[Kabar-Irian] Irian News - 12/29/05 (Part 2 of 2)
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MonstersandCritics.com
Report: Freeport Largesse in Jakarta
Jakarta, Dec. 27 (UPI)
Freeport-McMoRan Copper & Gold Inc. has given nearly $20 million to
officials in Indonesia where it is accused of polluting Papua.
The New York Times said Tuesday that company records show that between
1998 and 2004 Freeport gave the money to military and police generals,
colonels, majors and captains and military units. In one case, Freeport
gave a single $150,000 gift.
The $10 billion corporation runs an operation in Papua that is the world’s
largest gold mine and the world’s third-largest copper mine. Every day
Freeport dumps 700,000 tons of waste from its Grasberg mine around Papua,
the newspaper said.
The Times intimated that Freeport gave the millions to Jakarta to keep it
from objecting to its destruction of Papua. That pollution has become so
acute that Papua is in the throes of a species 'die-off,'
environmentalists say.
Freeport responded to the newspaper by saying it has 'taken appropriate
steps' to bring all its practices into conformity with U.S. and Indonesian
laws.
Meanwhile, company’s investors are doing well: In the last three years
Freeport’s share price has grown nearly six-fold.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
New York Times
Below a Mountain of Wealth, a River of Waste
By Jane Perlez and Raymond Bonner
Published: December 27, 2005
Jakarta, Indonesia - The closest most people will ever get to remote
Papua, or the operations of Freeport-McMoRan, is a computer tour using
Google Earth to swoop down over the rain forests and glacier-capped
mountains where the American company mines the world's largest gold
reserve.
Freeport-McMoRan Copper and Gold, an American company, operates this mine
in the easternmost province of Indonesia, on the island of New Guinea.
With a few taps on a keyboard, satellite images quickly reveal the
deepening spiral that Freeport has bored out of its Grasberg mine as it
pursues a virtually bottomless store of gold hidden inside. They also show
a spreading soot-colored bruise of almost a billion tons of mine waste
that the New Orleans-based company has dumped directly into a jungle river
of what had been one of the world's last untouched landscapes.
What is far harder to discern is the intricate web of political and
military ties that have helped shield Freeport from the rising pressures
that other gold miners have faced to clean up their practices. Only
lightly touched by a scant regulatory regime, and cloaked in the
protection of the military, Freeport has managed to maintain a nearly
impenetrable redoubt on the easternmost Indonesian province as it taps one
of the country's richest assets.
Months of investigation by The New York Times revealed a level of contacts
and financial support to the military not fully disclosed by Freeport,
despite years of requests by shareholders concerned about potential
violations of American laws and the company's relations with a military
whose human rights record is so blighted that the United States severed
ties for a dozen years until November.
Company records obtained by The Times show that from 1998 through 2004,
Freeport gave military and police generals, colonels, majors and captains,
and military units, nearly $20 million. Individual commanders received
tens of thousands of dollars, in one case up to $150,000, according to the
documents. They were provided by an individual close to Freeport and
confirmed as authentic by current and former employees.
Freeport said in a written response to The Times that it had "taken
appropriate steps" in accordance with American and Indonesian laws to
provide a secure working environment for its more than 18,000 employees
and contract workers.
"There is no alternative to our reliance on the Indonesian military and
police in this regard," the company said. "The need for this security, the
support provided for such security, and the procedures governing such
support, as well as decisions regarding our relationships with the
Indonesian government and its security institutions, are ordinary business
activities."
While mining and natural resource companies sometimes contribute to the
costs to foreign governments in securing their operations, payments to
individual officers raise questions of bribes, said several people
interviewed by The Times, including a former Indonesian attorney general,
who said it was illegal under Indonesian law for officers to accept direct
payments.
The Times's investigation also found that, according to one current and
two former company officials who helped set up a covert program, Freeport
intercepted e-mail messages to spy on its environmental opponents.
Freeport declined to comment.
More than 30 current and former Freeport employees and consultants were
interviewed over the past several months for this article. Very few would
speak for attribution, saying they feared the company's retribution.
Freeport's support of the military is one measure of its extraordinary
working environment. In the 1960's, when Freeport entered Papua, its
explorers were among the very first outsiders ever encountered by local
tribesmen swathed only in penis gourds and armed with bows and arrows.
Since then, Freeport has built what amounts to an entirely new society and
economy, all of its own making. Where nary a road existed, Freeport, with
the help of the San Francisco-based construction company Bechtel, built
virtually every stitch of infrastructure over impossible terrain in
engineering feats that it boasts are unparalleled on the planet.
