Argentina-la Rioja Governor Angel Maza Linked To Gold Mining Company Operating In His Province

ARGENTINA

La Rioja Governor Angel Maza Linked to Gold Mining Company Operating in his Province

By Francisco Jueguen, www.perfil.com

13th September 2006

It's common knowlege in La Rioja, Argentina: While current Governor Ángel Maza travels around the world promoting mining investment, sources here affirm that in reality, the Province of La Rioja isn't the only one making money on mining. The former geologist and ex-Menemista turned devout Kirchnerista is also a major stockholder in Yamiri, S.A., a mining firm that holds the stakes for the mines of Famatina, the largest gold mining project in La Rioja.

"Maza is part owner of the mine," revealed a provincial government official who prefers to remain anonymous. "I know that he is, or was, a stakeholder. Now I don't know if he has sold them," the source who confirmed the story that is all over the province. Supporting this some days earlier, a member of Vecinos Autoconvocados (Self-Organized Residents) of Famatina and Chilecito told perfil.com, "We are sure that Maza owns a full 41% of stocks in Yamiri S.A." However, none of the sources could provide documentation that proves the connection between the governor and the former state comany Yamiri S.A.

To understand where this story begins, it is necessary to look in the rear-view mirror and return to the first government of ex-President Carlos Menem. With the consolidation of a legal framework based on the plunder of nonrenewable natural resources, the story begins with a pact that involved the multinational and national mining companies closely related to public officials. Yacimiento Mineros of La Rioja (Yamiri) was the publicly-owned company with which the Province ran, since 1987, mining operations for non-renewable resources such as gold, uranium and silver until 1993. That is when the current Governor Maza, President Menem and Minister of Economy Domingo Cavallo created the Law of Mining Investment 24.196.

In order to stimulate private mining investments, the law stipulates that no publicly-held company could mine these natural resources. "Between 1993 and 1997, the firm Yamiri began its transformation into a private corporation. In the middle of this mutation, it became a phantom company, until it recently emerged as a new private company," said the source within the Vecinos Autoconvocados of Famatina, who added, "This is when the word began to spread that Maza was owner of 41% of the company stock."

In 1997, the firm returned, now as Yamiri S.A., a subsidiary of Yamiri Gold and Energy Inc., a company with headquarters in Vancouver, Canada, home of the largest gold mining company in the world, Barrick Gold, who would later turn into their principal partner. Although Yamiri had transformed into a corporation, the State maintained part of the shares (20.4%), which helped the company avoid any possible appearance of conflict of interest between public officials in charge of mining activity in the province. Geologist Carlos Medina has been President of Yamiri, S.A., since 1992. He worked through the ranks of the publically-owned Yamiri, and was General Director of Mining in La Rioja during the last military dictatorship. Geologist Jorge D. Lorefice, today the Vice President of the company, has occupied the post since 1999 when the presidency of Carlos Menem ended.

In 2005 the company bought a Canadian firm called Telcoplus, the only goal in this transaction was to gain capital in the Toronto stock market, the most important market for mining firms. Curiously, in just one year, the company managed to raise funds of about 2.5 million dollars.

"This is robbery, plunder," proclaimed the source very close to the Governor about this issue. But furthermore, he added something even more shocking: According to this official, Maza signed a contract with the Canadian firm Barrick Gold, of which nobody knows the small print. "It is a secret contract," he says. "The Constitution says that the Governor must make public every contract he signs, above all those with foreign companies or groups. And what is more, they are already in exploration and the agreements have not been ratified. They must pass before the legislature," added the source, who believes they will not be approved by legislative body, which only has a block of five lawmakers loyal to Maza.

The business of Barrick Gold

Yamiri S.A. has various other projects in the Province (Helvecia, Mina El Oro, Peñas Negras, Il Potro and Sierras de las Minas) which previously belonged to the public Yamiri. However, the most important is the gold mine of Famatina. There the company has the rights for mining operatins, and it is Canadian firm Barrick Gold that has already begun to work there two years ago with positive results. A month before the agreement between the two, Maza had made a trip to Canada in search of mining investors. More specifically, the Governor was meeting in the offices of the lawyers of the Canadian multinational, supposedly to put in motion a training program for La Rioja lawyers to defend the mining industry.

As if that weren't enough, while the residents of Famatina and Chilecito were struggling to prevent the mining operations which put all other sustainable activities in risk, there have not been anyone in the government who represent them. The director of the Environment, Abel Nonino, was at the same time the Subsecretary of Mining, for which he drew twin incomes from the public administration. With picturesque touches apt for Lewis Carroll's Alice in Wonderland, this story is one of a kind. He rose through the ranks of the private sector of mining to be picked by Maza to be Director of the Environment in 2005. Nonino became, while already the chief of Environment, the Subsecretary of Mining. "I don't see it as a contradiction," he told perfil.com, "Being Subsecretary (of Mining) also means I will protect the environment. I am not going to forget to protect the place where we live just because of my job title," confessed the man who held two jobs for six months.

The La Rioja official was sent to try and conciliate the interests of the residents and environmentalists with those of the mining companies, who, they say, are linked to the governor and the multinational corporations.

What interests will have to be postponed? Before it exploded into a scandal, Nonino resigned two months ago as Director of the Environment in order to dedicate himself fully to promoting mining business.