Contact l Sitemap

home industries issues reasearch weblog press

Home  » Industries » Natural Resources


Mongolian Nomadic Herders Worry About Impact of Rio Tinto's Gold Mine

Posted by Puck Lo on September 24th, 2012
CorpWatch Blog
Father and daughter, resettled by Oyu Tolgoi. Photo by CEE Bankwatch Network. Used under Creative Commons license

Mongolian livestock herders are worried that a series of massive gold and copper mining projects will dry up scarce water reserves and exacerbate desertification in the delicate Gobi Desert when operations begin next year to tap one of the world’s largest copper and gold deposits.

A landlocked country of 2.8 million caught between China and Russia, Mongolia is home to the first "cowboys" - nomadic herdsman. Even today, two out of five people in Mongolia still make their living herding livestock, and the same number live in poverty.

After the fall of the Soviet Union, Mongolia’s major former trading partner, the government encouraged free market development and expansion of mining in the gold, copper and uranium-rich country, on the advice of the World Bank. Last year the country’s economy grew 17 percent from mining alone - faster than any other in the world and twice as fast as China.

Eurasia Capital, a Hong Kong-based investment bank, estimates that Mongolia sits on $1.3 trillion worth of untapped mineral assets. They predict that the country’s gross domestic product could swell from $5 billion to $30 billion by 2020, based on its mineral resources alone.

The biggest project to date - the $6 billion Oyu Tolgoi gold and copper mine (“Turquoise Hill” in Mongolian) - is now nearly ready to open. Located just 50 miles north of the Chinese border, it is expected to be one of the world’s three largest mines when it reaches full production in 2018. Two thirds of Oyu Tolgoi is owned by Canadian-owned Turquoise Hill (formerly Ivanhoe Mines), which in turn is majority-owned by Rio Tinto, the world’s largest private mining company, based in London.

“This is the biggest agreement in the history of the country by a magnitude of a thousand,” Jim Dwyer, executive director of the Business Council of Mongolia, told the Global Mail in February.

Indeed, even while under construction Oyu Tolgoi accounted for 30 percent of Mongolia’s current economy, according to the mine’s spokesperson. Already thousands of young people in their 20s and 30s have flocked to the capitol, Ulan Bator, seeking jobs working for Oyu Tolgoi. The noveaux rich spend time at the new Irish pubs near the Louis Vuitton store and watch Hummers drive by alongside Soviet-era buses.

“When international investors make big decisions to employ their scarce capital, cutting-edge technology, management expertise, and marketing prowess, they look for responsible partners,” Oyu Tolgoi’s Australian CEO Cameron McRae, said. “Partners like Rio Tinto prefer to invest in countries when the government takes the long view, as we do.”

But critics say that the large-scale mining operations have dire social and environmental costs.

“We don’t need money from mining,” Battsengel Lkhamdoorov, a 40-year-old former herder, told the New York Times. “What we need is water and land.”

Sukhgerel Dugersuren, head of Oyu Tolgoi Watch, a Mongolian non-governmental organization that keeps tabs on the mine, says the agreement with Rio Tinto is a bad deal for Mongolia. Dugersuren said that the investment agreement the government signed with Rio Tinto is unfair and that World Bank leadership pushed too hard for the Mongolian government to sign on. She told the Bank Information Center in Washington DC that the World Bank extended  "too much credit to Mongolia” in support of mining “without implementing compliance monitoring mechanisms or impact assessments.”

Today, the Mongolian government owns just 34 percent of the mine under the deal that was signed with Rio Tinto in 2009. Mongolian members of parliament are now pressuring the government to push the mining companies to renegotiate for a majority 51 percent share but the company has refused - noting that the agreement only allows for the state to negotiate for a larger share after the project has been in operation for 30 years - and even then no more than 50 percent.

Even worse, the London Mining Network alleges that the Mongolian government signed the agreement “before a technical and economic feasibility study was accepted by the Mongolian government, as prescribed by law." Additionally, the London Mining Network notes that the mining company has failed to show that there is enough water for the 30 to 60-year project.

This is despite the fact that mining industries consume the largest part of the country's annual water consumption, says The RiverMovements, a Mongolian environmental group which points out that Oyu Tolgoi will use approximately 243 gallons of water a second.

Meanwhile nomadic herders, who comprise 40 percent of the country’s population, will be forced to wander further to find water for their flocks, a 2011 United States Agency of International Development report said.

“(Oyu Tolgoi) does not understand the dynamics of herding and the need to follow the livestock to adequate pasture and water sources,” the report stated. “It is economically and psychologically difficult for herder families to move from their traditional land.”

Rio Tinto says it is committed to having a “zero impact on community water sources.”

“The water source for Oyu Tolgoi is the Gunii Hooloi aquifer - a deep, non-drinkable water source that is separate from the shallow water sources used by households and animals,” the company states on its website. “Oyu Tolgoi is only allowed to use approximately 20 per cent of the water from Gunii Hooloi, so the aquifer can never be exhausted. We do not need to take water from any other source.”

But many local herders are skeptical.

"When we come to the well, we can see the level of the well water is 8 inches lower than it used to be," Mijiddorj Ayur, a 76-year-old who herds his camels near Oyu Tolgoi, told National Public Radio.

Oyu Tolgoi Watch believes that the country should invest instead in sustainable economic development that bolsters traditional livelihoods like cashmere production and organic beef ranching.

“If the same amount of credit was made available to developing world standards products and services from these sectors Mongolia could sit on its wealth until there is dire need to disturb the earth,” Dugersuren said. “Unfortunately, this does not coincide with the interest of the World Bank to support Western industries to extract and sell minerals to China.”

The government has made a major effort to ban mining in environmentally sensitive areas but ironically this has the heaviest economic impact on the 100,000 Mongolian self-employed miners rather than on Rio Tinto. By contrast, Oyu Tolgoi will employ about 3,500 workers when it is fully operational, according to the World Bank.


Cameroon Palm Oil Plantation Withdraws Sustainability Application

Posted by Pratap Chatterjee on September 6th, 2012
CorpWatch Blog
A bulldozer clears natural forest for the Fabe SGSOC oil palm nursery. Photo: Jan-Joseph Stok / Greenpeace.

A subsidiary of Herakles Capital, a New York based investment firm, has decided to cancel its application to join the Roundtable on Sustainable Palm Oil (RSPO) after environmental groups alleged that its 73,086 hectare project in southwestern Cameroon would threaten the sustainability of the local community.

In 2009, the SG Sustainable Oils Cameroon, Ltd. (SGSOC), which is wholly owned by Herakles Capital, acquired a 99 year lease to land in Ndian and Kupe-Manenguba divisions where it drew up plans for a $350 million palm oil plantation. (Herakles Capital has several other investments in Africa such as the Bujagali dam in Uganda, the Boke Alumina Project in the Republic of Guinea and an East African undersea fiber-optic project.)

“From its very name, American-owned SG Sustainable Oils Cameroon, Ltd. (SGSOC) presents a pro-environment, pro-resources image,” writes Frederic Mousseau, policy director of the Oakland Institute in California in a new report released this week. “(But it) is also part of a strategy to deceive the public into believing that there is logic to cutting down rainforests to make room for palm oil plantations.”

SGSOC has gone to great lengths to convince the public that it is socially responsible. “Our project, should it proceed, will be a big project with big impacts – environmentally and socially,” Herakles CEO Bruce Wrobel wrote to the Oakland Institute in July 2011. “The big question – and the real story – is whether it ends up strongly positive or strongly negative. I couldn’t be more convinced that this will be an amazingly positive story for the people within our impact area.”

In addition to Herakles, Wrobel operates a non-profit dedicated to poverty reduction named “All for Africa” that boasts board members like Nigerian-American actor Gbenga Akinnagbe who shot to fame in The Wire, a U.S. TV series, and the film: The Taking of Pelham 123.

And SGSOC also applied to join the international Round Table on Sustainable Palm Oil (RSPO), which has signed up 779 members and associates including almost every major industry player in the world, in an effort to burnish its social responsibility credentials.

Indeed RSPO was created in 2004 to address the numerous clashes over palm plantations around the world with the help of non-government organizations such as the World Wildlife Fund which helped set up the organization.
But the palm oil industry – which produces 50 million tons of edible oils and biofuels a year - remains deeply controversial.

As CorpWatch writer Melody Kemp noted in her recent article for us “Green Deserts: The Palm Oil Conflict” the plantation companies make money in two ways: First they clear cut and sell the existing high-value trees, burning the residue. The haze from those forest fires has interrupted regional air traffic and caused severe respiratory illnesses in countries like Indonesia, Malaysia as well as Singapore. Then the companies plant the spiky oil palms trees, creating vast, eerily silent monoculture plantations.

Activists have sparked a raging debate over the industry, faulting palm oil for contributing significantly to carbon dioxide and methane emissions, the loss of biodiversity and precious carbon sequestering forests, land subsidence, poverty, and for exacerbating starvation resulting from land appropriation.

The very same problems have been predicted in an Environmental and Social Impact Assessment (ESIA) conducted by SGSOC itself. The company assessment suggested that the negative impact of the plantation on livelihoods will be “major” and “long-term.”

Nor is the Herakles investment the most efficient way to support the local economy, according to a report by on the SGSOC deal by two Cameroonian NGOs, the Centre for Environment and Development (CED) and Réseau de Lutte contre la Faim (RELUFA). The groups calculated that the government of Cameroon could generate 13 times more employment and significantly larger tax revenue if it were to require local bread-makers to use 20 percent locally produced flour (derived from sweet potatoes, corn or cassava), using just 15,000 hectares of land.

