The Multinational Monitor


T H E    F R O N T

Placing Placer Under Arrest

MANILA, THE PHILIPPINES -- When the Philippines' largest copper mine suddenly leaked its tailings into a pristine river last March, company executives expected a public relations nightmare. What they did not anticipate was that they would be held personally responsible.

In an unprecedented move, the Philippine government filed criminal charges in April 1996 against three executives of Marcopper, a mining company operated by Placer Dome Pacific, the Australia-based subsidiary of the Canadian mining multinational Placer Dome. Two of the executives -- company president John Loney and resident manager Steve Reid -- are Australian, and the third, Pedro Hernandez, is Filipino. The case marks the first time the Philippine government has criminally prosecuted officials of a multinational for the company's activities.

Placer Dome holds a 40 percent stake in Marcopper; Filipino business interests, including the Bernardino family, the owners of another copper mine, Maricalum, own the remaining 60 percent. Philippine law limits foreign investors to a 40 percent ownership level.

The Marcopper disaster followed a successful lobbying effort last year by the mining industry for a landmark Mining Act that would throw the economy's doors open to foreign mining firms. Applications to explore issued under the new law had already covered 20 percent of the nation's territory when the Marcopper disaster occurred.

In response to the public outcry over the mine spill, the government suspended the processing of permits and is currently tightening mining regulations. The industry has threatened lawsuits and the withdrawal of investments if the proposed new rules take effect.

The Marcopper leak was the most extensive mining disaster in the country's history. On March 23, tailings began to gush from an abandoned drainage tunnel connected to an old mine pit which had been converted into a tailings pond several years before. The mine wastes drained into the main river system of Marinduque island, south of Manila.

Marcopper did not plug the leak until the end of July, four months after it started. According to the company, four million metric tons of tailings were lodged in the Makulapnit and Boac Rivers. At one point, more than a thousand dump truck loads of tailings were pouring into the river system every day.

Several hundred families evacuated to higher ground. More were isolated, and many children lost access to their schools.

There have been no confirmed reports of deaths from the disaster. But the country's health department warned of long-term toxic contamination of the underground water system, the island's main source of domestic water. The tailings were found to contain traces of heavy metals, including copper and zinc. Government toxicologists linked already occurring illnesses among several people to the poisoning of drinking water sources near the rivers.

The disaster killed the Boac River, a waterway of high biodiversity which had been the center of life for numerous communities along the banks. Even a Marcopper consultant estimates it will take the the river a full decade to recover; others project more than twice that long.

Last May, a United Nations assessment mission noted the "total loss of the use of the rivers for livestock, fishing, laundry, bathing and agriculture."

"Our food here used to be free," says Herminio Mascarinas, a father of seven whose family lives on the river's edge. Now Mascarinas fears having to buy food with money he does not have.

The dry-season sun quickly hardened the tailings to a clay mass at river bottom, reducing the river's depth and creating the potential for flashflooding. The lowest portions of the river run by the historic town of Boac, which is more than 200 years old. The town had been hit by heavy flooding even when the river still had its old depth.

According to Placer Dome spokesperson Anne Gallegher, the company has finished dredging near the mouth of the river where it is most flood-prone. The company is still negotiating with the government and communities over how to handle the tailings from the upper parts of the river. "We've been lucky the rain so far this year has been light," says Gallegher, a Vancouver-based community relations specialist for Placer Dome who has been assigned to Marinduque temporarily to oversee consultations with the communities. She adds that the company has already spent about $15 million on repairing the leak in the converted drainage tunnel and on rehabilitation measures along the river. The company has also assisted in the relocation of hundreds of people.

In the event's aftermath, environment officials argued that Marcopper had not fully disclosed how it would seal the abandoned drainage tunnel in its environmental impact statement. Some local elected officials with knowledge of the tunnel allege that the plugs at either end were flawed by poor engineering.

Marcopper, however, calls the mine leakage an "act of God" for which no one should be held liable. The company has filed a motion for reconsideration of the criminal charges -- for violations of the country's pollution control law, the water code and the Mining Act, and for "reckless imprudence" -- with the courts.

Placer Dome has indicated it may leave Marinduque after it finishes rehabilitating the Boac River, despite evidence of largely untapped copper reserves on the island. For more than three decades, Marcopper was Marinduque's biggest employer, and at one point was the island's main source of electricity. Provincial Governor Jose Carrion and other local officials have opposed the resumption of mining operations unless the company allocates a much greater proportion of its revenue to the island.

The company has pending applications to explore elsewhere in the Philippines. Placer Dome's chair and chief executive officer, John Wilson, met with Philippine President Fidel V. Ramos in September to apologize for the mining disaster. Ramos reportedly assured the company that it was still welcome in the country.

