ECUADOR/CANADA: Canadian Mining Firm Financed Violence in Ecuador: Lawsuit

"Financing being raised in Canada is travelling across borders to do
harm," said lawyer Murray Klippenstein by phone from his office in
Toronto. "We want to find out if our legal system can respond to this."

Klippenstein is perhaps best known for his representation of the
estate and family of native activist Dudley George, who was shot and
killed by police in Ipperwash Provincial Park in Ontario in 1995. This
lawsuit revealed deep political involvement from the premier's office
and resulted in a landmark public inquiry.

In another ambitious and possibly precedent-setting case,
Klippenstein is representing three villagers from the valley of Intag
in northwestern Ecuador who are suing Copper Mesa Mining Corporation
(TSX:CUX) and the Toronto Stock Exchange. They allege that company
directors and the TMX Group have not done enough to reduce the risk of
harm being faced by farmers and community leaders in Intag who have
faced violent threats and attacks for opposition to a large open-pit
copper mine in their pristine cloud forests.

Still, they hope to go further. "What is happening in Intag is
illustrative of a wider problem," a summary of the legal claim states,
"the corporate and financial unaccountability of the Canadian mining
industry." So while the case uses established legal principles, the
plaintiffs hope it will lead to long-awaited legal reforms to help
better control thousands of Canadian financed projects abroad.

Ecuador,
December of 2006: Armed security guards fire guns and tear gas as they
confront villagers opposed to a Canadian-financed mine. Photo by
Elizabeth Weydt.

Klippenstein, who said he "has learned to go miles on very little,"
acknowledges the "staggering financial mismatch" and says that
companies have hundreds of millions of dollars to gain, so it won't
surprise him if they spend tens of millions on the case. He also
anticipates years of counterattacks, including motions and appeals on
technicalities.

But he emphasized that the basics of the case are straightforward.
"There's a simple fundamental legal point that you shouldn't harm
somebody and that you shouldn't use your money to hire someone who you
know is likely to do harm."

Conflict escalates

Marcia Ramírez is secretary of the Intag Community Development
Committee. She lives near the end of the road in an isolated village in
one of the most biodiverse places on earth. Her community of
Chalguayaco Alto sits at the crossroads of two biodiversity hotspots,
the Tumbes-Chocó-Magdalena and the Tropical Andes.

"It isn't fair," she told The Tyee, "that a foreign company can come
here and contract people who attack us for defending our rights, for
wanting to live in a healthy environment, for defending our land and
our water." She added, "We'd like the stock exchange to listen to us
and to understand that we've been very hurt by one of their companies."

Now 25 years old, the fight against large scale copper mining has
marked daily life for the diplomatic and dedicated leader since she was
about 12.

Broad-based opposition to large scale copper mining arose when a
Japanese company was initially carrying out mineral exploration a short
distance away. When the company released its Environmental Impact
Assessment report for the proposed mine, the news that four communities
would be displaced, as well as massive deforestation, local
desertification, river contamination and harm to endangered species
sparked vociferous opposition that persists.

Since Copper Mesa, who has a strategic alliance with the giant Rio
Tinto, took over the project in 2004, new issues have emerged with
apparent attempts to break the opposition. Now land trafficking,
threats of violence, as well as relatively high-paying job offers have
been driving a wedge between neighbours and families in these rural
communities.

"But," commented Ramírez, "what most hurt is when they came... with armed men and sprayed us with gas."

In early December 2006, over 50 heavily armed security guards,
mostly ex-soldiers, were hired to reach company concessions and set up
camp. Local residents had been tipped off and gathered along the narrow
dirt road that the company-hired trucks would have to pass. When they
arrived, Ramírez and others tried to urge the armed men to turn around.
But instead, the security agents sprayed tear gas into their faces from
only a metre away and fired their weapons into the air, injuring one
man, also a plaintiff in the case.

When the residents didn't back down, the guards finally retreated.

The incident was caught on film by a European student researching the controversy and is retold as part of the recent film Under Rich Earth
by director Malcolm Rogge that debuted at the Toronto International
Film Festival in September. It has also been denounced in a complaint
to the Inter-American Human Rights Commission.

Prior warning

Canadian authorities were warned that such an incident could arise.