Local farmers and politicians are especially skeptical of SGSOC because palm oil plantations are not new to the region. Beginning in 1927, companies like Pamol have operated similar projects for decades. “Plantation jobs have always been modern day slavery,” says Joshua Osih of the Social Democratic Front, Cameroon’s main opposition party, in an interview for the film “The Herakles Debacle” just released by the Oakland Institute. “We’ve seen a lot of industrial plantations develop around this area and nothing, absolutely nothing, has happened positively to the population.”

“Everybody here is self employed,” Okie Bonaventure Ekoko, a cocoa farmer from Mboko village told the film maker Franck Bieleu. “There is no advantages that the people here will have (from Herakles investments). We don’t need them, we are fine.”

“And if they come and say they want to take this land from us, we are not ready for it,” says Esoh Sylvanus Asui, a farmer from Bombe Konye village. “We will fight and we will die for our land.”

In May 2011, some 50 local and international environmental and community groups wrote a letter to Wrobel expressing concern. In March 2012 a number of the same groups lodged a formal complaint against Herakles with the RSPO alleging that Herakles' project violated Cameroonian laws and noted that it "would disrupt the ecological landscape and migration routes of protected species." Meanwhile local farmers have begun to organize against the project. On June 6, 2012, villagers from Fabe and Toko held a protest against the plantation during the visit of the local governor.

On August 24 2012, Herakles withdrew its application to the RSPO.

“The RSPO regrets this withdrawal of membership by Herakles Farms,” the organization said in a brief statement posted to its website. “This action pre-empts recommendations from the RSPO Complaints Panel to further verify the allegations made by the complainants.”

The company did not respond to requests for comment from the media.

Grupo San Jose Linked to Bulldozing of Land of Paraguayan Uncontacted Tribe

Posted by Pratap Chatterjee on August 27th, 2012
CorpWatch Blog
Ayoreo woman. Photo: Survival International

Grupo San Jose, a Spanish construction company, has been accused of bulldozing the forest home of the Ayoreo, one of the last uncontacted tribes outside the Amazon. The indigenous community lives in the Chaco forests, a semi-arid zone in northern Paraguay not too far from the borders with Brazil and Bolivia.

In late July, Paraguayan forestry officials caught workers for Carlos Casado SA “bulldozing forest, constructing buildings and reservoirs, and putting up wire fencing” on land that the Totobiegosode – a sub-group of the Ayoreo - are known to inhabit. The discovery was confirmed by a letter from the Paraguayan ministry of environment sent to Organizacion Payipie Ichadie Totobiegosode (OPIT)

Carlos Casado SA is a ranching subsidiary of Grupo San Jose. The president of both Carlos Casodo and Grupo San Jose is Jacinto Rey González, who is also the controlling shareholder of Grupo San Jose.

“It’s shocking to discover that one of Spain’s biggest companies is involved in such scandalous behavior. Perhaps they thought that as this is happening in a far-off corner of South America, no-one would notice,” Stephen Corry, director of Survival International, a UK-based NGO, said in a press release. “But if they continue, they will be directly responsible for the destruction of the Ayoreo’s heartland – in flagrant violation of Paraguayan and international laws.”

The Ayoreo are nomads who hunt wild pigs and large tortoises. They live in small communities of three to four families and shun the outside world. First contact was established by Mennonite farmers in the 1940s and 1950s, followed by the New Tribes Mission - a Florida-based evangelical group that attempts to spread the Bible by translating it to into other languages – who sponsored manhunts to track down the Ayoreo in 1979 and 1986.

Almost 70 years later, some of the members of the tribe have managed to elude all contact with others and environmentalists argue that this isolation needs to be maintained. One of the major reasons is that these tribes lack immunity to illnesses and diseases that are common elsewhere, and could die from exposure. 

This isolation has been threatened in recent years as three Brazilian companies have started clearing land in the area to set up ranches: BBC SA, River Plate SA and Yaguarete Porá SA. Survival was able to catch two of the companies doing illegal logging, using satellite imagery.

Guyra, an environmental group in Asunción, estimates that some 1.3 million acres of Chaco forest have been cleared in the last two years, for cattle ranches. http://www.guyra.org.py/index.php/reportes-de-cambios-de-uso-de-la-tierra-del-gran-chaco-americano Lucas Bessaire, a U.S. anthropologist told the New York Times that the rate of deforestation was so rapid that even during the day, the sky turns “twilight grey” from the forest fires. “One wakes with the taste of ashes and a thin film of white on the tongue,” he said.

Today the Mennonites farmers and Brazilian ranchers have coverted vast swathes of the Chaco region. Displaced Ayoreo live in poverty outside the new ranching boomtowns, sleeping under plastic bag tents under the trees.

“We are witnessing ethnocide in action,” Gladys Casaccia and Jorge Vera of Gente, Ambiente y Territorio (GAT), a Paraguayan NGO that supports environmental initiatives for the indigenous people of the Chaco. “This crime is a human tragedy, an embarrassment for Paraguay in the eyes of the world – and it will only stop if those responsible are caught and punished.”

Paraguay already has the sad distinction of being a deforestation champion,” José Luis Casaccia, a former environment minister, told the New York Times. “If we continue with this insanity, nearly all of the Chaco’s forests could be destroyed within 30 years.”

Turmoil at South Africa’s Platinum Mines

Posted by Pratap Chatterjee on August 23rd, 2012
CorpWatch Blog
Cyril Ramaphosa photo courtesy Mining Weekly video. Rustenberg platinum processing plant courtesy bbcworldservice. Used under Creative Commons license

A third wildcat strike this year has closed yet another South African platinum mine less than a week after the police opened fire and killed 34 miners at the Lonmin mine north of Johannesburg. The latest to lay down tools are a thousand workers at the Royal Bafokeng Platinum Mine at Rasimone this Wednesday.

The strikes have hit the global supply of platinum, which is mostly used by the car manufacturing industry to make catalytic converters. Some 80 percent of the world’s supply of the precious metal is mined in South Africa.

Clashes between South Africa’s powerful mining companies and the government are only part of the story. A battle to win membership between two rival unions – the older establishment affiliated National Union of Mineworkers (NUM) and the newer more radical Association of Mineworkers and Construction Union (AMCU) – is also reported to be a major factor in the violence.

NUM - which was founded by Cyril Ramaphosa in 1982 – was deeply involved in rallying black mine workers against apartheid. AMCU was created in 1998 by Joseph Mathunjwa who left the NUM after he fell out with Gwede Mantashe, then general secretary of the older union.

Today Mantashe has become the right hand man of Jacob Zuma, the president of South Africa and Ramaphosa has become a powerful and wealthy businessman. Last year Ramaphosa took over the franchise for McDonald’s in South Africa. He also serves on the board of Lonmin, the UK-based platinum mining company where workers were killed last week.

But while the NUM’s former leaders have become powerful actors in post-apartheid South Africa, the union has started to lose members. “The National Union of Mineworkers doesn’t care about the workers,” Thabo Moerane, a Lonmin supervisor told Bloomberg. “It is eating with management. We’ve been trying to get a decent salary increase since 2007. That is why we wanted to join AMCU.”

AMCU, which has grown to about a tenth of the size of NUM with 30,000 members nationally, has also attracted its own share of controversy. “Its leaders call themselves devout Christians and say life is sacred,” wrote Reuters recently. “But its supporters march with spears, machetes and clubs and anoint themselves with magic potions to ward off police bullets.”

Meanwhile, local anger at the mining companies has been brewing for a while. “Lonmin has done nothing for the local community. They take our platinum and enrich themselves but where is our royalty money going? We don't have tar roads and our youth are unemployed,” a woman worker told the BBC. “They cut off our water supply every day during the day. The water comes back only late at night. The water stinks and we have to buy purified water.”

The first strike, early this year, was in Rustenberg at the world’s largest platinum mine run by Impala Platinum Holdings. Three workers were killed in clashes between the unions. Then on August 10, some 3,000 Lonmin rock drill operators went on strike at the Marikana mining complex to ask for a pay raise to 12,500 rand ($1,500) a month. AMCU, which represents 5,000 workers out of a total workforce of 28,000 was in favor of the strike. NUM which represents some 12,000 workers at Lonmin did not back the strike. (Frans Baleni, NUM’s new general secretary, is paid 105,000 rand or $12,600 a month)

Over the next week, violent attacks and clashes resulted in ten deaths, including two police officers and at least one worker who was hacked to death on his way to work.

Then on August 16, the police claim they came under attack from workers armed with guns, spears and machetes. “Police had no option but to open fire,” police commissioner Riah Phiyega said. “This is a dark moment for the country.”

The police killed 34 people and injured another 78. The deaths caused shockwaves to roll through South Africa, where it brought back memories of the apartheid era shootings of protestors. Lonmin said it would not insist that workers return to work this week and Zuma came to meet with the workers Wednesday.

Workers feel that (violence) adds both positive and negative value,” Crispen Chinguno, a sociologist at the University of Witwaterstrand who conducted research among the platinum workers, told the Mail & Guardian newspaper. "At Implats, where workers were also demanding a salary adjustment (of 9,000 rand) outside of a bargaining agreement, they ended up getting more than 8,000 rand. The strike was illegal, some were dismissed, but most of them got their jobs back. From that perspective, the workers feel the use of violence is working for them. The negative aspects are some job losses, injuries and death."

