In test for Jakarta, trial of U.S. giant opens
By Jane Perlez The New York Times
FRIDAY, AUGUST 5, 2005
MANADO, Indonesia In a rare case against an American corporate giant
operating in the developing world, Newmont Mining and its chief executive in
Indonesia go on trial here Friday on criminal charges of pollution at its gold
mine near this remote city.
The Indonesian government says in court documents that the Denver-based
mining company, the world's biggest gold producer, contaminated the equatorial
waters of Buyat Bay with mine waste containing arsenic and mercury.
The documents allege that under an Indonesian environmental act, the
president of Newmont in Indonesia, Richard Ness, is responsible.
In a vigorous pretrial response, Newmont said that it would prove that
its operations had not harmed the water, the fish or the local people, many of
whom moved in a public evacuation from Buyat Bay in June after complaining of
illnesses. No definitive cause for their ailments has been found.
"Everyone involved in this firmly believes we have not done anything
wrong," Ness said at a briefing in Jakarta on Tuesday. "There is no pollution.
I am very confident about what the evidence shows. We will be exonerated."
That the corporate head of operations for a major American company is
being criminally prosecuted abroad is exceptional enough.
But the case has also become a test both of Indonesia's weak legal system
and of the conduct of international corporations that operate in distant lands,
where local people often feel foreign businesses keep less stringent standards
than they do at home.
The verdict may prove a bellwether for Indonesia's other foreign
investors, especially in extraction industries, with far greater stakes and
potential liabilities. If convicted, Ness could face up to 10 years in jail and
a $50,000 fine; the company faces a $50,000 fine and the costs of repairing any
environmental damage.
The environment minister, Rachmat Witolear, said in an interview, "We
will pursue the criminal case as hard as we can. We will produce the best
professional experts in the field."
Even so, the Indonesian government, which depends heavily on foreign
investment, has pushed the case ambivalently.
On the one hand, its anemic regulatory agencies would like to put teeth
into still-evolving environmental laws. On the other, high-ranking and local
officials alike fear driving off the corporate money that is their biggest
source of tax revenue.
Western business people and analysts said that the onus was on Indonesia
to run a transparent and fair trial.
Robert Broadfoot, the managing director of Political and Economic Risk
Consultancy in Hong Kong, who often visits Indonesia, said, "The Indonesian
institutions involved in the case had better prove it, because it's not only
the reputation of Newmont that is at stake but the reputation of the government
as well."
For Newmont the trial has been a major irritant.
The nearly yearlong events over the modestly sized gold mine on a hill
above Buyat Bay, on the northern tip of the island of Sulawesi, have become at
once an emotional drama and bare-knuckle legal fight.
Newmont has brought defamation suits against three outspoken critics -
nongovernmental organizations in Indonesia. It won one of the cases and agreed
to out-of-court settlements with the two others in which the defendants made
payments to Newmont.
Newmont says it has refused to participate in court-ordered negotiations
for settlement of a $133 million civil suit brought against it by Indonesia in
which the government asserted that the company was polluting.
At the same time, the company has made a public demonstration of the
human toll on its own people who have faced charges.
As a show of solidarity, the company distributed gold pins, designed in
the style of AIDS ribbons, among its 14,000 employees worldwide. The ribbons
were worn at the company's annual general meeting in Denver in May and at
Newmont mines around the world.
In June, after intensive lobbying by the company, the Indonesian
prosecutor dropped five Newmont employees from the indictment. The prosecutor
chose instead to focus on Ness, the company's public face in government offices
and the social circuit in Jakarta, the capital.
In an expression of its outrage at what it considered unfair treatment,
Newmont publicly highlighted the fact that Ness was barred from leaving
Indonesia and could not attend the funeral of his granddaughter in the United
States earlier this year.
As the trial has approached, the company has also tried to build a
sympathetic portrait of Ness, a longtime resident who is married to an
Indonesian, and let it be known in this overwhelmingly Muslim country that he
is a convert to Islam who has been to Mecca three times.
Ness married his Indonesian wife in 1997 and joined Newmont in 1998 after
a career at Freeport-McMoran Copper and Gold.
Manado, the scene of the trial and the capital of the province where the
mine is situated, is a familiar arena for Newmont.
The company has been the biggest taxpayer to the provincial capital, and
has supported the Sam Ratulangi University with grants and has been rewarded
with stalwart support from its scientists.
In May, the company sponsored a three-day seminar in Manado on the
dispute. Last month, Newmont opened a well-equipped information center at the
city's Mega Mall replete with rock and waste samples and computers filled with
company data.
