vest­ment can be a pow­er­ful trig­ger for pos­i­tive change, says one of B.C.’S big­gest in­dus­try boost­ers. Mark O’dea is a New­found­land-raised ge­ol­o­gist and min­ing en­tre­pre­neur who sold pub­licly traded Fron­teer Gold to U. S. ti­tan New­mont Min­ing Corp. for $2.3 bil­lion in 2011. He’s also a win­ner of the As­so­ci­a­tion for Min­eral Ex­plo­ration Bri­tish Columbia’s Mur­ray Pezim Award for per­se­ver­ance and suc­cess in fi­nanc­ing min­eral ex­plo­ration. O’dea is no stranger to launch­ing min­ing ven­tures abroad. As founder and chair of Van­cou­ver-based in­vest­ment firm Oxy­gen Cap­i­tal Corp., he has in­ter­ests in projects in On­tario, Nevada, Turkey and the West African na­tion of Burk­ina Faso.

Al­though O’dea wouldn’t com­ment on Ta­hoe and Nev­sun’s le­gal trou­bles, he thinks neg­a­tive sto­ries in­volv­ing Cana­dian min­ing com­pa­nies over­shadow the eco­nomic good that mines bring to de­vel­op­ing na­tions. He points to Karma, a gold mine in Burk­ina Faso that he de­vel­oped through one of his com­pa­nies, True Gold Min­ing. O’dea says the Us$130-mil­lion project brought op­por­tu­ni­ties to a re­gion of the coun­try that was pre­vi­ously with­out in­dus­try and “des­o­late,” though it also ran into protests from lo­cal pop­u­la­tions that briefly sus­pended its con­struc­tion in 2015.

“Over sev­eral years we cre­ated 1,000 jobs, with spinoffs to lo­cal busi­ness, and we dammed a sea­sonal river to pro­vide year-round wa­ter,” O’dea says. “That’s a last­ing ben­e­fit; that’s long-term.” The min­ing sec­tor does a poor job of telling its own good news story, he adds.

Ta­hoe didn’t re­spond to re­quests for com­ment, but the com­pany’s story in Gu­atemala is much more nu­anced than you’d gather from sor­did tales of se­cu­rity forces fir­ing in­dis­crim­i­nately on pro­test­ers. Many Gu­atemalans, both mine work­ers and busi­ness own­ers, sup­port Es­cobal. Yet the project re­mains mired in con­tro­versy, and ef­forts by mine man­agers and Gu­atemalan gov­ern­ment of­fi­cials to sup­press lo­cal dis­sent are well doc­u­mented.

While Ta­hoe was pre­par­ing to de­fend it­self in B.C. Supreme Court this past sum­mer, trou­bles con­tin­ued to mount at its Gu­atemalan sil­ver mine. In July, Es­cobal pro­tester Án­gel Es­tu­ardo Quevedo was mur­dered, and

“We're not with­out prob­lems as an in­dus­try. But I'd say as a coun­try, we're do­ing more than most to ad­dress con­flicts that arise be­tween com­pa­nies and the com­mu­ni­ties in which they op­er­ate overseas. I also think that we're see­ing more com­pa­nies adopt­ing pro­gres­sive and proac­tive poli­cies on their own” – Ben Chalmers, VP of sus­tain­able devel­op­ment, Min­ing As­so­ci­a­tion of Canada

the per­pe­tra­tors haven’t been iden­ti­fied. Ear­lier in 2018, the Con­sti­tu­tional Court of Gu­atemala sus­pended Ta­hoe’s min­ing li­cence, ask­ing for a third-party re­view of both Es­cobal’s en­vi­ron­men­tal im­pact study, along with the Gu­atemalan Min­istry of En­ergy and Mines’ con­sul­ta­tion process that re­sulted in its per­mit­ting in 2013. The mine, which has been shut since mid-2017, re­mains the tar­get of block­ades, as well as protests 40 kilo­me­tres away in the na­tion’s cap­i­tal, Gu­atemala City.

Lawyer Fio­rante, whose con­nec­tion to Gu­atemala dates back to trav­els there in the early 1990s, when the coun­try was still crip­pled by civil war, says he’s “open to dis­cus­sions about the ben­e­fits of min­ing.” (He now serves as vol­un­teer le­gal coun­sel for Project So­mos, a Van­cou­ver char­ity that helps or­phaned Gu­atemalan chil­dren.) “But in coun­tries like Eritrea and Gu­atemala where there is so much cor­rup­tion, I don’t think you can have any as­sur­ance that these ben­e­fits will trickle down to lo­cal peo­ple.”