Others say the killings reflect the reality of the new South Africa. “The story of the Marikana mine shootings is that of a trade union that cosied up to big business; of an upstart and populist new union that exploited real frustration to establish itself; and of police failure,” writes Justice Malala, founding editor of South Africa's ThisDay newspaper, in the Guardian. “It is a story which exposes South Africa's structural weaknesses too: we are one of the world's top two most unequal societies (with Brazil). Poverty, inequality and unemployment lie at the heart of the shootings this week.”

Chevron Face Opposition Over Eastern Europe Fracking Plans

Posted by Pratap Chatterjee on August 6th, 2012
CorpWatch Blog
Anti-fracking poster in Bulgaria. Photo: Пенка ГенадиеваБългария

Chevron - the Northern California-based oil and gas company – has been quietly acquiring rights to drill for natural gas in Eastern Europe using “fracking” technology – a controversial technique. However, grassroots opposition in Bulgaria and Romania has thwarted the companies plans so far.

An interview with Ian MacDonald, vice-president of Chevron Europe, Eurasia and Middle East, in the Financial Times suggests that the company is getting ready for what it believes is the next fossil fuel extraction boom in the region.

“For years, it has been snapping up exploration acreage along a geological faultline that stretches from the Baltic to the Black Sea,” writes Guy Chazan. “A crucial piece of its jigsaw fell into place in May when it won the right to negotiate a big shale gas contract in Ukraine. That left it with an almost continuous arc of concessions stretching from Bulgaria in the south-east to Poland in the north. The blocks in Romania alone cover 2,700sq km.”

But the company faces an uphill political battle to the technology that has been blamed for contaminating local water supplies and even causing earthquakes. Bulgaria banned fracking in January after a major protest against Chevron’s plans to drill in Dobrudja, the most fertile farm region in the country in January.

Chevron is also running into fierce opposition in Romania which has a moratorium on the technology. The company has licenses in the north-east and south-east Dobrogea region near the southern border with Bulgaria as well as for the in north-eastern Romania near the border with Moldova.

“We examined the Chevron contract and… encountered suspicious secrecy at all levels,” says Nicolae Rotaru of Civic Platform in Romania. “We want a law to be worked out to regulate the drilling for shale gas in Romania … It is dangerous for human life.”

Others pointed out that the drilling would not even benefit the local people financially. “These royalties are so tiny that they cost almost nothing, the private operators who profit from the exploitation and give peanuts to the state,” wrote Ilie Serbanescu in “Romania Libera”

The Czech republic is also considering a ban.

Western European countries have been fighting fracking too. France banned fracking last July after environmentalists and wine producers raised alarms about water pollution. Fracking was also recently briefly banned in the UK.

Why the opposition to fracking? Greenpeace explains here: “To access these reserves, fluid is pumped down a drilled channel (well) into the gas-bearing rock at very high pressures. This causes the rock to fracture, creating fissures and cracks through which the gas can 'escape'. The fracturing liquid generally consists of mainly water, mixed with sand and chemicals. Numerous different chemical agents are used, many of which are flagged as dangerous to humans and the environment (carcinogens, acute toxins).

“The fracturing of a single well requires a huge volume of water: around 9,000 - 29,000 m3 (9 -29 million litres). Chemicals make up about 2% of the fracturing liquid, i.e. about 180,000 – 580,000 litres. Only 15 – 80% of the injected fluid is recovered, meaning that the rest remains underground, where it is a source of contamination to water aquifers.”

The contamination has shown up in unusual place. For example communities in the U.S. have seen tap water catch on fire in fracking areas. (Watch this YouTube video and this one from Time magazine)

Fracking can also dramatically increase the likelihood of earthquakes, according to recent research in Youngstown, Ohio, where residents were hit last Christmas Eve and again on New Year's Eve.

A new study from Cliff Frohlich, a seismologist at the University of Texas, Austin, just published in the Proceedings of the National Academy of Sciences, shows a high degree of correlation between local earthquakes and fracking. “Beginning in 2001, the average number of earthquakes occurring per year of magnitude 3 or greater increased significantly, culminating in a six-fold increase in 2011 over 20th century levels,” Frohlich wrote. “This suggests injection-triggered earthquakes are more common than is generally recognized.”

To learn more about the dangers of fracking, check out the film Gasland and the Drilling Down series in the New York Times.

Congo Copper Mine Deals Questioned

Posted by Pratap Chatterjee on August 2nd, 2012
CorpWatch Blog
Women copper miners in the Congo. Photo: FairPhone. Used under Creative Commons license.

Eurasian Natural Resources Corporation (ENRC), a global mining company that got its start in Kazakhstan, has won a new $101.5 million license to dig for copper at the Frontier mine in the Democratic Republic of Congo. The company has been criticized by Global Witness for its purchases of rights from offshore companies connected to Dan Gertler, a controversial Israeli diamond merchant. http://www.globalwitness.org/library/possible-new-enrc-deal-raises-fresh-corruption-risks

“The Congolese state has foregone billions of dollars in revenues by secretly selling off its assets on the cheap to offshore companies,” Daniel Balint-Kurti, campaigner for the Democratic Republic of Congo at Global Witness said in a press release issued last month. “With so much at stake in one of the poorest countries on the planet, ENRC must do the right thing and shed full light on its dealings.”

Per-capita income in the Congo is under $300 a year and experts at the Carter Centre, which was founded by former US president Jimmy Carter, say there is a reason. "In a mining sector defined by irregularities and mismanagement, large industrial mining projects can earn huge profits for investors and government officials,” Sam Jones, associate director of the centre's human rights program, told the Guardian. “(L)ittle revenue finds its way back into desperately impoverished Congolese communities for schools, healthcare, or other social services.”

The Frontier copper mine is located near the town of Sakania in the Congo, about a mile from the Zambian border. It is located in the copper belt that straddles the border of the two countries that has been exploited commercially from the days of Belgian colonization to this day. Indeed the profits from the Union Minière du Haut Katanga, the original mining company in the region, was a major source of wealth for Belgium at the beginning of the 20th century.

First Quantum, a Canadian company, acquired the rights to mine for copper at Frontier in 2001 but was forced to turn it over to Sodimco, a state owned company in 2010 by the Congolese government. The licences were then sold to Fortune Ahead, a Hong Kong shell company. Meanwhile First Quantum filed multiple legal claims demanding $4 billion in compensation for Frontier and other assets nationalized by the Congolese government.

In January this year First Quantum agreed to turn over all its prior mineral rights to ENRC for $1.25 billion. ENRC had already bought rights to the giant Kolwezi tailings project for $175 million and purchased CAMEC, yet another Congolese company that owned a half share in the SMKK copper and cobalt mine.

But exactly who paid whom how much for mining rights in the Congo is up for debate. “ENRC’s purchase of its stake in Kolwezi was structured through a deal between itself and at least seven companies registered in the British Virgin Islands, all connected to Dan Gertler,” states a Global Witness fact sheet. “When ENRC bought the remaining 50 per cent stake in SMKK, it purchased it from another British Virgin Islands company linked to Mr Gertler. Even ENRC’s acquisition of CAMEC involved sale purchase agreements with several offshore companies linked to Dan Gertler which held shares in CAMEC.”

Gertler, an Israeli diamond merchant, has been doing business in Congo for over a decade, working first with Laurent-Désiré Kabila, the former president of the Congo, and now with his son, Joseph Kabila, the current president.

“The nature of these deals raises serious questions about whether corrupt Congolese officials could be benefitting from Congo’s considerable mineral wealth at the expense of the Congolese people,” says Balint-Kurti. “Global Witness has been calling for ENRC to publish the full results of an external audit into its dealings in Congo, conducted by the law firm Dechert.”

It is certainly not the first time Gertler and the Kabila clan have been linked. A lawsuit filed in Israel by Yossi Kamisa, a former Israeli fighter who worked for Gertler, says that the diamond tycoon had offered the elder Kabila military aid to the Congolese army in 2000.

“At the time, the Second Congo War (1998-2003) was raging - one of the most brutal conflicts in the history of the African continent, involving eight countries, dozens of guerrilla organizations and a horrific human toll that included large-scale rape and even cannibalism,” write Gidi Weitz, Uri Blau and Yotam Feldman in Haaretz newspaper. “This did not deter Gertler from realizing his plan to penetrate the lucrative diamond market in the DRC.”

Kamisa’s lawsuit charges that he “witnessed Gertler's method of operation, involving paying considerable sums of money as bribery to different individuals in the Congo government ... all in order to pave the way to a meeting with the president of Congo and to improve the terms of the future agreement that was to be struck between him and the state.”

Gertler denied these allegations, calling them vengeful and baseless, says the newspaper.

Malaysian Water Company Claims To Have Run Dry

Posted by Pratap Chatterjee on August 1st, 2012
CorpWatch Blog
Giant Syabas tap visible from the highway. Photo by suanie. Used under Creative Commons license.

Syabas, a private water company in Malaysia, has threatened to start water rationing in the state of Selangor after claiming that it had almost no water reserves left. The local government has called foul and critics claim that the threat is a ploy to win more lucrative contracts and to favor a rival political party.

“Here, we have a corporation holding a state government and public to ransom,” Charles Santiago, the coordinator of the Coalition Against Water Privatisation who is also a local member of parliament, told Free Malaysia Today. “The truth is not coming out. They have vested interest to overthrow the state.”