That history, Papua's extreme remoteness and the company's long ties to
the Indonesian government have given Freeport exceptional sway over a
21st-century version of the old company town, built on a scale unique even
by the standards of modern mega-mining.
"If any operation like this was put forward now, it wouldn't be allowed,"
said Witoro Soelarno, a senior investigator at the Department of Energy
and Mineral Resources, who has visited the mine many times. "But now the
operation exists, and many people depend on it."
For years, to secure Freeport's domain, James R. Moffett, a Louisiana-born
geologist who is the company chairman, assiduously courted Indonesia's
longtime dictator, President Suharto, and his cronies, having Freeport pay
for their vacations and some of their children's college education, and
cutting them in on deals that made them rich, current and former employees
said.
It was a marriage of mutual convenience. As Freeport prospered into a
company with $2.3 billion in revenues, it also became among the biggest -
in some years the biggest - source of revenue for the government. It
remains so.
Freeport says that it provided Indonesia with $33 billion in direct and
indirect benefits from 1992 to 2004, almost 2 percent of the country's
gross domestic product. With gold prices hitting a 25-year high of $540 an
ounce this month, the company estimates it will pay the government $1
billion this year.
With Suharto's ouster in 1998, after 30 years of unchallenged power,
Freeport's special place was left vulnerable. But its importance to
Indonesia's treasury and its carefully cultivated cocoon of support have
helped secure it against challenges from local people, environmental
groups, and even the country's own Environment Ministry.
Letters and other documents provided to The Times by government officials
showed that the Environment Ministry repeatedly warned the company since
1997 that Freeport was breaching environmental laws. They also reveal the
ministry's deep frustration.
At one point last year, a ministry scientist wrote that the mine's
production was so huge, and regulatory tools so weak, that it was like
"painting on clouds" to persuade Freeport to comply with the ministry's
requests to reduce environmental damage.
That frustration stems from an operation that, by Freeport's own
estimates, will generate an estimated six billion tons of waste before it
is through - more than twice as much earth as was excavated for the Panama
Canal.
Much of that waste has already been dumped in the mountains surrounding
the mine or down a system of rivers that descends steeply onto the
island's low-lying wetlands, close to Lorentz National Park, a pristine
rain forest that has been granted special status by the United Nations.
A multimillion-dollar 2002 study by an American consulting company,
Parametrix, paid for by Freeport and its joint venture partner, Rio Tinto,
and not previously made public, noted that the rivers upstream and the
wetlands inundated with waste were now "unsuitable for aquatic life." The
report was made available to The Times by the Environment Ministry.
Freeport says it strives to mitigate the environmental effect of its mine,
while also maximizing the benefits to its shareholders. The Times made
repeated requests to Freeport and to the Indonesian government to visit
the mine and its surrounding area, which requires special permission for
journalists. All were turned down.
Freeport refused to make any official available for an interview and would
respond to questions only in writing. A cover letter signed by its legal
counsel, Stanley S. Arkin, said that Grasberg is a copper mine, with the
gold retrieved as a byproduct, and that many journalists had visited the
mine before the government tightened its rules in the 1990's. "Freeport
has nothing to hide," Mr. Arkin wrote.
Indeed, at Grasberg, Freeport-McMoRan Copper & Gold mines the world's
third-largest copper deposit. The mine also has proven reserves of 46
million ounces of gold, according to the company's 2004 annual report.
This year, Mining International, a trade journal, called Freeport's gold
mine the biggest in the world.
Social Tensions Erupt
Since Suharto's ouster, Freeport employees say, Mr. Moffett's motto has
been "no tall trees," a call to keep as low a profile as possible, for a
company that operates on an almost unimaginable scale.
But even before then, the new world that Freeport created was growing
smaller. By the mid-1990's, with production in full swing, and the
expanding impact of Grasberg's operations ever more apparent, Freeport was
beset on all sides.
Environmental groups, able to coordinate more effectively with the
Internet, made Freeport a target. Local tribes were more and more restless
at seeing little benefit for themselves as vast riches were extracted from
their lands. And some military commanders in Papua saw Grasberg's
increasing value as ripe for the plucking.
To fortify itself, Freeport, working hand in hand with Indonesian military
intelligence officers, began monitoring the e-mail messages and telephone
conversations of its environmental opponents, said an employee who worked
on the program and read the e-mail messages.
The company also set up its own system to intercept e-mail messages,
according to former and current employees, by establishing a bogus
environmental group of its own, which asked people to register online with
a password. As is often the case, many who registered used the same
password for their own messages, which then allowed the company to tap in.
Freeport's lawyers were nervous, a person who was at the company at the
time said, but decided that nothing prohibited the company legally from
reading e-mail messages abroad.
