Canada-Ecuador: When Stock Exchanges Fuel Human Rights ViolationsPublished by MAC on 2010-01-19
Toronto-based Pinetree Capital has purchased a few million shares of Copper Mesa Mining Corporation, making it the largest share owner of a failing and disgraced outfit, currently embroiled in a lawsuit.
But, says Carlos Zorilla, the company got more than it bargained for.
Canada-Ecuador: When Stock Exchanges Fuel Human Rights Violations
by Carlos Zorrilla, http://upsidedownworld.org
21 December 2009
Recently, Toronto-based Pinetree Capital bought a few million shares of Copper Mesa Mining Corporation, making it the largest share owner of a failing company currently embroiled in a lawsuit. The takeover raised the price of its penny stock upwards to between three and five cents.
Pinetree Capital, however, got a lot more than it bargained for.
Copper Mesa, until last year, was the owner of a couple of mining concessions in the Intag region of Ecuador. But the company ran into a strong, organized opposition from communities, local government and, eventually even the national government, which eventually stripped Copper Mesa of its concessions in the country. The company then had to shed itself of its mining projects in the US to pay off debts, leaving it as empty handed as when it was first aborted.
Needless to say, Copper Mesa's directors and a select number of employees and shareholders have never been the worse for the disaster they created, which happens to be an established norm in the world of Canadian stock exchange business. The Bre-X case is one which comes to mind. Bre-X was the Canadian company that fleeced thousands of investors of billions of dollars all based on a non-existent gold mine in Indonesia.
Copper Mesa, based in Vancouver, is infamous for other reasons, in addition to wasting millions of dollars on a mining project that has gone nowhere. Its notoriety mostly comes from using the equivalent of paramilitaries in the Junín community to forcefully trying to gain access to its concessions (which they never were able to access even to explore). Interestingly enough, the shootout took place almost exactly three years ago to the day that Pinetree took over the shipwreck called Copper Mesa. The assault against the community of Junin failed completely, but the graphic images and video of ex-military thugs dressed as security personnel shooting at defenseless campesinos went round the world, and is featured on several full-length documentaries about Intag's successful resistance to mining.
In the rich and varied annals of corporate abuse and stupidity, and in record time, this has become a classic.
The paramilitary assault, which unfolded early in December 2006, was one of the actions by the company that served to ground a multi-billion dollar lawsuit against the Toronto Stock Exchange and two of the company's director, as well as the company itself. The lawsuit was presented in Canada in March of 2009 by three of Junin's residents. Toronto-based Murray Klippensteins is the plaintiffs' lawyer.
It's challenging to see what Pinetree sees in this company, unless it's a classic case in back scratching. What would compel Pinetree to gain control of a company with no mining concessions, or anything of value for that matter, but with also such a tainted human rights record firmly attached to it while facing a multi-million dollar lawsuit? This is on top of losses now approaching forty million dollars in four years, with debts big enough to make it impossible to refloat this shipwreck. There is no way a company such as Pinetree would not have known that these are just some of about 17 other major obstacles that Copper Mesa faces in developing mining projects in Ecuador.
Before the Toronto Stock Exchange decided to allow Copper Mesa to list and therefore make it possible for the company to get millions of dollars to fund its operations, it was clearly warned that company's presence in the communities surrounding the Junin concession would likely lead to violent conflicts. This was no idle speculation, but was based on the communities' confrontation with the company starting in May of 2004 when it made its presence known in the area. The warning came in the form of various letters to the TSX, including one by the Mayor of the County government.
There is no question in the minds of the Intag residents, that the TSX's decision made it possible for the company, not only to hire the thugs that shot at defenseless campesinos in Junin on December 2006, but that also paid for a number of other illegal and aggressive tactics. These include a similar paramilitary-like attack on residents of the Barcelona-Cerro Pelado communities the month before. Both assaults coincided with a fraudulent court case set up against me two months before the Junin assault that culminated when 19 heavily-armed police stormed my house on the early morning hours of October 2006. After not finding me or any incriminating evidence, one of the police planted a gun in my home to implicate me in further criminal lawsuits. These same dollars- collected overwhelmingly from Canadian investors- also made it possible for Copper Mesa to hire the likes of Honor and Laurel, an "international security firm" that provides "security" to oil companies in Colombia, and which is believed responsible for many of the outrages committed in Intag. The company is based out of Bogotá- founded by an ex Mi6 agent- and was working illegally in Ecuador at the time it was hired by Copper Mesa. Before the assaults took place, Canada's Ambassador in Ecuador was fully informed by the company of this, yet never did anything to try to stop it. This potentially could make the government of Canada an accomplice in the different assaults by paid thugs on my neighbors. Unfortunately, I now see the lawsuit didn't go far enough.
But that is far from all that this ill-begotten money was able to buy in Ecuador. In addition, to the tens of millions of dollars the company raised in Toronto, Copper Mesa (or Ascendant Copper) was able to set up a number of proxy organizations to do its dirty work. This includes several local "development" organizations. The president of one of these organizations, Codegam (Consejo de Desarrollo de Garcia Moreno), it turned out, was linked to a drug-trafficker and is currently being sought by Interpol in connection with multiple murders at his property in Intag after he became president of Codegam. When that organization eventually turned against the company for breaking agreements, the company disbanded it and created ODI (Organización de Desarrollo de Intag), with more local folks. ODI was offered a million dollars a year in development money for four years once the company started exploring the Junin site. Since the company was stopped from exploring its concessions by fierce local opposition, ODI never collected a single penny.