A senior city official, Markus Sulimintang, said in an interview that he
was convinced that Newmont would be acquitted because the scientists at the
local university knew "they had not polluted."
During an interview in her chambers last week, the chief justice for the
Manado provincial court, Juliana Wullur, acknowledged that she was worried
about being able to understand the scientific testimony. "I'll have to be told
what CN is," Wullur said, referring to the symbol for cyanide, which is
commonly used in the gold extraction process.
A few days later, the Supreme Court in Jakarta requested that she and
another judge be removed from the panel because they lacked expertise. Two new
judges who attended special courses on the law and the environment were
appointed in their place.
The choice of judges is particularly important because under Indonesian
laws, which are based on Dutch jurisprudence, judges are granted exceptional
authority over whether witnesses are heard and evidence accepted. There is no
trial by jury.
In many instances, according to Western lawyers, Indonesia's written laws
are commendable but are often disregarded. For example, it is prohibited for
lawyers to visit a judge privately. But in practice this is commonly done, and
often cases are decided in the privacy of a judge's office, lawyers said.
In public, government officials, including the economics minister,
Aburizal Bakrie, have said they have a strong case against the company.
The prosecutor here in Manado, Robert Ilat, who will read the indictment
in court Friday, said in an interview last week that 11 villagers from Buyat
Bay would be among the government's 34 witnesses.
Fishing families living on the bay complained of skin rashes, tumors and
dizziness in the years after the mine began operations in 1996. Newmont, which
finished mining operations last year, said the diseases were common in coastal
areas with poor sanitation.
Under the provisions of the 1997 environmental act, the government must
prove pollution only and does not need to show a causal link between the mine
and the villagers' illnesses. But Ilat said he was planning to do so, even
though legal experts have said the connection would be difficult to prove.
Ilat also said he would argue that after 2000 the company did not have a
permit from the Environment Ministry to deposit the mine waste, known as
tailings, in the sea, a contention the company has denied.
The heart of the trial, both sides say, will be the expert testimony and
scientific evidence, where there are likely to be sharply differing
interpretations.
The company has contended, at its annual meeting and in interviews, that
the mine waste is nothing more than ground up rock and sand. The government and
the company have said that the waste contains mercury, arsenic, cyanide
compounds, copper and iron.
The company pumped more than 2,000 tons of it daily into the warm bay
waters during the eight-year life of the mine at a depth of 82 meters, or 270
feet.
Newmont said that its key evidence would include studies done last year
by the World Health Organization and the Commonwealth Scientific and Industrial
Research Organization, a government- and industry-funded group in Australia,
known as CSIRO.
The health organization said that the villagers at Buyat Bay do not
suffer from Minamata disease, an acute form of methylmercury poisoning. It did
not address other diseases.
The CSIRO study showed that heavy metals concentrations in the bay waters
were below international standards.
The study also showed elevated levels of arsenic, mercury and antimony in
sediment in parts of the bay. But the company argues that these elements are
not harmful because they cannot enter the food chain.
Ilat, the prosecutor, said that he would use a separate Environment
Ministry report from last November to prove pollution.
That study showed the waters were clean but that the sediment was
polluted with mercury and arsenic. In contrast to CSIRO, the ministry said the
arsenic and mercury had entered the food chain after being ingested by
mirco-organisms that are food for fish.
The ministry's report said the fish in the bay were high in arsenic. It
recommended that the villagers curtail their fish consumption. Newmont
officials vigorously disputed the conclusions.
Within Newmont itself, the mine was the subject of dispute when an
internal company audit in 2001 showed that between 1997 and 2001 the managers
had allowed 33 tons of mercury to escape into the air and the bay waters. The
mercury was released into the air in vaporized form.
The audit, which cited a number of infractions of Indonesian regulations
and company policies, said that the mine had failed to operate a
pollution-control device that was supposed to separate and collect the mercury
for disposal. The company did not inform the Indonesian government of the
releases, according to newspaper articles and the company audit.
Asked about the emission, Glenn Miller, a professor of environmental
science at the University of Nevada, who is an expert in the mining industry,
said it "was one of the largest amounts of mercury released in to the
atmosphere for any gold mine in modern times." Newmont says that the releases
were not harmful and that when Indonesia gave its initial approval for the mine
there was no air standard for mercury.
After the findings concerning mercury were published in The New York
Times last December, the company hired four consultants to review the audit.
The review found the emissions did not violate Indonesian or American air
standards. It does not address the question of mercury put into the sea.
Evelyn Rusli contributing reporting from Indonesia
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