Social tensions around the mine, meanwhile, were fast growing, as was
Papua's population. Papua, mostly animist and Christian after long years
of missionary work, is distinct in many ways from the rest of Indonesia,
the world's largest Muslim country.
Almost from Indonesia's independence, the province had rumblings of a
separatist movement. Throughout Indonesia the military, a deeply
nationalist institution, finances itself by setting up legal enterprises
like shopping centers and hotels, or illicit ones, like logging. In Papua,
the Grasberg mine became a chance for the military not only to profit but
also to deepen its presence in a province where it had barely a toehold
before Freeport arrived.
For many years Freeport maintained its own security force, while the
Indonesian military battled a weak, low-level insurgency. But slowly their
security needs became entwined.
"Where Freeport really took it on the chin is the military who came in had
no vehicles, and they would commandeer a Freeport bus or a Freeport
driver," said the Rev. David B. Lowry, an Episcopal minister hired by Mr.
Moffett to oversee social programs. "We had no policies at that time."
No investigation directly linked Freeport to human rights violations, but
increasingly Papuans associated it with the abuses of Indonesian military
units, in some cases using company facilities.
An Australian anthropologist, Chris Ballard, who worked for Freeport, and
Abigail Abrash, an American human rights campaigner, estimated that 160
people had been killed by the military between 1975 and 1997 in the mine
area and its surroundings.
Finally, in March 1996, long-simmering anger at the company erupted in
rioting when anti-mine sentiment among different groups coalesced into
what was perhaps the biggest threat to the company to this day.
The mine and its mill were shut down for three days. Rioters destroyed $3
million of equipment and ransacked offices.
The company intercepted e-mail messages that, according to two persons who
read them at the time, suggested that certain military units, the
community and environmental groups were working together.
One e-mail exchange, between a community leader and the head of an
environmental group, was filled with tactical military intelligence,
according to a person who read the messages. In another exchange, an
environmental leader urged the group's members to pull out because the
demonstrations had turned violent.
Freeport told The Times that local leaders later met with company
officials and said "they had provoked the disturbances as a means of
expressing their aspiration to receive greater benefits from our
operations."
In recent interviews, current and former Freeport officials recalled how
they were stunned when, among those rioting, they saw men with military
haircuts, combat boots and walkie-talkies. They seemed to be directing the
rioters, at one point, to a Freeport laboratory, which they ransacked.
It was not long before a worried Mr. Moffett flew out to Indonesia in the
company jet.
Freeport refused to comment on the meeting that followed. But a company
official who was there recounted that Mr. Moffett met with a group of
senior Indonesian military officers at the Sheraton Hotel in the lowland
town of Timika, near the mine. The all-powerful Gen. Prabowo Subianto,
son-in-law of President Suharto and commander of the Indonesian Special
Forces, presided.
"Mr. Moffett, to protect you, to protect your company, you have to help
the military here," General Prabowo began, according to the company
employee who was present.
Mr. Moffett is said to have replied: "Just tell me what I need to do."
The Cost of Security
Each military service drew up its wish list, current and former company
employees said.
In short order, Freeport spent $35 million on military infrastructure -
barracks, headquarters, mess halls, roads - and it also gave the
commanders 70 Land Rovers and Land Cruisers, which were replaced every few
years. Everybody got something, even the Navy and Air Force.
The company had already hired a former C.I.A. operative, and on his
recommendation, it now approached a military attaché at the American
Embassy in Jakarta, and persuaded him to join the company, according to
former and current employees. Two more former American military officers
were hired, and a special department, called the Emergency Planning
Operation, was set up to handle the company's new relationship with the
Indonesian military.
The new department began making direct monthly payments to Indonesian
military commanders, while the Security Risk Management office handled the
payments to the police, according to company documents and current and
former employees.
"They signed a pact with the devil," said an American who was part of
Freeport's security operations at the time, and who agreed with the
company's decision.
Freeport gave the military and the police in Papua at least $20 million
from 1998 to May 2004, according to company documents. In interviews,
current and former employees said that at least an additional $10 million
was also paid during those years.
Seven years of accounting records were provided to The Times by an
individual close to the company. Additional records for three years were
provided by Global Witness, a nongovernment organization, which released a
report last July, "Paying for Protection," about Freeport's relations with
the Indonesian military.
Diarmid O'Sullivan, who works for Global Witness in London, criticized the
payments. It may be necessary for a company to help governments with
security, he said, but "they should give the money through the proper
channels, in a transparent way."
Freeport told The Times, "Our books and records are transparent and
accurately reflect the support that we provide."
That support, the company said in its responses, included "mitigating
living costs," as well as "infrastructure, catered food and dining hall
costs, housing, fuel, travel, vehicle repairs, allowances to cover
incidental and administrative costs, and community assistance programs
conducted by the military and police."