Besides Codegam and ODI, the company hired various security firms, including Falericorp which, in turn, hired another security firm (Segurivital), which then swept good ex-military personnel off the streets one sunny day in a coastal town, dressed them up in their garb, gave them illegal weaponry and transported them to the green hills of Intag. It turned out that 56 of these gun-toting thugs were captured by Intag residents a few days after the armed assault against Junin and held for five days in the community's church until finally being turned over to authorities (this, by the way, is all documented in the film "Under Rich Earth" by Malcolm Rogge). Also, Falericorp, with Copper Mesa funding, hired an army helicopter to provide Segurivital's men with supplies on the day of the shootout around Junin. The expensive helicopter ride turned out to be a complete waste since the thugs were stopped that day from achieving their goals of establishing a mining camp. When the community people asked some of the thugs who hired them, some made reference to Honor and Laurel, others to a Canadian mining company. Others couldn't remember. In all likelihood Honor and Laurel probably hired Falericorp, who then hired Segurivital, who then hired the guys off the street, and so forth.
All of this done with money collected through the Toronto Stock Exchange.
And, not surprisingly, the government of Ecuador never investigated these outfits, the legality of the arms used in the attack, nor the judicial set up (which required the "help" of judges and district attorneys, plus crooked police). Nor did the Canadian Embassy once contacted us to find out more about what one of its own was up to in Intag, even though the assault became national and international news.
I believe that the company ended up hiring no less than five security firms. It also created, as most companies do, an impressive number of subsidiaries (eleven so far), some based in the Caribbean and out of reach of certain legal actions and fiscal control. The company list of creations includes Agricaya, an agricultural company. And, as ludicrous at it may sound, the company also created its own business management solution firm to advise other companies on how to do business in Ecuador!
A good deal of the close to $40 million the company has lost in the past five or so years went to pay for all these "business and political consultants" as transnational corporations commonly label this kind of expense in their books. Many of these so-called consultants are ex military, including the CEO of Falericorp, as well as first of the company's community relations employee, a retired general with connections to military intelligence, and who studied in the infamous School of the Americas.
Just as there is no doubt in the minds of Intag residents that the money raised in the Toronto Stock Exchange funded all this mayhem and human rights violations, it is also true that this bloody money continues to violate the rights of anti-mining activist throughout the world. The latest murder in Chiapas of a prominent anti-mining activist, in which employees of the Canadian miner Blackfire were allegedly involved, along with the destruction of hundreds of homes within Barrick Gold's Porgera mining concessions, are just two of countless abuses and crimes that reaffirm this sadistic connection.
Which brings us back to the lawsuit.
In simple terms, the lawsuit alleges that money acquired by Copper Mesa in the Toronto Stock Exchange helped to fund the company´s human rights violations. The TSX defense will undoubtedly argue in court that the exchange cannot regulate where every dollar raised is spent, but the inescapable fact is that it was warned, in no uncertain terms, and previous to listing by local government officials and others in Ecuador that the exchange's decision to allow listing would likely lead to the kind of violent confrontations and human rights violations which later ensued. In Canada, the law holds companies must take reasonable care to avoid creating an unreasonable risk of harm to others. On this very significant issue Murray Klippensteins reflects that "No matter how you dress up a corporation with all sorts of subsidiaries, chains of financial transactions and miles of distance, the principle that you should not hurt another person should apply."
Beyond holding the Toronto Stock Exchange responsible for the harm Copper Mesa caused in Intag, the lawsuit has other objectives. The main one is to use the courts to attempt to pressure the Canadian government into instituting legislative action to regulate their extractive industry operating overseas and to make it easier for individuals impacted by the actions of Canadian mining companies operating overseas to seek redress in Canadian courts.
What makes it more likely that a Canadian mining company is involved in human rights violation rather than a US, British or Australian corporation (even though there are no lack of abuses by these) can be attributed to the lax, or practically non-existent- regulation by the Canadian authorities of its corporations, and the ease of listing in the Canadian stock exchanges. Right now there is a bill pending in Parliament, the C-300 Bill, which seeks to create a minimum set of mandatory regulations aimed at preventing some of the abuses here described. Canadian civil society has tried for years to have the Parliament pass such a bill, and for years the powerful extractive industry lobby has defeated it. Because of this stronghold on the Harper government, some analyst think this bill also has no chance whatsoever of passing, at least until there a change of government.
In light of what can only be called gross irresponsibility on the part of Canada's Executive and Legislative branches to institute effective legal measures to stop the human rights and other violations being committed by Canadian companies overseas, the lawsuit seeks to bring about the urgently-needed change through the courts.
The lawsuit will also hopefully force the issue by bringing it to the forefront of legal and public opinion. It is an ssue that- incredibly- is little known about within Canada. And it's an issue that every Canadian should know is closely tied in with the powerful lobby of the country's extractive industries, which for years has stopped cold measures to try to regulate it, or to tax it as it should be. Implying, at the very least, massive corruption and a lethal weakness in its democratic process. It is the same corruption that makes it feasible for Northern Alberta's oil sands to be exploited, causing irreparable damage to the land and water, and people. It is the same system, in short, that makes it possible for Canadian mining companies to fund mayhem and get away with murder.