CORE val­ues

Com­pared to such places, Canada has strin­gent mine as­sess­ment and per­mit­ting pro­ce­dures—so strin­gent that Oxy­gen Cap­i­tal’s O’dea says it’s be­come dif­fi­cult to de­velop projects on his home turf in a rea­son­able time frame. When a Cana­dian com­pany makes a for­eign play, es­pe­cially in juris­dic­tions where demo­cratic in­sti­tu­tions are brit­tle, it takes a next-level com­mit­ment to cor­po­rate re­spon­si­bil­ity and over­sight to en­sure that the project meets the same stan­dards ex­pected in Canada. Fac­tor in lo­cal con­trac­tors that may be ac­cus­tomed to play­ing by a dif­fer­ent set of eth­i­cal and le­gal rules, and events can quickly spi­ral out of con­trol.

That’s a big rea­son why last Jan­uary, the fed­eral gov­ern­ment an­nounced $6.8 mil­lion in fund­ing over six years for the cre­ation of CORE, the Cana­dian Om­budsper­son for Re­spon­si­ble En­ter­prise, tasked with in­ves­ti­gat­ing al­le­ga­tions of hu­man rights abuses in­volv­ing Cana­dian com­pa­nies of all stripes op­er­at­ing out­side the coun­try. Ot­tawa is also es­tab­lish­ing a multi-stake­holder ad­vi­sory body to guide gov­ern­ment and CORE on “re­spon­si­ble busi­ness con­duct abroad.”

Even at the high­est level of min­ing in­dus­try ad­vo­cacy, it’s widely ac­cepted that Canada needs to step up its cor­po­rate re­spon­si­bil­ity game on for­eign soil. Ben Chalmers, VP of sus­tain­able devel­op­ment for the Ot­tawa-based Min­ing As­so­ci­a­tion of Canada (MAC), says his or­ga­ni­za­tion sees the new will­ing­ness of Cana­dian courts to try cases in­volv­ing for­eign plain­tiffs and Cana­dian com­pa­nies as a step for­ward when it comes to trans­parency and clar­ity.

In 2004, MAC be­gan im­ple­ment­ing its To­wards Sus­tain­able Min­ing ( TSM) ini­tia­tive. Chalmers calls it a re­sponse to some high-pro­file tail­ings pond fail­ures dur­ing the 1990s, such as the one near Vir­ginia, South Africa, in 1994, when the Mer­riespruit tail­ings dam col­lapsed, killing 17 peo­ple and de­stroy­ing 80 houses. TSM pro­vides pro­to­cols and frame­works for com­pa­nies on all as­pects of op­er­a­tions, in­clud­ing Abo­rig­i­nal and com­mu­nity en­gage­ment, green­house gas emis­sions and tail­ings man­age­ment, bio­di­ver­sity con­ser­va­tion, health and safety, cri­sis man­age­ment, mine clo­sures, and the pre­ven­tion of child and forced labour.

To achieve TSM ver­i­fi­ca­tion, a com­pany must con­duct an­nual self-as­sess­ments, get an ex­ter­nal ver­i­fi­ca­tion ev­ery three years and pro­vide a CEO let­ter of as­sur­ance con­firm­ing that the out­side as­sess­ment meets TSM stan­dards, Chalmers says.

“We’re not with­out prob­lems as an in­dus­try. But I’d say as a coun­try, we’re do­ing more than most to ad­dress con­flicts that arise be­tween com­pa­nies and the com­mu­ni­ties in which they op­er­ate overseas,” he as­serts. “I also think that we’re see­ing more com­pa­nies adopt­ing pro­gres­sive and proac­tive poli­cies on their own.”

As proof of Canada’s com­mit­ment to so­cially re­spon­si­ble min­ing, Chalmers cites a 2018 study by Paul Haslam, an as­so­ciate pro­fes­sor in the Uni­ver­sity of Ot­tawa’s fac­ulty of so­cial sciences, that rates 634 min­ing prop­er­ties in five Latin Amer­i­can coun­tries for their im­pact on lo­cal com­mu­ni­ties. Out of this to­tal, Haslam and his fel­low re­searchers iden­ti­fied 128 mines with known so­cial con­flict, nearly 33 per­cent of them Cana­dian-owned. (For more, see p.43.)

Dif­fer­ent stan­dards

Al­though Chalmers think it’s a de­cent bat­ting av­er­age, Cather­ine Coumans, re­search co­or­di­na­tor for Min­ing­watch Canada, says if this is how Cana­dian

min­ing com­pa­nies are play­ing ball, they need to strive for a much bet­ter stan­dard on the in­ter­na­tional stage. In her view, the min­ing as­so­ci­a­tion’s TSM ef­fort smacks of the fox guard­ing the hen­house. Case in point: in 2016, MAC gave a TSM Lead­er­ship Award to Hud­bay Min­er­als for its Hud­son Bay Min­ing and Smelt­ing Co. at the same time the com­pany was de­fend­ing it­self against al­leged hu­man rights in­fringe­ments at its for­mer mine in Gu­atemala.