The company said all of its expenditures were subject to a budget review
process.
The records received by The Times showed payments to individual military
officers listed under things like "food cost," "administrative services"
and "monthly supplement."
Current and former employees said the accounting categories did not
reflect what the money was actually used for, and that it was likely that
much of the money went into the officers' pockets. The commanders who
received the money did not have to sign receipts, current and former
employees said.
Asked if there was a reason Freeport would give money directly to military
officers, Father Lowry, who retired in March 2004, but remained a
consultant to Freeport until June, said, "I can't think of a good one."
The records show that the largest recipient was the commander of the
troops in the Freeport area, Lt. Col. Togap F. Gultom.
During six months in 2001, he was given just under $100,000 for "food
costs," according to the company records, and more than $150,000 the
following year. Freeport gave at least 10 other commanders a total of more
than $350,000 for "food costs" in 2002, according to the records.
Colonel Gultom declined to be interviewed.
Those payments were made to individual officers, current and former
employees said, even though since the riots Freeport had allowed soldiers
to eat in the company's mess and had trucked food to more distant military
kitchens. "Three meals a day, seven days a week," a former official said.
Freeport also gave commanders commercial airplane tickets for themselves
and their wives and children. Generals flew first or business class and
lower ranking officers flew economy, said Brig. Gen. Ramizan Tarigan, who
received $14,000 worth of tickets in 2002 for himself and his family.
General Tarigan, who held a senior police post, said that police officers
were allowed to accept airplane tickets because their pay was so low - as
a general, his base salary was roughly $400 a month - but that it was in
violation of police regulations to receive cash payments.
In April 2002, the company gave the senior commander of forces in Papua,
Maj. Gen. Mahidin Simbolon, more than $64,000, for what was described in
Freeport's books as "fund for military project plan 2002." Eight months
later, in December, he was given more than $67,000 for a "humanitarian
civic action project." The payments were first reported by Global Witness.
General Simbolon, who is now inspector general of the Indonesian Army,
declined requests to be interviewed.
A former Freeport employee who was involved in making those payments said
the company could not be certain how much of the money General Simbolon
actually spent on those projects.
Unsolved Killings
By 2003, following the Enron scandal and passage of the Sarbanes-Oxley
Act, which imposed more rigid accounting practices on companies, Freeport
began making payments to military and police units instead of individual
officers, according to records and current and former employees.
The company paid police units in Papua slightly under $1 million in 2003,
according to the records, listed under items like "monthly supplement
payment," "administrative costs" and "administrative support."
Freeport told The Times that "company policies take into account the
potential for human rights abuses in determining what types of assistance
to provide."
According to the records received by The Times, the police Mobile Brigade,
a paramilitary force often cited by the State Department for its
brutality, received more than $200,000 in 2003.
In its 2003 annual human rights report, the State Department said soldiers
from the Mobile Brigade "continued to commit numerous serious human rights
violations, including extrajudicial killings, torture, rape, and arbitrary
detention." It cited no specific incidents from Papua.
There was another reason for extra care by the company.
In August 2002, three teachers employed by Freeport, including two
Americans, were killed in an ambush on a company road patrolled by the
military that Freeport had paid to protect its employees. Three years
later, the F.B.I. is still investigating and the reasons for the killings
have not been determined. Freeport said that it could not comment on the
investigation.
The United States indicted a Papuan, Anthonius Wamang, in 2004. But it has
yet to receive the full cooperation of the military, several American
officials said.
Freeport employees and American officials said the killings could have
been part of a turf war between the military and the police, each of which
wanted access to Freeport payments.
An initial report by the Indonesian police pointed to the Indonesia
military, and some Freeport and Bush administration officials have said
they suspect some level of military involvement.
The police report suggested that the motivation was that Freeport was
threatening to cut its support to soldiers. Soldiers assigned to Papua
have "high expectations," the report said, but recently, "their perks,
such as vehicles, telephones, etc., were reduced."
Questions of Accountability
Freeport has resisted nearly any detailed disclosure of its payments to
the military, saying they are legal and even required under Indonesian
law.
Marsillam Simanjuntak, who was minister of justice and later attorney
general in one of the first governments after the fall of President
Suharto, said it was a violation of Indonesian law for soldiers or police
officers to accept payments from a company. "Of course, it's illegal," he
said.
But many companies do it, he said. The better question to ask, he said,
was, "Is it allowed by the laws of the United States?"
This year, the New York City pension funds submitted a shareholder
resolution asking Freeport to review its policy on paying the police and
military. They argued that it could violate the Foreign Corrupt Practices
Act, which forbids American companies from paying bribes to foreign
officials. Freeport opposed the resolution.
