Indonesians see “slap in face” in corporate pollution settlement

Indonesia’s Environment Ministry is evidently caught between ecologists and nationalists demanding a tougher line on foreign corporate polluters and a judiciary that seems beholden to the corporate shadow government. The New York Times noted Feb. 17 that under the terms of the $30 million out-of-court settlement (termed a “goodwill agreement”), the government will drop its $135 suit filed against Newmont Mining of Colorado after villagers near its gold mine at Buyat Bay in North Sulawesi developed tumors, rashes and other illnesses caused by mine waste. From the Jakarta Post, Feb. 18:

Rachmat says $30 million Newmont deal no slap in the face
State Minister of the Environment Rachmat Witoelar has defended the government’s out-of-court settlement with PT Newmont Minahasa Raya, saying US$30 million was better than no compensation at all.

“If there’s someone who’s upset about the ruling, why don’t they ask the presiding judge (in the original civil suit)? The settlement occurred because the court dismissed our demand. I’ve suffered because the court trampled on me,” he said Friday.

The South Jakarta District Court dismissed in November a civil lawsuit in which the government sought $133 million in compensation for alleged dumping of tailings in Buyat Bay, North Sulawesi, by the gold mining firm.

The company, a subsidiary of U.S. corporation Newmont Mining, has denied allegations it dumped tons of toxic waste into the bay through a submarine tailing disposal system, endangering the health of local residents.

Coordinating Minister for Public Welfare Aburizal Bakrie and Newmont vice president for Indonesia and Australia Robert Galagher signed what was termed a “goodwill” settlement Thursday. The settlement has no bearing on a pending criminal trial of the company’s executive director Richard Ness.

The money, which will be disbursed over a 10-year period, will be used to set up an environmental monitoring and assessment program in the region.

Under terms of the deal, the company will transfer an initial payment of $12 million to an escrow account 10 days after the signing. Once the government drops its appeal of the court ruling, the funds will be transferred to a foundation responsible for managing their disbursement to environmental monitoring and community projects.

The South Jakarta District Court, Rachmat said, had asked for an international rehabilitation program for Newmont, which could take at least two years. With the “peaceful” settlement, however, Buyat residents would reap benefits within two months from the implementation of a housing construction program.

“I’ve pledged that the money will be used to sustain the environment of Buyat Bay. The point is that office of the state minister of the environment is striving to fight for the public and environmental good. It’s better than not getting anything at all and being defeated in court.”

Rachmat acknowledged that the outcome of the case was a valuable lesson about the importance of revising the current environment law, currently before the House, and giving more authority to the office of the state minister in pollution cases.

Meanwhile, Bruce Gale, an independent political risk analyst in Singapore, told Bloomberg news service that foreign investors “are watching to see whether justice will be done in the criminal case”.

President Susilo Bambang Yudhoyono has pledged to resolve the Newmont dispute as a way to win more foreign investment through better investor confidence.

“We think the agreement won’t satisfy all sides, but this is the best option for us to resolve the dispute for the welfare of the people there,” Aburizal Bakrie said Thursday.

See also “Indonesia: Report Heightens Pollution Dispute with Newmont Mining,” NYT, Nov. 8, 2004 via CorpWatch

See our last post on Indonesia, and the Newmont case.