Selangor is the richest and most populous state in Malaysia with over seven million inhabitants and many of the country’s key industries in the area surrounding the national capital of Kuala Lumpur. It is governed by Pakatan Rakyat (PR) parties, an opposition coalition.

Syabas (which is short for Syarikat Bekalan Air Selangor) has a monopoly on providing water to Selangor. The company won a 30 year contract to provide water in December 2004 when the ruling Barisan National coalition privatized the state water supply.

Rozali Ismail, the treasurer for the United Malays National Organisation (UMNO) party in Selangor, owns 40 percent of Puncak Niaga Berhad, which in turns owns 70 percent of Syabas. UMNO is one of the key members of Barisan National.

Syabas is now lobbying heavily to raise rates for water but the Selangor government is insisting that the company first reduce the rate of “non-revenue water” which amounts to 30 percent of treated water.

Another option is the construction of a new RM3.6 billion ($1.15 billion) Langat 2 water treatment plant which is also likely to benefit Syabas and its affiliates.

“From what I understand from my industry sources, Umno boys are getting a lot of the contracts,” says Santiago. “I am talking about contracts for things like laying the pipes to others. Industry sources also tell me that Puncak Niaga is also getting the contract to operate and manage this.”

Tony Pua, another opposition politician, says that Barisan National wants to use the water issue as a way to prove that the state is being mismanaged. "They want to influence the course of the elections. They have a monopoly over water resources and are holding the people to ransom," Pua told Reuters.

“(I)n Selangor, the private concession companies chosen to treat and distribute water were not skilled nor experienced in the water services industry,” Khalid Ibrahim, the chief minister of Selangor, told the Sixth World Water Forum in Marseille, France, in March. “There should have been specific and detailed clauses providing penalties for the companies’ failure to comply with conditions. In our case, the agreement was so flawed that when the distributor experienced financial difficulties, the government eventually underwrote the companies’ debts.”

Others say that the idea that water privatization will serve the public better is simply untrue. “Proponents of privatization consistently argue that it saves costs due to competitive pressures private providers face to be more efficient,” writes Mildred E. Warner for the Trans National Institute in the Hague. Yet the reality is quite different. “The majority of the studies (11) found no difference in costs between public and private production,” she adds.

For example, Manila Water and Maynilad, two private corporations have run the water supply of eastern and western Manila since 1997. “Since then, water prices have soared, with increases between 450% - 850% for residents of each zone,” writes Corporate Accountability International. “Quality has suffered, with severe public health consequences, and the much-needed infrastructure investment which was used to justify the privatization has failed to materialize.”

The same was true in Jakarta where PT PAM Lyonnaise Jaya (Palyja) manages the west part of the city and PT Aetra Air Jakarta (Aetra) manages the east part. (Palyja’s major shareholder is Suez Environment, a French water company while Aetra is currently owned by Acuatico Ltd, a company based in Singapore)

“Citizens in Jakarta are suffering from unimproved services, high prices, bad quality of water and environmental deterioration,” writes Irfan Zamzami of the Amrta Institute for Water Literacy.  Zamzami predicts that the city will soon owe the companies 18.2 trillion rupiah. ($2.04 billion). “(W)ater service should be re-municipalized. This is a global trend and needs international solidarity to prevent citizens of the world from a privatized and inaccessible water service.”

Fracking Billionaire Faces Shareholder Anger

Posted by Pratap Chatterjee on June 8th, 2012
CorpWatch Blog
Photo: Gasland still. From the film by Josh Fox.

Aubrey McClendon, the founder and CEO of Oklahoma-based Chesapeake Energy, who championed natural gas to the extent of paying environmental groups to oppose coal, is facing angry shareholders for his profligate ways. Chesapeake is one of the leading users of fracking - an environmentally questionable method of extracting natural gas by injecting fluids underground at high pressure.

Chesapeake Energy, a 23-year old oil and gas company with 2011 sales of $11.64 billion, has bought up rights to drill on millions of acres of land in the U.S. This past March Rolling Stone magazine described the company thus: “It’s not only toxic – it’s driven by a right-wing billionaire who profits more from flipping land than drilling for gas,” wrote Jeff Goodell. “McClendon's primary goal is not to solve America's energy problems, but to build a pipeline directly from your wallet into his.”

McClendon aggressively promoted natural gas as part of the solution to climate change. He gave over $25 million to the Sierra Club’s Beyond Coal campaign and in return former executive director Carl Pope even accompanied him to speak out in favor of natural gas. (The Sierra Club’s new director, Michael Brune, has returned the remaining money)

But in the last four years, the company’s share price has dropped from almost $67 in June 2008 to about $18 now because of the crash in natural gas prices as well as the company heavy debt load. Shareholders have forced McClendon to resign as chair and this Friday, they voted out a number of individuals that he appointed to the board of directors.

Well blow-outs and water contamination from fracking haven’t helped the company’s image or share prices either. Alarming incidents like tap water catching on fire started to bring national attention to the environmental impact of fracking in recent years. By 2011, even the New York Times started to investigate the matter. (CorpWatch raised these questions in 2005 in a partnership with the Oil and Gas Accountability Project)

Fracking uses a mix of water, sand and a variety of chemicals, many of which are dangerous to humans and the environment. A study by the U.S. Congress estimated that out of 2,500 hydraulic fracturing products "(m)ore than 650 of these products contained chemicals that are known or possible human carcinogens, regulated under the Safe Drinking Water Act, or listed as hazardous air pollutants.”

Then there is the problem of waste waters. "Since there were no laws covering the disposal of this stuff at first, they (fracking companies) just dumped it into rivers or hauled it off to sewage plants to be 'treated,' which they knew didn't work," Deborah Goldberg, a lawyer at Earthjustice, told Rolling Stone. "They just wanted to get rid of the stuff as quickly and as cheaply as possible."

McClendon also brought attention to his company by funding right-wing causes like the Swift Boat attacks against John Kerry in 2004 and contributing more than $500,000 to stop gay marriage.

The latest scandal to entwine McClendon are his spendthrift ways. He shot to fame when he paid himself $112 million in 2008. Now Reuters has uncovered documents on how McClendon fused his personal expenses with that of the company.

“In 2010, Chesapeake employees spent more than 15,000 hours working on McClendon's personal projects at a cost of about $3 million,” write John Shiffman, Anna Driver and Brian Grow. The journalists report that McClendon arranged for over $1.5 billion in personal loans using his interest in company-owned wells as collateral. He bought a house on Bermuda's so-called billionaire's row, which includes houses purchased by Michael Bloomberg, Ross Perot and Silvio Berlusconi.

He was generous with shareholder’s money too. “On one flight, nine friends of McClendon's wife took a Chesapeake-leased jet to Bermuda without any McClendons aboard,” Reuters reports.

Small wonder that Forbes magaine once called him “America’s Most Reckless Billionaire.” Today, it's a bit hard to shed a tear for his plunging fortunes.

Ikea Furniture Made From Ancient Russian Trees

Posted by Pratap Chatterjee on May 31st, 2012
CorpWatch Blog
Swedwood pine lumber from Karelia. Age range approx. 200-600 years old. Photo: Protect the Forest Sweden.

Kalevala, a 19th century epic poem from Finland, is often considered the heart of the Finnish national identity. It was inspired by traditional verses from the ancient forests on the border of central Finland and Russia. Today some of the 600 year old trees around the Kalevala national park are being chopped up to make cheap furniture for Ikea, the Swedish home furnishing chain, according to activists.

Ikea, which is based in Delft, Netherlands, sells €23.5 billion ($30 billion) worth of goods every year from shelves to entire kitchens through its 300 shops around the world. Wood is used in roughly 60 percent of the products that it stocks – according to IPS news agency - and one of the company’s slogans is: "We Love Wood"

Critics are now questioning what this love for wood really represents.

In 2010 and 2011 activists from Protect the Forest Sweden took photos of lumber being hauled out of high conservation value forests just outside Kalevala national park in Russia by a company named Swedwood Karelia.

Protect the Forest immediately sent a letter of complaint to Nikolay Tochilov, the director of NEPCon, a Danish NGO that helps monitor sustainable forestry projects for Ikea. “Swedwood Karelia and their owner Ikea … state that they do not log primeval forests and that they do not cut hundred of years old trees,” wrote Viktor Säfve and Daniel Rutschman of Protect the Forest in a September 21, 2011 letter. “They … are clearly misleading their customers through marketing and through media, stating that their forestry is ecologically, socially and economically sustainable.”

Just 10 percent of the ancient old-growth forests remain in Karelia, according to the forest department of SPOK, the Karelia Regional Nature Conservancy, a Russian NGO. Swedish public service television recently estimated that Swedwood is further depleting that stock by cutting down about 1,400 acres of forest a year.

Protect the Forest say that the Kalevala forests hosts a number of red-list species, notably a number of lichen and fungi such as Antrodia crassa and Antrodia infirma (fungi), Bryoria Fremontii (black tree lichen), Hydnellum gracilipes (tooth fungus) and , Lobaria Pulmonaria (lungwort).

Earlier this week the forest activists launched a campaign against the company. "During our field visits to Russian Karelia, we have documented the reality of IKEA's forestry, and it's a far cry from the fine words in their advertising," Säfve wrote in the press release. "You must immediately stop logging old-growth forests, and you must stop lying! Those are two of the demands we make of IKEA."