In 2002, the funds submitted a similar resolution demanding that Freeport
disclose how much it was paying to the military. Freeport kept it off the
ballot.
In later filings with the Securities and Exchange Commission, Freeport
reported that it had paid the military a total of $4.7 million in 2001,
and $5.6 million in 2002. The company did not indicate whether the money
was paid into commanders' personal accounts, or what the money was used
for.
Freeport, in its responses, said it was complying with the Voluntary
Principles on Security and Human Rights, a set of guidelines drawn up by
the State Department. They recognize that natural resource companies "may
be required or expected to contribute to, or otherwise reimburse, the
costs of protecting company facilities."
The principles do not address the question of direct payments to
individual officers. Nor do they require companies to account for the
payments.
Freeport has also said that the payments were required under its Contract
of Work, its basic agreement with the government of Indonesia, first
signed in 1967 and updated in 1991.
The company declined to provide a copy of the contracts to The Times. A
copy of each was provided by Denise Leith, author of "The Politics of
Power: Freeport in Suharto's Indonesia." They contained no language
requiring payments to the military.
S. Prakash Sethi, head of the International Center for Corporate
Accountability, which recently concluded a report on Freeport's
development policies in Papua, said that the company had told him that it
made "in-kind" contributions to the military, for housing and food, but
that he had not been given access to accounting records.
Any direct payments to military officers would be illegal, said Mr. Sethi,
an expert on business ethics and corporate social responsibility and a
professor at Baruch College. "It's corruption," he said. "It's bribery."
Mine Waste in the Rivers
All the while Freeport sealed its relations with the military, the
country's fledgling environment ministry could do little but watch as
waste from the mine piled up.
This year Freeport told the Indonesian government that the waste rock in
the highlands, 900 feet deep in places, now covers about three square
miles.
Down below, nearly 90 square miles of wetlands, once one of the richest
freshwater habitats in the world, are virtually buried in mine waste,
called tailings, with levels of copper and sediment so high that almost
all fish have disappeared, according to environment ministry documents.
The waste, the consistency and color of wet cement, belts down the rivers,
and inundates and smothers all in its path, said Russell Dodt, an
Australian civil engineer who managed the waste on the wetlands for 10
years until 2004 for Freeport.
About a third of the waste has moved into the coastal estuary, an
essential breeding ground for fish, and much of that "was ripped out to
sea by the falling tide that acted like a big vacuum cleaner," he said.
But no government, even in Indonesia's new democratic era, has dared
encroach on Freeport's prerogatives. The strongest challenge came in 2000,
when a feisty politician, Sonny Keraf, who was sympathetic to the Papuans,
was appointed environment minister.
Again, Mr. Moffett flew out to Jakarta.
Mr. Keraf initially refused to see the Freeport boss, but eventually
agreed, and on the day kept him waiting for an hour and a half. "He came
in so arrogant," Mr. Keraf recalled of the meeting in a recent interview,
"sitting with his legs crossed."
Freeport refused to comment on the meeting. The American ambassador to
Indonesia at the time, Robert Gelbard, said in an interview: "It was a
terrible meeting."
Mr. Keraf said that Mr. Moffett had said that his company had never
polluted. "I told him that he should spend the money he spent on paying
off people not to talk about the mine to properly dispose of the waste,"
Mr. Keraf said.
Behind the scenes, Mr. Keraf kept up the pressure, angered that the
company was using the rivers, forest and wetlands for its mine waste, a
process allowed during the Suharto years.
An internal ministry memorandum from 2000 said the mine waste had killed
all life in the rivers, and said that this violated the criminal section
of the 1997 environmental law.
In January 2001, Mr. Keraf wrote to the coordinating minister for economic
affairs, arguing that Freeport should be forced to pay compensation for
the rivers, forests and fish that its operations had destroyed.
Six months later, one of his deputies, Masnellyarti Hilman, wrote to
Freeport, saying a special environmental commission had recommended that
the company stop using the river as a waste chute, and instead build a
system of pipes.
She also told Freeport to build sturdier dam-like walls to replace the
less solid levees that it used to contain the waste on the wetlands. That
practice has continued.
Freeport says that local and regional governments have approved its waste
management plans, and that the central government has approved its
environmental impact statement and other monitoring plans.
But in a blistering July 2001 letter, Mr. Keraf took the governor of Papua
to task for granting Freeport a permit in 1996 to use the rivers for its
waste. The governor, Mr. Keraf said, had no authority to grant permits
more lenient than the provisions of national laws.
