PAPUA NEW GUINEA

Q and A: The story behind Bougainville's Rio Tinto suit

5:40 pm today
Don Wiseman, RNZ Pacific Senior Journalist
don.wiseman@rnz.co.nz


View of the tailings located downstream of the Panguna mine. Photo: OCCRP / Aubrey Belford

A lawsuit brought by 4500 Bougainvilleans against multinational mining giant, Rio Tinto, is being bankrolled by a secretive group of investors hoping for a huge windfall.

The landowners, from around the long closed Panguna mine, in the autonomous Papua New Guinea region, are seeking compensation for the damage the mine caused.

The suit comes as Rio Tinto is separately helping fund an assessment exercise to determine the social and environmental impact of the mine.

The Panguna mine was at the crux of the civil war which tore Bougainville apart in the 1990s.

Investigative journalist with the OCCRP, Aubrey Belford, has looked into the suit and he spoke with RNZ Pacific.

(The transcript has been edited for brevity and clarity.)

Don Wiseman: Four and a half thousand Bougainvilleans are suing, or want to sue, Rio Tinto, over the destruction caused by the Panguna mine. Is it a cash grab?

Aubrey Belford: It's a complex story. There's definitely pros and cons and arguments being made from either side. Class action lawsuits are an effective way to get compensation for wrongs by big companies, but they are also an industry. Financiers invest a lot of money into them, with a lot of risk, on the hope that they will win, and that they'll get a significant portion of any settlement or award from a court victory.

DW: There's been a class action over Panguna before, which never came to anything.

AB: That's right. There was a class action in the United States that failed because the US Supreme Court said they didn't have jurisdiction. So, this is a second bite at the apple, so to speak.

DW: And there's a lot of opposition to it for fairly good reasons, I think?

AB: There's two main reasons why people oppose this class action. One is that there are very big hopes for Bougainville to gain its independence from PNG, and so the government wants to reopen the mine, and a lot of people want to reopen the mine, because that is really the main way that they'll earn any money to find their independence.

The second reason is that there is an ongoing process to assess the damage from the mine and to properly calculate who needs compensation, and what they need and what needs to be done to clean it up. There is a feeling that now, by going and dragging Rio Tinto and Bougainville Copper into court, that it could endanger that process.

DW: And Rio Tinto, has to be said, was very supportive of that process of assessing the social and environmental impacts?

AB: They are supporting the process. They are partly funding it, but it is also worth saying that they have not committed to paying to clean up or to get any compensation. The hope is that after the assessment happens, that Rio Tinto will pay up. But there is no guarantee of that, and that is something that advocates of the class action point to, and they say, 'Well, can you really trust them?' At least this way we win in court. Maybe not everyone gets everything, but we get something.

DW: The major issue would seem it's a reintroduction of division into Bougainville when it least would want it, given that it's aiming for its independence, possibly as soon as next year. How damaging do you think it potentially is for Bougainville?

AB: I am not Bougainvillean, and I cannot pretend to really know all the dynamics. There is definitely a difference of opinion among members of the local elite there - amongst politicians, amongst tribal leadership, amongst ex-combatants, over this division within families. Bougainvilleans also do have a lot of capacity to talk things through and to reach agreements and consensus on things. I do not know how far it is going to go. Right now, it seems pretty raw. President Ishmael Toroama issued a pretty blistering statement about this, calling it treason. Whether things can cool down is something I am not really quite qualified to talk about, but I certainly hope so.

DW: Yes. And Ishmael Toruama, of course, has a vested interest, because his government is now the controlling shareholder in Bougainville Copper.

AB: That's right, the shares are intended to be handed over from the PNG government to the Autonomous Bougainville government. But when that happens, they will have about 72 percent the shareholding. So their argument really is that Bougainville Copper is not the same old company that everyone remembers and hates, but it is our company now, and by awarding them the exploration licence, which is what they did back in February, that this is how you develop the economy and how you gain independence. So they really do have an interest in trying to see the ongoing process with the legacy assessment through, and reopening the mine as soon as they can, on their terms.

DW: Now ever since the Peace Agreement [in 2001], there have been shady groups, shady foreigners, it would seem, involved in schemes to reopen the Panguna mine or to deal with the mine in some fashion. Do we know who it is, who's behind the suit, who's driving it, who's paying for it?

AB: We do not know who the investors are. The way this lawsuit started was with a shell company set up in St Kitts and Nevis, which is two islands in the Caribbean. It was on Nevis that it was designed to put together this lawsuit. They have paid out several million dollars to lawyers and other experts to put together this suit. They will pay and shoulder all of the costs, even if they lose.

They will also get between 20 and 40 percent of the profits if they win, but we do not know who is behind it. Nevis is a place that keeps absolute secrecy on who owns companies and who the directors are, so there is no way of finding out. When I asked them, they said they would not tell me. That is not incredibly strange at all for this sort of litigation. This is how the industry works that the investors will be the ones who come up with the idea.

They will look around the world and see where a big company has done something that has hurt people, where people need compensation, and they will say, 'Okay, well, maybe we can do some good, but we can also make some money along the way'. And they will usually do it through some sort of corporate vehicle like this. Sometimes it will be an anonymous vehicle. So we just do not know who they are.

DW: You said that it's a valid means of obtaining money and successful. But has it been successful in developing countries?

AB: There has been some pretty big ones. Australia is somewhere where there have been some pretty big cases brought by indigenous communities. It is a successful way of getting compensation from companies. The US is somewhere where it has happened a lot. The issue is that you can only benefit from a class action lawsuit if you have signed on to it.

So, with the example of Bougainville, there is perhaps 15,000 people that are affected. So far, 4500 have signed up. So those who have signed up will get a share of a payout. Those who have not, will not. It is not really an issue of whether or not these things are successful at winning compensation from companies, because they do. The issue is how the spoils are then divided.

DW: Yes, well that could certainly be another divisive issue.

AB: I hope not.

DW: You have visited the mine in very recent times, obviously. What's your feeling about the push, and certainly in some circles, to have it reopened, when, regardless of how it's done, it's going to continue to cause environmental issues after all this time. It's in the mountains, and the way of getting rid of the waste is still going to be down the river, isn't it?

AB: You are digging out an entire mountain and crushing it up and flushing it down the river, like it is always going to be dirty. It is really hard to get a read on public opinion somewhere like Bougainville, because there is not some pollster that is calling people up and getting percentages. My feeling is that there is significant support amongst a reasonable section of the community for re-opening the mine, just because it is how they will pay for having their own nation.

There obviously are environmental concerns. But the other thing that is worth remembering, and something that you see very clearly when you go there, is that the status quo right now is incredibly dirty, because you have basically the abandoned mine left behind, but also you have hundreds and thousands of artisanal miners going through the tailings of the mine, which is an incredibly destructive thing in and of itself. It is completely unregulated. It also poisons the river.

So, there is mining going on now. It is not as large scale as you would get from a Rio Tinto style miner, but it is incredibly polluting. It is entirely unregulated. There are absolutely no measures in place to stop pollution going in. It is really the kind of dirtiest way of extracting gold out of the river.