“We don’t think TSM is the high­est stan­dard that it could be,” Coumans says from Min­ing­watch Canada’s Ot­tawa head­quar­ters.

Ac­tivists and in­dus­try watch­ers are an­tic­i­pat­ing the full im­ple­men­ta­tion of an in­de­pen­dent set of stan­dards known as the Ini­tia­tive for Re­spon­si­ble Min­ing As­sur­ance (IRMA), she notes. The fact that IRMA has been 12 years in the mak­ing and re­mains at the draft stage is a tes­ta­ment to the so­cioe­co­nomic com­plex­ity of min­ing.

Where TSM was driven in­ter­nally by the Cana­dian min­ing sec­tor, IRMA emerged af­ter cit­i­zen ac­tivists started show­ing up with plac­ards at re­tail­ers like Amer­i­can lux­ury jew­elry chain Tif­fany & Co. in the mid-2000s, when the pub­lic sham­ing of so-called blood di­a­monds from Africa was hit­ting a fever pitch and con­sumers de­manded to know more about pre­cious-gem and met­als pro­cure­ment poli­cies.

When these re­tail­ers ap­proached non- gov­ern­men­tal or­ga­ni­za­tions for guid­ance in iden­ti­fy­ing the “green min­ers,” Seat­tle- based IRMA co­or­di­na­tor Aimee Boulanger ex­plains, they found there was no cred­i­ble body to help them sep­a­rate good and bad ac­tors.

“It has been a hard process be­cause min­ing is so com­plex. No two sites are the same, from the geo­chem­i­cal con­di­tions to the wa­ter con­di­tions of a mine, or the so­ciopo­lit­i­cal con­di­tions of a given ju­ris­dic­tion,” Boulanger says. “The strength of IRMA will be the fact that the third-party ver­i­fi­ca­tion will be just as im­por­tant as the stan­dards them­selves.”

IRMA, which Boulanger hopes to see fully rolled out in 2019, has a heavy­weight steer­ing com­mit­tee with rep­re­sen­ta­tives from the min­ing gi­ants An­glo Amer­i­can and Arcelor­mit­tal, down­stream pur­chasers like Mi­crosoft Corp. and Tif­fany, hu­man rights and en­vi­ron­men­tal non-gov­ern­men­tal or­ga­ni­za­tions, labour groups and Indige­nous lead­ers.

Boulanger places min­ing in a sim­i­lar phase as the gar­ment and forestry in­dus­tries more than a decade ago, when con­sumers and ac­tivists be­gan plac­ing their prac­tices in a glar­ing spot­light, whether it was a sweat­shop in Bangladesh or old-growth clear-cut­ting in B.C. Such pres­sure helped put cor­po­rate and so­cial re­spon­si­bil­ity at the top of board­room agen­das in those in­dus­tries; Boulanger be­lieves min­ing’s day of reck­on­ing is next.

“My hope is that CEOS will re­al­ize that they won’t be able to avoid this level of cor­po­rate re­spon­si­bil­ity in­def­i­nitely,” she says.

Min­ing is al­ready a much dif­fer­ent world than it was in the 1990s. Or­ga­ni­za­tions like Re­spon­si­blesteel and the Re­spon­si­ble Jew­ellery Coun­cil, both based in the U.K., are tar­get­ing their sec­tors to raise eth­i­cal stan­dards. Loose lan­guage from the Cana­dian gov­ern­ment ex­hort­ing Cana­dian com­pa­nies to re­spect the law of what­ever coun­try they’re op­er­at­ing in no longer cuts it. Con­sumers, buy­ers and now Cana­dian courts are ex­pect­ing more.

In turn, pend­ing tri­als like the ones faced by Ta­hoe Re­sources and Nev­sun Re­sources in Van­cou­ver, and by Hud­bay Min­er­als in On­tario, have put Cana­dian min­ers on no­tice.

“Canada is ac­tively min­ing in many coun­tries where the rule of law is loose,” at­tor­ney Fio­rante says. “We’re try­ing to place le­gal re­spon­si­bil­ity right at the top of these com­pa­nies.”

IRMA'S Aimee Boulanger places min­ing in a sim­i­lar phase as the gar­ment and forestry in­dus­tries more than a decade ago, when con­sumers and ac­tivists be­gan plac­ing their prac­tices in a glar­ing spot­light, whether it was a sweat­shop in Bangladesh or old­growth clear-cut­ting in B.C.

i l lus t r a t ion b y KA­GAN MCLEOD

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