Despite all these efforts, nothing happened. Mr. Keraf was unable to
secure the support of other government agencies or his superiors in the
cabinet.
In August 2001, a new government came to power, and a less aggressive
minister, Nabiel Makarim, replaced Mr. Keraf. At first, he, too, talked
publicly of setting stricter limits on Freeport. Soon his efforts petered
out.
The Environment Ministry has begun trying to put teeth into its rules
where it can. It brought a criminal suit against the world's largest gold
company, Newmont Mining Corporation, for alleged pollution, including a
charge of not having a permit for disposing of mine waste into the sea.
Newmont has fought the charges vigorously.
But in the case of Freeport, the ministry has had no traction. Freeport
still does not hold a permit from the national government to dispose of
mine waste, as required by the 1999 hazardous waste regulations, according
to Rasio Ridho Sani, assistant deputy for toxic waste management at the
ministry. Mr. Arkin, Freeport's counsel, said that the company cooperated
well with the environment ministry and that Freeport would not otherwise
comment.
"Freeport says their waste is not hazardous waste," Mr. Rasio said. "We
cannot say it is not hazardous waste." He said his division and Freeport
were now in negotiations on how to resolve the permit question.
'A Massive Die-Off'
The environment ministry was not the first to challenge Freeport over how
it has disposed of its waste in Papua.
The Overseas Private Investment Corporation, a United States government
agency that insures American corporations for political risk in uncertain
corners of the world, revoked Freeport's insurance policy in October 1995.
It was a landmark decision, the first time that the agency had cut off
insurance to any American company for environmental or human rights
concerns.
In doing so, two environmental experts, Harvey Himberg, an official at the
agency, and David Nelson, a consultant, after visiting the mine for
several days, issued a report critical of Freeport's operations,
especially the huge amounts of waste it had sent into rivers, something
that would not be allowed in the United States.
The company went to court to block the report from being made public, and
only a redacted version was later released. A person who thought it should
be made public provided an uncensored copy to The Times.
Freeport says the report reached "inaccurate conclusions." The company
says it has considered a full range of alternatives for managing and
disposing of its waste, instead of using the river, and settled on the
best one.
A storage area would not be large enough and would require a tall dam in a
region of heavy rainfalls and earthquakes, it said. A waste pipeline,
rather than the river, would be too costly, prone to landslides and
floods.
To the American auditors, such arguments were not convincing.
Freeport "characterizes engineered alternatives as having the highest
potential for catastrophic failure when the project otherwise takes credit
for legendary feats," the audit noted, like the pipelines more than 60
miles long down the mountains to carry fuel and copper and gold slurry.
At the time, the waste was jumping the riverbanks, "resulting in a massive
die-off of vegetation," the report said.
The company threatened to take the agency to court over the cancellation
of its insurance. After protracted negotiations, the policy was reinstated
for a few months, as a face-saving gesture to Mr. Moffett, according to
the head of the agency then, Ruth Harkin. It was not renewed.
Today, many of the same problems persist, but on a much larger scale. A
perpetual worry is where to put all the mine's waste - accumulating at a
rate of some 700,000 tons a day.
The danger is that the waste rock atop the mountain will trickle out acids
into the honeycomb of caverns and caves beneath the mine in a wet climate
that gets up to 12 feet of rain a year, say environmental experts who have
worked at the mine.
Stuart Miller, an Australian geochemist who manages Freeport's waste rock,
said at a mining conference in 2003 that the first acid runoffs began in
1993.
The company can curb much of it today, he said, by blending in the
mountain's abundant limestone with the potentially acid producing rock,
which is also plentiful. Freeport also says that the company collects the
acid runoff and neutralizes it.
But before 2004, the report obtained by The Times by Parametrix, the
consulting company who did the study for Freeport, said that the mine had
"an excess of acid-generating material."
A geologist who worked at the mine, who declined to be identified because
of fear of jeopardizing future employment, said acids were already flowing
into the groundwater. Bright green-colored springs could be seen spouting
several miles away, he said, a tell-tale sign that the acids had leached
out copper. "That meant the acid water traveled a long way," he said.
Freeport says that the springs are "located several miles from our
operations in the Lorentz World Heritage site and are not associated with
our operations."
The geologist agreed that the springs probably were in the Lorentz park,
and said this showed that acids and copper from the mine were affecting
the park, considered a world treasure for its ecological diversity.
In the lowlands, the levees needed to contain the waste will eventually
reach more than 70 feet high in some places, the company says.
Freeport says that the tailings are not toxic and that the river it uses
for its waste meets Indonesian and American drinking water standards for
dissolved metals. The coastal estuary, it says, is a "functioning
ecosystem."