“We believe the future of forestry in Russia lies in sustainably managing the vast areas of secondary forests – not in destroying the last intact areas of primeval forests,” Säfve and Rutschman wrote. “There are excellent conditions in Karelia to implement selective cutting methods in unmanaged, naturally regenerated secondary forests.”

Ikea disputes the charges. "Swedwood has played an important role in the advancement of forestry in Karelia. Our goal is to develop and improve forest management," Anders Hildeman, forest manager at Ikea told IPS. “We will continue to work according to the principles that we agreed on together with Russian environmental organisations like SPOK.

Repsol Sues Argentina for $10 Billion Over YPF Nationalization

Posted by Carmelo Ruiz-Marrero on May 18th, 2012
CorpWatch Blog
Cordoban youth poster supporting the takeover of YPF. Photo: Chupacabras. Used under Creative Commons license

Repsol, a multinational based in Spain, has brought a class action lawsuit in New York courts against the Argentine government for the re-nationalization of YPF, the former Argentine state oil company. The company has also lodged a complaint with the World Bank's International Center for Settlement of Investment Disputes (ICSID).

President Cristina Fernández de Kirchner of Argentina signed a bill on May 4 seizing 51 percent of the company’s shares after over 80 percent of legislators in both the lower and upper houses of parliament voted in favor. Respol, which owned 57 percent of YPF, wants $10.5 billion in compensation although it may find it hard to collect since Buenos Aires has ignored previous ICSID fines.

"When corporate interests are not aligned with national interests, when companies are concerned only with profits, that's when economies fail, which is what happened globally in 2008 and what happened to Argentina in 2001," Fernández said in a speech on May 3 to explain her motives in pushing for the takeover alleging that Repsol under-invested in the company and paid out excessive dividends, essentially stripping out the value.

Fernández’s move has rattled international financial markets but drawn extensive praise from some popular movements.

The Battle Against Privatization in South America


In the 1970s, most oil companies in South America were state owned, just like most utilities. Following the debt crisis of the 1980s, governments in the region were persuaded by the World Bank and the International Monetary Fund to privatize many of these state assets. A number of European multinationals – like Repsol of Spain and Suez of France - jumped at the opportunity to capture lucrative new sources of production and revenues. Financial institutions hailed this wave as an opportunity for the region to attract capital for modernization and to get rid of unnecessary bureaucracy.

Carlos Menem, who was elected the president of Argentina at this time, became the darling of global financial markets for his aggressive privatization strategy that brought in foreign direct investment, cut inflation and boosted productivity, although his policies also caused major unemployment. At the same time Menem also increased borrowing from the International Monetary Fund and failed to control the flight of capital out of the country by the country’s elite. In 2001, the Argentine economy collapsed again.

In 2003 President Néstor Kirchner was elected. He chose to turn his back on the international financial institutions and renegotiate the national debt at favorable terms and engineer an economic recovery. In 2006 he canceled Argentina’s contract for water supply to Buenos Aires with the French company Suez.

He was succeeded in 2007 by his wife, Cristina Fernández, who maintained his policies of keeping the international institutions and multinationals at bay.

The partial nationalization of YPF (49 percent of the company will remain in the hands of local and foreign private investors) repudiates the advice of international economists but is wildly popular in Argentina. It could bring an influx of cash to the Argentine economy but could also backfire, if it does not.

Then there is the threat of Western interests who do not take kindly to being kicked out. Notably, the government of Spain has not taken the news well. Spanish president Mariano Rajoy has threatened economic sanctions against Argentina, and vice president Soraya Saenz de Santamaria has stated that Spain and its allies "will protect the juridical safety of European investments worldwide". The European Union is considering bringing a case against Argentina to the World Trade Organization.

Fernandez says she has a very pragmatic reason for pushing for nationalization: Argentina’s bills for energy imports hit $9.4 billion last year affecting the country’s trade surplus.

Environmental Impact Questionable

She has the backing of some community activists.

"Repsol is still in debt to the people of Argentina and to nature,” proclaimed the National Peasant and Indigenous Movement (MNCI) on their website. “The REPSOL corporation must assume responsibility for the environmental harms it has caused and damages to natural resources, economically compensating the country and the peasant and indigenous communities that have been affected."

But not all movements are convinced that a state owned YPF will be that different. "As an ecologist collective, and being plainly conscious that the Argentina government was not thinking of environmental issues when it made its decision, we will remain vigilant of (YPF's) future actions," said Noelia Sánchez of the Spanish group Ecologistas en Acción.

Indeed Repsol-YPF has been tried three times by the Permanent Peoples Tribunal for environmental and human rights violations and found guilty. For example in 2010 YPF was accused of trampling on the rights of the Lonko Purran community of Mapuche people in the Cerro Bandera oil field.

Others note that YPF plans to exploit the country's "unconventional" oil and gas finds, such as the Vaca Muerta oil deposit in the province of Neuquen, using hydraulic fracturing (fracking) will mean business as usual, no matter who owns the company: "The future scenario could be one of profound environmental and social risk for much of the country, as experience abroad (of the environmental impact of fracking) has demonstrated,” warns Diego Di Risio, a spokesman for Petroleum Observatory South (Opsur)

Enbridge, Bank of America CEOs Targeted for Extreme Energy Impacts

Posted by Pratap Chatterjee on May 10th, 2012
CorpWatch Blog
Yinka-Dene Alliance newspaper ad.

War has been declared on Enbridge, a Canadian oil company, by a chief from the Nadleh Whut'en in British Columbia. Chief Martin Louie was attending the company annual general meeting in Toronto where he spoke out Wednesday against the environmental impact of the company’s tar sands operations.

"How far are they willing to go to kill off the human beings of this country? Enbridge and the government are going to go on fighting us," said Louie. “The war is on."

Some 700 miles directly south of the Enbridge meeting, on the very same day, Bob Kincaid of Coal River Mountain Watch leveled similar charges against Brian Moynihan, the CEO of Bank of America at their annual general meeting in Charlotte North Carolina, for the impact of mountaintop removal mining.

"You are part of the poisoning of Appalachia and so is every one of your directors and so is every one of your shareholders," Kincaid said. "You are part of the destruction of an entire region of the country."

These two new and unconventional fossil fuel sources –tar sands and mountain top coal together with shale rock –  have been dubbed “extreme energy” sources by Professor Michael Klare of Hampshire College, to signify the extraordinary and expensive technology needed to extract energy from them. The rush to exploit these source - from rural North Dakota (see “North Dakota Shale Boom Displaces Tribal Residents”) to the deserts of South Africa (see “Fracking South Africa”) that has sparked angry protests because of the devastating environmental consequences.

This week the battle against extreme energy was taken to the company annual meetings by environmental and social justice groups. The Nadleh Whut'en were part of the Yinka-Dene Alliance which is protesting Enbridge’s $5.5-billion project that would pipe crude from tarsands in Alberta over 1,100 kilometres to the West coast where the fuel is to be loaded on supertankers to take to Asia.

The protestors brought with them a declaration that read in part:

“We are the Indigenous nations of the Fraser River Watershed. We are many nations, bound together by these waters. Enbridge wants to build pipelines to pump massive amounts of tar sands crude oil through the Fraser’s headwaters. An oil spill in our lands and rivers would destroy our fish, poison our water, and devastate our peoples, our livelihoods, and our futures. Enbridge has many pipeline oil spills every year, including this year’s large spill into Michigan’s Kalamazoo river. We refuse to be next.”

The company claims it is doing a good job. "We wouldn't be proposing this project if we didn't have utmost confidence that we could both construct and operate the project with utmost safety and environmental protection," Enbridge spokesman Todd Nogier told CBC TV.

Brian Moynihan responded the same way to the activists in North Carolina who told him that Bank of America was poisoning Appalachia. "Sir, our environmental team will take a look at it. We look at it all the time,” he told the shareholders who booed him.

Coal River Mountain Watch activists disagreed. “A human health crisis is exploding in Appalachia and Bank of America lights the fuse every day," said Bob Kincaid, noting that as much as five million pounds of explosives are used every day in Appalachia to extract coal. Kincaid estimated that the practice caused 4,000 deaths a year in West Virginia: "That's a newborn who never knows a clear breath, a 4-year-old who never gets to be a 5-year-old, a mother who never gets to be a grandmother.”

At the same annual general meeting on Wednesday, Bank of America also saw a number of protestors speak out against the company’s mortgage practices. For example Sister Barbara Busch, a Catholic social justice worker who runs a Cincinnati-based homeowner advocacy group called Working In Neighborhoods, told Moynihan that his bank was the hardest to deal with (41 percent of her customers have their loans managed by Bank of America)  “(W)we have no one to talk to. They do not call us back,’ she said of the loan officers. “I understand, Mr. Moynihan, that you really believe that you've done something, but ... you've got to do something about your mortgage servicing."

The North Carolina protests were coordinated by the Unity Alliance which brought together groups like Grassroots Global Justice Alliance, Jobs with Justice, the National Day Laborers Organizing Network, the National Domestic Workers Alliance, the Pushback Network, and the Right to the City Alliance.

Although the Bank of America protests are now over, the activists plans to be back – for the Democratic National Convention slated to take place in the city this coming September.