In the meantime, a hold order that had prevented Marcopper's two expatriates from leaving the country has been lifted. Reid was reassigned to company headquarters in Vancouver, while Loney is still in Manila to supervise the rehabilitation work in Marinduque. Company lawyers continue to seek dismissal of the criminal charges in Philippine courts.

-- Howie G. Severino is environment desk coordinator with the Philippine Center for Investigative Journalism

Corporate Rights in South Africa

SOUTH AFRICA'S CONSTITUTION will explicitly guarantee corporations the same core rights provided to humans.

That was assured after the country's constitutional court rejected in September a challenge to little-noticed section 8(4) of the constitution, which states that "Juristic persons are entitled to the rights in the Bill of Rights to the extent required by the nature of the rights and of the juristic persons." "Juristic persons" refers to corporations and other organizations.

Patrick Bond, an economist with the National Institute for Economic Policy and a contributing writer to Multinational Monitor, Darlene Miller of the Institute for African Alternatives and Langa Zita of the South African Communist Party challenged the constitutional provision as inconsistent with constitutional principles agreed upon in 1993. Their challenge was endorsed by two dozen prominent individuals, as well as environmental groups, trade unions and other civic groups including the National Union of Metalworkers of South Africa, several branches of Earthlife Africa and the Environmental Justice Networking Forum, the International Labor Rights Information Group and Workers Organization for Socialist Action.

As the white Nationalist Party negotiated a transition from apartheid to democracy with Nelson Mandela's African National Congress in the early 1990s, it insisted that the final constitution be consistent with a set of 34 constitutional principles. After the South African Constitutional Assembly adopted a final constitution in May 1996, individuals and organizations were given approximately two months to challenge elements of the final constitution as inconsistent with those constitutional principles.

The Constitutional Court ultimately heard approximately three dozen challenges to the constitution. It ruled in favor of the challengers in a couple important areas, directing the Constitutional Assembly to reconsider provisions including those concerning labor union rights and the power allocated to regional governments.

The challenge to section 8(4) emphasized the ways in which the grant of Bill of Rights rights to corporations would undermine citizens' comparable rights. "The extension of fundamental rights to juristic persons frequently entails simultaneous weakening of, and prejudice to, and even derogation from the fundamental rights of natural persons," contended the brief submitted by attorney Derek Spitz on behalf of the challengers.

The brief emphasized how granting basic constitutional rights to corporations had diminished citizen rights in other countries, particularly the United States. Citing U.S. Supreme Court decisions, the brief stated, "The extension to corporations of freedom of political expression, negative free speech rights and rights of privacy has undermined the constitutional rights of natural persons to freedom of expression, freedom of association in organs of civil society, access to information, the rights to life, security of person and a safe environment." The South African constitutional principles, and the new constitution, include explicit guarantees of rights to information, life, security of person and a safe environment, as well as rights of expression and association comparable to those found in the U.S. constitution.

Among the U.S. cases cited by the brief was First National Bank of Boston v. Bellotti, which held that corporations have a First Amendment right to spend money to influence referenda. Unlimited corporate spending on referenda in the United States often dwarfs the sums contributed by citizens, and indisputably shapes the outcome in numerous contests -- often to the detriment of principles privileged by the South African constitution, such as a safe environment.

The challengers emphasized the particular dangers of providing Bill of Rights rights to corporations in the context of the dramatically concentrated South African economy. An annex to their brief reported that a handful of corporations -- Anglo American and De Beers, the Rembrandt Group, Old Mutual, Sanlam and Liberty Life -- control 80 percent of the assets listed on the Johannesburg Stock Exchange.

To ensure that real persons' rights not be trampled by corporations exercising similar rights, the petitioners contended not that corporations should never enjoy constitutional rights, but that corporate rights should be explicitly subordinated to the rights of citizens. "What is required, and what the final constitution does not adequately provide, is express recognition of the principle that where the constitutional rights of juristic persons conflict with the constitutional rights of natural persons, the rights of the latter will prevail," their brief argued.

The Constitutional Court rejected the challengers' claim primarily on the basis that "many `universally accepted fundamental rights' will be fully recognized only if afforded to juristic persons as well as natural persons." To illustrate the point, the Court used the example of freedom of speech; "to be given proper effect," the Court asserted, free speech "must be afforded to the media, which are often owned or controlled by juristic persons."

The Court did not directly answer, however, the challengers' argument that corporate rights should not be denied altogether, but subordinated to those of real persons.

Although characterizing the Court decision as a loss, Patrick Bond says the case constituted a victory in that "we got to the stage of appearing before the Court, and generated very good publicity."