On March 8th, 2005, three months before Copper Mesa (then Ascendant
Copper) was listed on the TSX, County Mayor Auki Tituaña wrote to the
Finance and Audit Committee of the Toronto Stock Exchange: "We consider
it to be appropriate and fair that before accepting open "trade" of
Ascendant Copper Corporation's stocks in the Stock Market, you evaluate
in depth the "new" company's merits..."

Included in his list of 14 concerns were lack of prior community
consultation, lack of legally required municipal approval, violation of
a municipal ordinance that declares the area an "Ecological County," as
well as attempts to foster divisions as a "means to achieve company
profits against the citizen's will and at a cost of the loss of unique
biodiversity in our territory."

Then in May, Carlos Zorrilla, executive director of the Ecological
Defense and Conservation of Intag (DECOIN), travelled to Ottawa to
present a complaint to the Department of Foreign Affairs claiming that
Copper Mesa had violated the Organization for Economic Cooperation and
Development's (OECD) Guidelines for Multinational Enterprises. Mining
Watch and Friends of the Earth Canada supported the claim.

"I'm here," he says in a press release, "because Canadians need to
understand the real risk of violence that is emerging as a result of
this company's activities." He added, "The Canadian government must
take action to curb the excesses of Canadian mining companies operating
and exploring overseas."

The complaint was withdrawn after eight months when it was apparent
that the appropriate authorities would not apply the relevant
procedures. The legal summary notes that "the TSX stock market listing
of Copper Mesa has allowed the company to obtain over $25 million in
capital funds -- some of which paid for the armed attackers" in
December 2006.

Carolyn Quick, director of corporate communications for the TMX
Group, told The Tyee her firm considers the case to be "entirely
without merit" and that they will "vigorously defend this position."
She would give no further comment about the letter from Mayor Tituaña
nor the complaint made to DFAIT. No one from Copper Mesa was available
to speak with The Tyee.

Globalization of legal accountability

Another challenge in holding companies to account in Canada, where
the bulk of the world's mining companies are based, are complicated
corporate structures that criss-cross continents.

"By dispersing their actions across borders and saying that 'Well,
we didn't do that in Canada or Ecuador, that decision was made in the
U.S.,' they can evade accountability. The courts can respond and say
'Take this case somewhere else,'" says Klippenstein.

Copper Mesa whose headquarters in Colorado, "has connections to some
nine different legal jurisdictions, making it difficult to identify
which jurisdiction is the proper one in which to hold the corporation
accountable," says the legal summary of the case.

The former website of Copper Mesa (then Ascendant Copper)
acknowledged that its corporate structure makes suing directors
difficult: "All of the directors of Ascendant and substantially all of
their assets and those of Ascendant are located outside of Canada. It
may not be possible for purchasers of securities being qualified for
distribution under this prospectus to effect service of process within
Canada upon directors who reside outside of Canada..."

It is for this reason that the lawsuit focuses on decisions allegedly made in Ontario.

'Establish clear legal norms in Canada'

However, one possible advantage for rural residents of Intag
preparing for a lengthy legal battle on tricky Canadian territory is
that they are not alone in their concern.

Their broader goals for legal regulations of Canadian mining
companies echo what the Standing Committee on Foreign Affairs and
International Trade (SCFAIT) and the United Nations Committee on the
Elimination of Racial Discrimination and other civil society groups
have already been saying.

While Carlos Zorrilla was in Ottawa in 2005, the SCFAIT was writing
its 14th report, which recommended that the government "Establish clear
legal norms in Canada to ensure that Canadian companies and residents
are held accountable when there is evidence of environmental and/or
human rights violations associated with the activities of Canadian
mining companies."

The government responded saying that it "will continue to examine
the best practices of other states attempting to address the
accountability of businesses for activities conducted abroad." But it
has yet to implement mandatory rules.

Still Klippenstein is hopeful in the face of tough odds. "One has to
trust in the promise of a certain amount of fairness and independence
that the justice system can provide. It has been shown that powerful
people can be brought to kneel this way before."

It took eight years of legal proceedings before a public inquiry was
called in the Dudley George case. They never even made it to court, but
a long list of recommendations was implemented.

Ramírez is also optimistic that they have a chance at justice
through Canadian courts as part of their fight to leave Intag's cloud
forests intact.

She points out the variety of sustainable development projects that
they have been working on as alternatives to large scale mining,
including community owned watersheds, a mixed mini-hydroelectric
company, as well as agricultural and tourism initiatives. She urges
Canadians to see the benefits: "We want future generations to have what
we have."