North Dakota Shale Boom Displaces Tribal Residents

Posted by Pratap Chatterjee on April 25th, 2012
CorpWatch Blog
Bakken gas flare. Anonymous photo submitted to BakkenWatch

Heather Youngbird and Crystal Deegan used to live in a trailer at the Prairie Winds Mobile Home Park in the Fort Berthold Indian Reservation in North Dakota. Last week Leroy Olsen, their landlord, removed their front door and cut off the electricity and the propane supply. The reason? New homes to be constructed for out of town oil workers coming to take part in the shale exploration boom.

“This oil boom has divided the Mandan, Hidatsa and Arikara people and pitted them against each other in a negative way,” says Kandi Mossett, a tribal member and organizer with the Indigenous Environmental Network.

In 2010, WPX Energy of Oklahoma paid $925 million for the right to explore for oil on the 86,000 acres of the Fort Berthold Indian Reservation. The company plans to squeeze oil out of shale, the most abundant form of sedimentary rock. Until recently such exploration was prohibitively expensive, but with the evolution of technology and the rise in the price of oil, many rural communities from England to the Ukraine, from Argentina to North Dakota, have become targets for the shale oil boom.

Another company profiting from the Bakken boom, which has been described as the biggest oil find in North America in four decades with an estimated 4.3 billion barrels of recoverable oil, is Continental Resources, also from Oklahoma.

Fort Berthold – the center of the oil boom - has long suffered from crumbling roads and the lack of good housing and proper sewage facilities on the reservation. The companies plan to invest in housing and infrastructure for their workers and plants, but not for local residents.

“Right now, anything that’s available that has water and sewer on it is very attractive to anybody that’s trying to continue to grow their business,” says John Reese, the CEO of the United Prairie Cooperative company, which has taken over the trailer park.

“We were not even given a formal 30 day eviction notice and now that we have been kicked out of our home we are currently homeless,” said Heather Youngbird. The remaining residents of Prairie Winds Mobile Home Park have been told that they had to leave their trailers by May 1, but the eviction date has now been postponed until August 31.

More trouble is expected for the tribal community: Environmental groups note that residents may also soon see problems with their drinking water. “Information posted hydraulic fracturing fluid chemicals on the FracFocus web site indicates that Bakken Shale oil wells may contain toxic chemicals such as hydrotreated light distillate, methanol, ethylene glycol, 2-butoxyethanol (2-BE), phosphonium, tetrakis(hydroxymethyl)-sulfate (aka phosphonic acid),  acetic acid, ethanol, and napthlene,” writes EarthWorks, a Washington DC based group.

Then there is the air pollution: the oil companies are not even bothering to capture the natural gas that is generated by the drilling, partly because there are no state regulations to force them to and partly because it is expensive. Instead the gas is being “flared” or burnt off, the same way Shell does in the Niger delta with similar environmental consequences.

“Across western North Dakota, hundreds of fires rise above fields of wheat and sunflowers and bales of hay. At night, they illuminate the prairie skies like giant fireflies,” wrote Clifford Krauss in the New York Times last September. “Every day, more than 100 million cubic feet of natural gas is flared this way — enough energy to heat half a million homes for a day.”

Perhaps the greatest irony is that North Dakota has the greatest wind resource of almost any state in the country, says Mossett. She says that North Dakota could supply 1.2 trillion kilowatt-hours (kWh) of annual electricity.

Lukoil Threatens Arctic Reindeer

Posted by Pratap Chatterjee on April 23rd, 2012
CorpWatch Blog
Photo: Denis Sinyakov, Greenpeace

An oil spill in northern Russia from a joint venture between Lukoil and Bashneft has damaged fragile reindeer pastures in yet another blow to the indigenous Nenets people. Environmental activists have warned about such disasters for decades but few precautions have been taken by the oil companies.

Lukoil, which is now Russia’s largest oil company, and Bashneft are currently drilling for oil in the Trebs oil field in the Nenets Autonomous District which is estimated to hold 153 million tons of oil.

Vladimir Bezumov, chief of the local office of the Russian Environmental Agency, estimates that some 2,000 tons of oil gushed out of an exploratory well in the oil field this past weekend damaging as much as 14,000 square meters of land.

Oil exploration started in the region in the 1960s and expanded after the collapse of the Soviet Union. Activists warned that environmental problems were bound to get worse. "Western Siberia is already an ecological disaster area because of its many oil mishaps. Any oil accident would have serious consequences, that could reach upriver to the North Polar Sea," Ellen Schmidt wrote in a 1996 report for the World Wide Fund for Nature and a German environmental group called the Association for World Economy, Ecology and Development (AWEED) at the time.

Gail Osherenko, a Vermont-based anthropologist who works with the Nenets peoples, told IPS at the time that the idea oil drilling in the region would have only minimal impact was "wishful thinking."

And Russian and indigenous groups sent out an appeal in 1996 to ask the public to lobby the World Bank not to finance projects in the region. "We ask everyone to help us prevent an environmental nightmare. We ask you not to allow the use of your tax dollars, marks or kronor to facilitate further destruction of the environment," wrote Alexei Grigoriev of the Socio-Ecological Union in Russia in Taiga News.

The warnings were mostly ignored.

An Associated Press investigation by Nataliya Vasilyeva in late 2011 described some of the damage caused by the estimated half a million tons of oil spilled every year that make their way into the Arctic ocean, roughly two-thirds of the quantity of oil spilled in the Deepwater Horizon in the Gulf of Mexico. “On the bright yellow tundra outside this oil town near the Arctic Circle, a pitch-black pool of crude stretches toward the horizon. The source: a decommissioned well whose rusty screws ooze with oil, viscous like jam,” she wrote.

The indigenous communities say their traditional way of life has been devastated by the oil industry. “There is no future for us. People are dying. If oil companies behaved correctly, they would ask us, where drilling is possible and where not, which river is spawning, where fish comes for winter cabin. Fish comes to this bog in the autumn. And now all the rivers are blocked here, and fish has nowhere to go,” Valdimir Vello, a reindeer herder told Greenpeace recently for a report titled “Is there a life after oil?” “I think that there is no future. If the oil companies leave us, we can manage to save something here, to recover this place.”

Politicians are starting to pay attention. Last week, Yuri Trutnev, Russia’s minister for natural resources and ecology threatened to sue Lukoil rival, Anglo-Russian oil producer TNK-BP (owned jointly by British Petroleum and a consortium of the Alfa, Access and Renova groups) for numerous oil spills in Siberia. Trutnev said the company has 784 accidents last year.

"The land is practically flooded with oil," he said after a recent trip to the Khanty-Mansiisk region, according to a report by Gazeta.ru. "We didn't have to look for polluted places, we had to look for places that hadn't been touched by pollution."

The drilling ventures are hugely profitable so they are unlikely to be stopped but there is more than enough money to minimize some of the worst impacts. Since 2003, British Petroleum has paid out an estimated $19 billion in dividends, more than ten times more than it would cost to repair the aging infrastructure, according to an estimate by Gazprombank.

Peru’s Illegal Hardwood Timber Trade

Posted by Pratap Chatterjee on April 11th, 2012
CorpWatch Blog
GPS record of felled tree within the Amazon basin. Photo: Hans Berninzon, Environmental Investigation Agency

Francesco Mantuano, an Italian living in Peru with a timber concession in Loreto region, was puzzled when he got a request in July 2010 from a merchant named Mauro Paredes Sandoval to certify hundreds of trees harvested after just eight days of logging. The wood was to be exported by Madrera Bozovich, a Peruvian company, to its sister company in Alabama.

"After putting two and two together, Mantuano concluded that Paredes was only interested in obtaining (his forest transport permits) in order to launder timber which had already been illegally extracted from other areas, ," write the authors of a new report“The Laundering Machine” just published by the Environmental Investigation Agency (EIA), a Washington DC NGO. "The average harvest operation lasts months - but the low water levels and lack of rain at that time of year in Loreto make it difficult to transport timber on the rivers.

The biggest culprit that EIA uncovered is Grupo Bozovich, a family business set up in the late 1940s by Batrich Bozovich when he arrived from former Yugoslavia and set up business in Oxapampa, in central Peru. The group – which now includes Maderera Bozovich in Peru, Bozovich Timber Products in Alabama and a third company in Mexico – is the biggest exporter of hardwoods from Peru and the biggest importer of such hardwoods into the U.S.

The report alleges that at least 45 percent of shipments made Grupo Bozovich “included wood of illegal origin” such as big leaf mahogany and cedar, which are protected under the under the Convention on International Trade in Endangered Species of Flora and Fauna (CITES)

Surveys of forestry concessions used by Grupo Bozovich by the Supervisory Body for Forest and Wildlife Resources (OSINFOR) found some astonishing discrepancies: In the Productores Forestales Atacuaric concession, just one tree was actually cut down but its “extraction” yielded 311 cubic meters of wood. (The harvested tree in question measured just over 12 cubic meters and was found abandoned in the forest)  In the Oroza Wood S.A.C. concession, government investigators found 14 cedar stumps that turned out to be “disks of roundwood cut from logs and planted in the ground for the benefit of the supervisors.”

“Sometimes intentionally, sometimes through sheer negligence, each of the actors and agencies involved in this system are working as gears in a well-oiled machine that is ransacking Peru's forests and undermining the livelihoods and rights of the people that depend on them," write the EIA investigators. The cost to Peru is estimated to be $250 million a year.