The Parametrix report shows copper levels in surface waters high enough to
kill sensitive aquatic life in a short time, said Ann Maest, a geochemist
who consults on mining issues. The report showed that nearly half of the
sediment samples in parts of the coastal estuary were toxic to the
sensitive aquatic organisms at the bottom of the food chain, she said.
The amount of sediment presents another problem. Too many suspended solids
in water can smother aquatic life. Indonesian law says they should not
exceed 400 milligrams per liter.
Freeport's waste contained 37,500 milligrams as the river entered the
lowlands, according to an environment ministry's field report in 2004, and
7,500 milligrams as the river entered the Arafura Sea.
Below a Mountain of Wealth, a River of Waste
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Published: December 27, 2005
(Page 9 of 9)
Freeport would not comment on the measurements. The company says it spent
$30 million on environmental programs in 2004, and planted 50,000 mangrove
seedlings last year as part of its reclamation efforts. It says cash crops
can be grown on the waste with the addition of nutrients, and has begun
demonstration projects.
An Uneasy Coexistence
If the accumulating waste is the despair of critics, for Freeport it
signals expanding production. To keep its mine running, the company has
increasingly had to play caretaker for the world that it has created.
After the 1996 riots, Freeport began dedicating 1 percent of revenues
annually to a development fund for Papua to pay for schools, medical
services, roads - whatever the people wanted.
The company built clinics and two hospitals. Other services include
programs to control malaria and AIDS and a "recognition" fund for the
Kamoro and Amungme tribes of several million dollars which, among other
things, gives them shares in the company as part of a compensation package
for the lands Freeport is using.
By the end of 2004, Freeport had spent $152 million on the community
development fund, the company said.
Mr. Sethi, of the Center for Corporate Accountability, commended Freeport
for commissioning the report on the company's development programs, saying
that it was the first mining company to do so.
The report, which was released in October, concluded that the company had
successfully introduced a human rights training program for its employees
and had doubled the number of Papuan employees by 2001. The company was
poised to double the number of Papuans in the work force again by 2006,
the audit said.
Still, Thom Beanal, the Amungme tribal leader, says the combined weight of
the Indonesian government and Freeport has left his people in bad shape.
Yes, he said, the company had provided electricity, schools and hospitals,
but the infrastructure was built mainly for the benefit of Freeport.
Mr. Beanal, 57, a vocal supporter of independence for Papua, has fought
the company from outside and inside. In 2000, he decided that harmony was
the better path, and joined the company's advisory board.
In November, he and other Amungme and Komoro tribesmen met with Mr.
Moffett at the Sheraton Hotel in Timika. In an interview in Jakarta not
long afterward, Mr. Beanal said he told Mr. Moffett that the flood of
money from the community fund was ruining people's lives.
When the company arrived, he noted, there were several hundred people in
the lowland village of Timika. Now it is home to more than 100,000 in a
Wild West atmosphere of too much alcohol, shootouts between soldiers and
the police, AIDS and prostitution, protected by the military.
Still more soldiers are on the way. Having negotiated an end to a
separatist insurrection this year in another province, Aceh, the
government is redeploying soldiers to Papua in a move to defeat the
growing enthusiasm for independence, once and for all, and to watch over
the province with the world's biggest gold mine. Freeport says its gold
ore has 35 years to go.
Mr. Beanal said he was increasingly impatient with the presence of the
soldiers and the mine. "We never feel secure there," he said. "What are
they guarding? We don't know. Ask Moffett, it's his company."
-- Evelyn Rusli contributed reporting for this article.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Update 1: Indonesian Military Admits to Taking Money
Associated Press
By Slobodan Lekic , 12.29.2005, 12:09 PM
Indonesia's military acknowledged for the first time Thursday that a U.S.
gold-mining conglomerate has been providing direct "support" to army units
accused of human rights abuses for decades in the remote province of West
Papua.
Joint services spokesman Maj. Gen. Kohirin Suganda said the armed forces
"as an institution" had never received donations from Freeport-McMoRan Co.
"But we have heard that Freeport provides support such as vehicles, fuel
and meals directly to the units in the field," Suganda said. "That's the
company's policy. It was not done because we requested it."
Suganda was responding to an article published Tuesday in The New York
Times that detailed the New Orleans-based Freeport-McMoRan's payments of
$20 million to military commanders in the area in the last seven years in
exchange for protection of its facilities in the remote province.
Indonesia regularly ranks among the world's most corrupt countries in
international surveys. The latest reports will do little to raise
confidence in the army - considered one of the country's most graft-ridden
institutions - or the government's pledge to eradicate official
corruption.