And from a legalistic point of view, the decision may not have been a total loss. The Court stated that section 8(4) "recognizes that the nature of a juristic person may be taken into account in determining whether a particular right is available to such a person or not," which means there is room for challengers to argue in the future, in the context of specific disputes, that particular corporate rights should be subordinated to real persons' rights.

-- Robert Weissman

Assessing the World Bank

THE CENTERPIECE of the World Bank's environmental review process is having only "limited impact" on actual Bank practice, according to a leaked internal World Bank report. Bank staff often prepare environmental assessments too late and fail to properly consider alternatives to environmentally damaging proposed projects, the report concludes.

The report, "Effectiveness of Environmental Assessments and National Environmental Action Plans: A Process Study," prepared by the Bank's Operations Evaluation Department, evaluates the effectiveness of the Bank's environmental assessment (EA) policy in eight countries. Bank policy calls for conducting environmental assessments of all projects that are deemed likely to have a significant impact on the environment. The EAs are supposed to evaluate the potential effect of a hydroelectric dam, road or other project on the environment, and to consider ways to minimize the environmental effect of projects.

But Bank staff regularly fail to consider alternatives, according to the report. "Analysis of project alternatives, when done at all, is weak," the report says, finding that EAs even for the most potentially environmentally serious projects "have failed to give serious consideration to alternative designs and technologies, ... and those that do, often explore weak, superficial or easily dismissed options." The problem is compounded by the fact that EAs are often not completed until after project design is finalized, according to the report, "thus precluding meaningful consideration of alternatives."

Bank project implementation staff often do not understand EAs, according to the report, which says the EAs are often not even available in local project offices, the level at which implementation takes place. Not surprisingly, the report concludes that "implementation on the ground has not adequately integrated EA recommendations and mitigation plans."

Olas Kjorven, environmental assessment specialist with the Bank's Environmental Department, agrees that the Bank's EAs have suffered from several shortcomings but says "that does not mean previous EAs have been a failure." He says that EAs at the Bank have fulfilled their terms of reference, improved over time and "had a major effect on the way we do business."

The challenge for the Bank now, says Kjorven, is to move the EA process "upstream," so that assessments are done before projects are decided on, so that EAs can genuinely consider alternatives. Recommendations by the Environmental Department to move EAs upstream and to improve the public consultation process have been endorsed and accepted by senior management at the Bank, he says.

The leak of the Bank report comes as the World Bank is streamlining its more than 500 policies into 60 or 70 policies. While World Bank President James Wolfensohn says the effort is intended to improve efficiency and enable the Bank to operate "more like a business," many environment groups believe the Bank is downgrading the importance it places on environmental issues.

Some environmentalists have charged that the Bank is seeking to avoid scrutiny from the Bank's independent Inspection Panel, an autonomous body created to review the Bank's compliance with its own policies and procedures. If the Bank eliminates its environmental and social policies or couches them in more general terms, the Inspection Panel would be less able to reach a finding that the Bank was failing to comply with its own standards.

"The inspection panel will quickly become toothless without any policies to which to hold the Bank accountable," says Dana Clark, an attorney with the Washington, D.C.-based Center for International Environmental Law.

Revisions in Bank policy for energy and pesticide management lend strong support to these fears. The energy policy, once contained in two detailed, mandatory papers approved by the Bank's board of directors, has been translated into a one-page "good practice" sheet, written to provide staff with advice and good practice examples, but not to impose mandatory rules. There are no operational policies or Bank procedures being formulated to require staff to prioritize and ensure energy-efficient practices in Bank-sponsored projects.

David Theis, of the Bank's external affairs office, explains that the good-practice papers are designed to complement, not replace, existing policy. But Richard Stern, chief of the Bank's energy division, acknowledges that the Bank specifically rejected formulating the new policies as a binding operational policy, choosing instead to adopt them as a non-binding set of good practices. While the old, binding energy policies do appear to remain in place, they are confusing and of limited value.

Similarly, the conversion of the pesticide management policy has altered the content and intent of the original policy. Pesticide Action Network's Marcia Ischii-Eiteman says that the new policy completely strips the language designed to ensure that the Bank takes an ecologically sound approach in pesticide management.

The former policy's concrete steps to encourage integrated pest management based on ecologically sound approaches have been abandoned. The new policy backs away from the Bank's former commitment to reduce, whenever possible, reliance on chemical pesticides. The policy also fails to mention the importance of farmer leadership and participation in agricultural practices, an essential component of successful integrated pest management policies.

The EAreview and the streamlining process are deeply worrisome to environmental activists, who have long worked to reform the Bank's environmental policies and practices. They conclude that after a decade of battling the Bank over environmental controversies, concern for the environment remains marginal at the world's leading development institution.

-- Andrea Durbin

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