The company denies the allegation. "Bozovich's exports to USA comply with the terms and condition of Lacey Act and the Convention on International Trade in Endangered Species of Wild Fauna and Flora," a U.S. spokesman told Inter Press Service.  (The 2008 Lacey Act requires buyers to practice "due care" to make sure that their products are legal. This is typically done by examining the export certificates)

Experts say that the problem is global. "Justice for Timber" - a March 2012 World Bank report explains the extent of the problem: “Every two seconds, across the world, an area of forest the size of a football field is clear-cut by illegal loggers. In some countries, up to 90% of all the logging taking place is illegal. Estimates suggest that this criminal activity generates approximately US $10-15 billion annually worldwide-funds that are unregulated, untaxed, and often remain in the hands of organized criminal gangs.”

Green Tribunal Weighs Multinational Projects in India

Posted by Pratap Chatterjee on April 9th, 2012
CorpWatch Blog
Sukhdev Sahoo mourns the loss of his betel farm. Photo: Basant Sahoo

Two controversial multinational projects in Orissa, an eastern Indian state, face high level decisions in the next few weeks: a bauxite mine in the Niyamgiri hills planned by Vedanta of the UK and an iron and steel refinery in Jagatsinghpur being developed by POSCO of South Korea.

CorpWatch has reported on both in the past: the bauxite mine threatens the sacred hills of the Dongria Kondh people while the iron and steel refinery threatens traditional betel nut farmers.

As we noted last year, these two battles “encapsulate the chasm between two competing visions of how the second most populous country in the world should develop within the modern world. Jawaharlal Nehru, the country's first prime minister referred to dams and factories as the "temples of modern India," and his successors have gone cap-in-hand to international agencies such as the World Bank to fund major development projects such as the Narmada Valley Dams.

“Rural communities – with the help of city-based activist groups – have struggled to stop the mega-projects. They argue that the displacement of traditional communities, as well as the major environmental impacts of these projects, outweigh the financial benefits. The Narmada dams, for example, while generating electricity and irrigating great areas, would destroy villages and traditional farmland, displacing millions of people.”

Vedanta went before the Indian Supreme Court today to appeal an August 2010 decision by the Indian environment ministry blocking the mine from going forward because of the impact on the indigenous community. The court adjourned without making a decision but justices K S Radhakrishnan and C K Prasad are expected to rule  before the summer vacations. The court may refer the matter to the brand new National Green Tribunal which started hearing cases last year.

The Tribunal which was created in 2010 is “a specialized court with expert members having extraordinary powers to provide remedies to environmental problems.”

One of the Tribunal’s most significant decisions so far has been the suspension of POSCO’s permit last week. The ruling was made when Prafulla Samantray, an activist from Bhoinagar, brought suit over the fact that a comprehensive environmental impact assessment (EIA) report was not done for the 12 million tonne production project. Ritwick Dutta, the lawyer for the activists, told CNN-IBN TV: "Strangely enough the environmental impact assessment studies (were) done only for a 4 million tonne project.”

These two important cases will demonstrate whether or not the National Green Tribunal is up to the task of protecting local communities and the environment in India. Blocking either or both projects will not stop other multinational corporations from continuing to try to exploit the country, but it will surely give them pause in the knowledge that powers that be in New Delhi will listen to communities that organize and push back successfully against irresponsible development and human rights abuse.

As Dongria elder Dodhi Sikaka told Survival: “We are fighting for our own people, for our ancestral land, for Niyamgiri. Those who are fighting for their rights are beaten up and put behind bars. Now all we Dongrias are together in resisting this.”

For a recent and very vivid description of what the Dongria Kondh face, see Bianca Jagger’s latest. She notes: “According to the UN, companies have a responsibility to respect human rights wherever they do business. It is deplorable that local inhabitants should have to implore and appeal to the better nature of shareholders and company executives to protect their human rights, their homes and their livelihoods. Companies who violate this fundamental right should be held accountable in a court of law.”

Adds Jagger: “In the 21st century, we need to redefine the meaning of "development." It must be sustainable. Any development project must take into account the needs and aspirations of the local communities, and should benefit all sectors of society.”

Fracking South Africa

Posted by Pratap Chatterjee on March 29th, 2012
CorpWatch Blog
Karoo, South Africa. Photo: flowcomm. Used under Creative Commons license

The Karoo is not as well known as Kruger National Park with its elephants, leopards and lions. Located in the Western Cape region of South Africa, it is a desert area that is home to tortoises and eagles, and has been the subject of recent experiments to resettle the black rhino and resurrect the quagga, an unusual zebra like creature that went extinct in 1998. But today the people, flora and fauna of the Karoo are threatened by companies like Shell, the Anglo-Dutch oil company, which wants to drill for natural gas.

Like many ancient lands, the Karoo has fossil fuels trapped underground. Royal Dutch Shell, Falcon Oil & Gas and Bundu Oil & Gas want to explore 90,000 square kilometres for the natural gas using a controversial new technology called “fracking”

Bonang Mohale, the chairman of Shell South Africa, recently described the business potential as “bigger than the discovery of gold in Gauteng

However, a coalition of concerned citizens - Treasure the Karoo Action Group (TKAG) – has sprung up to oppose the plan. Their mission to their fellow citizens is simple: “South Africa cannot afford to gamble with your water supply, food security, the health of your family, and the heritage of your children in pursuit of a short-term gain for foreign oil companies and our government.”

TKAG is supported by Greenpeace, who attempt to explain what this technology does: “To access these reserves, fluid is pumped down a drilled channel (well) into the gas-bearing rock at very high pressures. This causes the rock to fracture, creating fissures and cracks through which the gas can 'escape'. The fracturing liquid generally consists of mainly water, mixed with sand and chemicals. Numerous different chemical agents are used, many of which are flagged as dangerous to humans and the environment (carcinogens, acute toxins).

“The fracturing of a single well requires a huge volume of water: around 9,000 - 29,000 m3 (9 -29 million litres). Chemicals make up about 2% of the fracturing liquid, i.e. about 180,000 – 580,000 litres. Only 15 – 80% of the injected fluid is recovered, meaning that the rest remains underground, where it is a source of contamination to water aquifers.”

Chris Hartnady, a well known geologist, says that fracking could have a huge impact on the Karoo desert especially because it will deplete the dwindling water supply. “Shale gas production would become a serious competitor for water, requiring as much as four times the current annual usage of the groundwater in all three of the Shell exploration areas,” he said at the Shale Gas Southern Africa conference in Cape Town earlier this week.

Hartnady noted that surface water might also become contaminated with fracking fluids and waste water. Indeed, communities in the U.S. have seen tap water catch on fire in fracking areas. (Watch this YouTube video and this one from Time magazine) Fracking can also dramatically increase the likelihood of earthquakes, according to recent research in Youngstown, Ohio, where residents were hit last Christmas Eve and again on New Year's Eve.

To learn more about the dangers of fracking, check out the film Gasland and the Drilling Down series in the New York Times.

Chevron & Transocean Back in the Dock Over Oil Spills

Posted by Pratap Chatterjee on March 22nd, 2012
CorpWatch Blog
Chevron Spoof Ad. Photo: The Yes Men. Used under Creative Commons license

Brazil has demanded that 17 Chevron and Transocean executives surrender their passports while they await the outcome of criminal charges brought against them for a spill that took place off the coast of Rio de Janeiro last November. The company has also been sued for $11 billion in damages by a Brazilian federal prosecutor.

Chevron has issued a statement claiming the charges are "outrageous and without merit.”  “We have sought to perform our operations in full compliance with Brazilian laws and industry practices and to comply with all applicable licenses and authorizations,” says a company press release issued Wednesday.

The jury is still out on the facts of the case. But it is hard to sympathize with a company that has played fast and loose with national justice systems in order to avoid paying compensation for toxic spills of immense proportions in the Ecuador by Texaco, a company that Chevron merged with in 2001.

Between 1964 to 1992 Texaco admitted to dumping more than 16 billion gallons of toxic “water of formation” into the streams and rivers used by local inhabitants for their drinking water, decimating indigenous groups and causing dramatically increased rates of cancer, according to a summary from Rainforest Action Network.

In 2002, Chevron asked for a trial in Ecuador to avoid a U.S. court battle. Eight years and 220,000 pages of evidence later, the courts ordered the company to pay $18.2 billion in damages. Chevron appealed but the Ecuadorean appellate court ruled against them on January 3, 2012. Now the company is attempting to have the judgement thrown out by a secret arbitration panel under a provision in the U.S. Ecuador Bi-Lateral Trade Agreement.

“Chevron won’t pay to clean up the toxic oil waste it deliberately dumped in the Ecuadorian Amazon, which has resulted in a human health crisis for the people living in the region. But it will pay thousands to lobby state leaders and ambassadors to extend its extreme investor rights, and continue to evade justice elsewhere,” said Ginger Cassady, campaign director at Rainforest Action Network.

Transocean, which is one of the largest offshore drilling contractors, has also been in trouble over oil spills. The U.S. company, which is headquartered in Switzerland was implicated in the Deepwater Horizon explosion that killed 11 men on April 10, 2010. Approximately 4.9 million barrels of oil were spilled into the Gulf of Mexico which caused major damage to the local marine environment and the fishing and tourism industries.

A Wall Street Journal review found that the company was involved in “three of every four incidents that triggered federal investigations into safety and other problems on deepwater drilling rigs in the Gulf of Mexico since 2008.” The newspaper noted that Transocean has accounted for 24 of the 33 incidents investigated by the U.S. Minerals Management Service despite during that time owning fewer than half the Gulf of Mexico rigs operating in more than 3,000 feet of water.