Human rights groups have criticized direct payments by foreign mining and
energy companies to the military, saying they were undermining efforts to
bring the politically powerful armed forces under civilian command
following the collapse in 1998 of the 32-year military dictatorship of
former President Suharto.
Only one-third of the financing for Indonesia's armed forces comes from
the state budget, while the rest is collected from non-transparent sources
such as "protection payments," allowing the military brass to operate
independently of the government's financial controls.
The revelations are potentially embarrassing for the Bush administration,
which recently lifted a ban on ties with the Indonesian military imposed
in 1999 by then-President Clinton following a rampage by Indonesian troops
in East Timor that killed at least 1,500 people.
When asked about the payoff allegations, Indonesia's military commander
Gen. Endriartono Sutarto would only say, "Please ask Freeport, not me."
Siddharta Moersjid, a spokesman for PT Freeport Indonesia, said dismissed
the allegations as "old news."
"We have been transparent about our logistical support for the Indonesian
security forces," Moersjid said. "Support for the government security
institutions is provided pursuant to government requests for its
legitimate requirements."
Reports that Freeport was paying off the military to protect the mine have
circulated for years.
Last year, the international watchdog Global Witness reported that Maj.
Gen. Mahidin Simbolon, the region's former military commander and
currently inspector-general of the army, personally received $247,705 from
Freeport from 2001 to 2003.
In 2003, Freeport acknowledged in a report to the U.S. Securities and
Exchange Commission and to New York City authorities that it had paid
millions of dollars to the army.
"We've been deployed to difficult areas, don't we deserve better
supplies?" Simbolon was quoted as saying Thursday in The Jakarta Post.
He acknowledged that the military had received payments from Freeport, but
denied he benefited personally, saying the money had been given to
battalion commanders to pay for various expenses and daily allowances to
the troops.
Freeport has been accused by international environmental groups of
polluting Papua's hitherto pristine jungles by allowing large quantities
of toxic waste to seep into surrounding groundwater.
In its SEC filings, Freeport said annual payments to the Indonesian
security forces were included in its contract covering operations at the
giant Grasberg mine in Papua, the Indonesian-occupied half of New Guinea
island.
Washington backed Suharto when he incorporated West Papua into Indonesia
in 1969 after a self-determination vote now viewed as a sham. Rights
groups maintain that about 100,000 Papuans have died as a result of
military action or other atrocities carried out by Indonesian troops.
Other U.S.-owned mining and energy companies have also drawn criticism for
allegedly providing money and other services to the Indonesian armed
forces, which are accused of having killed thousands of labor activists
and other political opponents after a military coup in Jakarta in 1965.
Human rights groups have denounced Exxon Mobile for allegedly working
closely with the military and paying it for security services in Aceh,
where the company operates a large liquefied natural gas plant. An
internationally supervised peace agreement that followed last year's
tsunami ended that war.
Exxon Mobil spokeswoman Deva Rachman confirmed the payments, but said they
had been managed by the government's Oil and Gas Regulatory Body and not
by Exxon Mobil.
Suharto gained Western support following the 1965 coup by opening
Indonesia's economy to foreign investment. The first company to take
advantage of this was Freeport-McMoRan in 1969. Critics have long
condemned Freeport for allegedly obtaining the rights to the mine through
a direct deal with the dictator.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Tempo Interactive
Activists Ask for Freeport’s Payments to the TNI to be Audited
Friday, 30 December, 2005 | 10:12 WIB
TEMPO Interactive, Jakarta: NGO activists consider think that the security
of foreign companies such as Freeport McMoran must be provided as a
compensation for tax payments to the state.
“The obligation of Freeport to pay taxes in turn obligates the state to
provide and guarantee the security of the company,” Usman Hamid,
coordinator of the Commission for Missing Person and Acts of Violence told
reporters in Jakarta on Thursday (29/12).
Hamid was responding to a recent report released by The New York Times
that Freeport, a gold and copper mining company in Papua, allocated
US$20,000 to Indonesian Military (TNI) officers and institutions and the
National Police.
Freeport considered this normal to guarantee the security of tens of
thousands of its employees.
According to Hamid, as an institution, it was not correct for the TNI to
allow its officers both active and non-active to receive illegal funds
from Freeport.
“This has indicated bad management by the government, the security
apparatus and private companies like Freeport,” he stated.
Therefore, Hamid has urged the carrying out of an audit at Freeport in
order to identify the allocation of company funds in relation to security
service provided.
If Freeport were found not to be involved, he stated, the TNI must carry
out an internal investigation, “It’s not enough just to deny the matter.”
According to Hamid, TNI commander General Endriartono Sutarto must trace
any embezzlement that might have been carried out by TNI officers or
personnel, and identify those involved.
-- (Fanny-Tempo News Room)
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