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CHILE: Pascua Lama payoff disputed by Chile locals

by Trey PollardSantiago Times/El Mercurio
September 11th, 2007

Huasco Valley property owners who live below the Pascua Lama gold mine and administer US$3 million yearly in “hush” money given them by mine owner Barrick Gold charged this weekend that their predecessors used Barrick’s money for personal gain.

Canada’s Barrick Gold agreed in 2005 to pay US$60 million over 20 years to benefit residents affected by the construction of its Pascua Lama open-pit mine, which sits on the border between Chile and Argentina. This money was to be given to community development projects and was to be dispersed by a special elected board of landowners.

The current board recently released a public statement condemning previous board decisions, and ordered an audit into the previous board's financial activity.

“This board is constrained by the disastrous work of the former administrators,” said current board managers Fransisco Bou and Luis Mansilla in their public statement. “We are looking to manage resources that have been grotesquely diverted to satisfy the personal interests of the previous administrators.”

Bou and Mansilla point to their recently published audit, which shows that approximately US$565,000 was allocated by earlier boards to interests affiliated with the former manager, Iván Pavletic. Invoices from financial records indicate the money was allocated for “project management” to Pavletic and for “environmental impact studies” to a company run by Pavletic's ex-wife, Michaela Heisig.

The board president from that period – Fernando Gonzalez Grey – strongly defended expenditures made during his stewardship, saying expenses approved during his administration were all legitimate and were even reviewed by those now making accusations.

“Each peso that was paid to Don Iván and Doña Michaela is integrated in a budget that was approved by the board,” said Grey. “The expenses were brought before the board and were accepted by all, including Fransisco Bou.”

Grey also said the recent allegations were a smokescreen designed to cover up financial chicanery carried out by the current board. “This is a smokescreen to hide the $200 million pesos (US$386,473) that was not approved in the budget by the board, among other things," said Gray.

The charges and counter-charges appear to have galvanized significant opposition to the current board. Opponents insist they have the votes necessary to oust Bou and Mansilla when a new board is elected in October.

For a detailed critique of the water agreement, which Barrick boasts is a sign that they have 94 percent support of the "water users" near their Pascua Lama project, read this testimony by Luis Faura, a councilperson in Alto Del Carmen.

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