Oil companies rank among the most profitable in the world. Chevron pulled in $26.9 billion in profits last year and Transocean made close to a billion dollars. Surely they could spare some of that money to pay for the clean-up of the mess they leave behind?

U.S. Supreme Court: Can Multinationals Be Sued for Crimes?

Posted by Pratap Chatterjee on March 1st, 2012
CorpWatch Blog
Project Underground poster on Shell

Barinem Kiobel was executed on November 10, 1995 by the military dictatorship of General Sani Abacha of Nigeria. Almost 16 years later, the U.S. Supreme Court is poised to decide whether Shell, the Anglo-Dutch oil multinational, can be held responsible for his death.

The lawsuit has been brought under the Alien Tort Claims Act of 1789 which allows lawsuits against individuals in U.S. courts for violations of international law – but what the court will decide is if this law applies to corporations. If the Supreme Court rules in favor of the plaintiff – his widow Esther – it could represent a watershed in holding corporations accountable for crimes around the world. (See EarthRights for more on Alien Torts)

The 42 year old was one of nine activists from Ogoni land in the Niger Delta who were sentenced to death by hanging. Ken Saro-Wiwa, another of the men who was executed that day, had already become an international cause celebre as a poet and an outspoken leader of the Movement for the Survival of the Ogoni People (MOSOP) that was leading protests against the massive pollution of the region caused by its oil extraction. (See MOSOP website here)

In 2009, Shell agreed to pay out $15.5 million to settle a lawsuit brought by the Center for Constitutional Rights on behalf of Saro-Wiwa’s family against the company in which they were alleged to have conspired with the military to capture, torture and kill protestors. The company did not admit guilt: "While we were prepared to go to court to clear our name, we believe the right way forward is to focus on the future for Ogoni people," Malcolm Brinded, a Shell director, said at the time. The money was placed in a trust for the education of the Ogoni people. (See the Center for Constitutional Rights summary here)

“Businesses with mining and drilling operations abroad decimate local populations with the full consent of brutal regimes, and when the people affected assemble and protest, family members are abducted, people are murdered, profits are defended at all costs and no local justice or accountability is possible because of government complicity,” wrote Vincent Warren of the Center for Constitutional Rights in the New York Times. “The decision before the court now boils down to whether corporations — considered legal persons already in many cases — should be held to the same standards of accountability as actual people when they commit egregious crimes.”

Susan Farbstein and Tyler Giannini, the directors of the International Human Rights Clinic of the Harvard Law School agree: “In exchange for rights, corporations accept certain responsibilities, including liability for harms committed by their agents,” they wrote in the same newspaper.

What makes this argument compelling is another decision made by the Supreme Court on January 21, 2010, in Citizens United v Federal Election Commission, where the justices decided, by a vote of five to four, that, since corporations were legal persons, they were entitled to the protection of the first amendment, which guarantees freedom of speech. (The case was brought by Citizens United, a company that wanted to air a film critical of Hillary Clinton)

Bad Karma in the Gulf of Mexico Oil Disaster

Posted by Phil Mattera on May 10th, 2010

Originally posted on May 7 at Dirt Digger's Digest.

http://dirtdiggersdigest.org/wordpress/wp-content/uploads/2010/05/deepwaterhorizon1.jpg

British Petroleum is, rightfully, taking a lot of grief for the massive oil spill in the Gulf of Mexico, but we should save some of our vituperation for Transocean Ltd., the company that leased the ill-fated Deepwater Horizon drilling rig to BP. Transocean is no innocent bystander in this matter. It presumably has some responsibility for the safety condition of the rig, which its employees helped operate (nine of them died in the April 20 explosion).

Transocean also brings some bad karma to the situation. The company, the world’s largest offshore drilling contractor, is the result of a long series of corporate mergers and acquisitions dating back decades. One of the firms that went into that mix was Sedco, which was founded in 1947 as Southeastern Drilling Company by Bill Clements, who would decades later become a conservative Republican governor of Texas.

In 1979 a Sedco rig in the Gulf of Mexico leased to a Mexican oil company experienced a blowout, resulting in what was at the time the worst oil spill the world had ever seen. As he surveyed the oil-fouled beaches of the Texas coast, Gov. Clements made the memorable remarks: “There’s no use in crying over spilled milk. Let’s don’t get excited about this thing” (Washington Post 9/11/1979).

At the time, Sedco was being run by Clements’s son, and the family controlled the company’s stock. The federal government sued Sedco over the spill, claiming that the rig was unseaworthy and its crew was not properly trained. The feds sought about $12 million in damages, but Sedco drove a hard bargain and got away with paying the government only $2 million. It paid about the same amount to settle lawsuits filed by fishermen, resorts and other Gulf businesses. Sedco was sold in 1984 to oil services giant Schlumberger, which transferred its offshore drilling operations to what was then known as Transocean Offshore in 1999.

In 2000 an eight-ton anchor that accidentally fell from a Transocean rig in the Gulf of Mexico ruptured an underwater pipeline, causing a spill of nearly 100,000 gallons of oil. In 2003 a fire broke out on a company rig off the Texas coast, killing one worker and injuring several others. As has been reported in recent days, a series of fatal accidents at company operations last year prompted the company to cancel executive bonuses.  It’s also come out that in 2005 a Transocean rig in the North Sea had been cited by the UK’s Health and Safety Executive for a problem similar to what apparently caused the Gulf accident.

Safety is not the only blemish on Transocean’s record. It is one of those companies that engaged in what is euphemistically called corporate inversion—moving one’s legal headquarters overseas to avoid U.S. taxes. Transocean first moved its registration to the Cayman Islands in 1999 and then to Switzerland in 2008. It kept its physical headquarters in Houston, though last year it moved some of its top officers to Switzerland to be able to claim that its principal executive offices were there.

In addition to skirting U.S. taxes, Transocean has allegedly tried to avoid paying its fair share in several countries where its subsidiaries operate. The company’s 10-K annual report admits that it has been assessed additional amounts by tax authorities in Brazil and that it is the subject of civil and criminal tax investigations in Norway.

In 2007 there were reports that Transocean was among a group of oil services firms being investigated for violations of the Foreign Corrupt Practices Act in connection with alleged payoffs to customs officials in Nigeria. No charges have been filed.

An army of lawyers will be arguing over the relative responsibility of the various parties in the Gulf spill for a long time to come. But one thing is clear: Transocean, like BP, brought a dubious legacy to this tragic situation.




Oil spill changes everything

Posted by Michael Brune on May 2nd, 2010

Originally posted on CNN.com on May 1.

tzleft.michael.brune.eanes.jpg

Michael Brune

Editor's note: Michael Brune is executive director of the Sierra Club and former director of the Rainforest Action Network.

The oil disaster plaguing the Gulf of Mexico and our coastal states puts our desperate need for a new clean energy economy in stark relief. We need to move away from dirty, dangerous and deadly energy sources.

We are pleased that the White House is now saying it will suspend any new offshore drilling while the explosion and spill are investigated, but there should be no doubt left that drilling will only harm our coasts and the people who live there.

Taking a temporary break from offshore drilling is an important step, but it's not enough. We need to stop new offshore drilling for good, now. And then we need an aggressive plan to wean America from dirty fossil fuels in the next two decades.

This BP offshore rig that exploded was supposed to be state-of-the-art. We've also been assured again and again that the hundreds of offshore drilling rigs along our beaches are completely safe. Now, we've seen workers tragically killed. We've seen our ocean lit on fire, and now we're watching hundreds of thousands of gallons of toxic oil seep toward wetlands and wildlife habitat.

This rig's well is leaking 210,000 gallons of crude every day, wiping out aquatic life and smothering the coastal wetlands of Louisiana and Mississippi. As the reeking slick spreads over thousands of square miles of ocean, it rapidly approaches the title of worst environmental disaster in U.S. history, even worse than 1989's Exxon Valdez oil spill. The well is under 5,000 feet of water, and it could take weeks or even months to cap it.

This disaster could unfortunately happen at any one of the hundreds of drilling platforms off our coasts, at any moment. It could happen at the drilling sites that the oil industry has proposed opening along the beaches of the Atlantic Coast.

Indeed, even before this spill, the oil and gas industry had torn apart the coastal wetlands of the Louisiana Bayou over the years. These drilling operations have caused Louisiana to lose 25 square miles of coastal wetlands, which are natural storm barriers, each year.

Another view: Why it won't be easy to replace fossil fuels

And it's hardly just the environmental costs of oil spills that we have to worry about with offshore drilling. The threat to the people who work on these platforms has again become terribly clear. In fact, more than 500 fires on oil platforms in the Gulf have injured or killed dozens of workers in just the past four years, according to the federal Minerals Management Service.

We don't need to pay this price for energy. We have plenty of clean energy solutions in place that will end our dependence on dirty fossil fuels, create good, safe jobs and breathe new life into our economy.

One huge example came Thursday, when the Obama administration approved our country's first offshore wind farm.

Our country has huge solar power potential as well. We can also save more oil through simple efficiency measures than could be recovered by new drilling on our coastlines.

This oil spill changes everything. We have hit rock-bottom in our fossil fuel addiction. This tragedy should be a wake-up call. It's time to take offshore drilling off the table for good.

The opinions expressed in this commentary are solely those of Michael Brune.




Displaying 1-20 of 44  
Next >> 
Last Page » 
« Show Complete List »