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Indonesia, USA's Newmont Reach 30m-Dollar Settlement Over Pollution Claim

Posted on: Friday, 17 February 2006, 06:00 CST

Text of report in English by Tb. Arie Rukmantara, carried by Indonesian newspaper The Jakarta Post website on 17 February

The government and gold mining company PT Newmont Minahasa Raya (NMR) signed Thursday (16 February) a 30m-US dollar out-of-court "goodwill" settlement of their contentious dispute about pollution of Buyat Bay in North Sulawesi.

The deal, with payments to be made over a 10-year period, ended a civil suit dating back to last March. The government's demand of 133m dollars compensation for alleged dumping of tailings in the bay was dismissed by the South Jakarta District Court in November.

The US subsidiary has denied allegations it dumped tons of toxic waste into the bay through a submarine tailing disposal system, endangering the health of local residents.

Environmentalists roundly panned the deal, saying it pandered to the interests of big business.

Although the amount was smaller than the original demand of the civil suit, Coordinating Minister for Public Welfare Aburizal Bakrie said it was acceptable to both parties and showed a "commitment to proper care of the environment and to sustainable development".

The funds will be used for environmental monitoring and community projects.

"We are not talking about who won or lost here, but we are talking about what's best for the people living near the mining site," he said.

Under terms of the deal, the company will transfer an initial payment of 12m dollars to an escrow account 10 days after the signing. Once the government drops its appeal of the South Jakarta District Court's ruling, the fund will be transferred to a foundation responsible for managing the fund disbursement for projects.

The company also will make annual payments of 3m dollars from 2010-2015.

Part of the deal involves the formation of a panel of scientific experts from the government and the firm to ensure there are no negative impacts of the company's operations.

The government said the deal would not affect the criminal case being heard at a North Sulawesi district court, where NMR's executive director Richard Ness is being tried for polluting the bay. He could face a maximum sentence of a 10-year prison term and 68,000 dollar fine.

Environmentalists said the settlement showed the government's failure to enforce the environmental protection law.

"It is an evil agreement made by parties with no interest in the Buyat people's fate," said Siti Maimunah of the Mining Advocacy Network.

"The money is nothing compared to what the people of Buyat have lost. They lost their health, they lost their homes, they even lost their relatives who died of illnesses caused by the pollution."

Legislator and former environment minister Sonny Keraf said the deal was a "bad example", because corporations would rely on out-of- court settlements whenever they broke the law.

"What the government should look at is enforcing the law, not seeking money," he said, adding the legislature should demand an explanation of the settlement.

Indonesian Forum for Environment executive director Chalid Muhammad said his organization would continue the legal battle against Newmont by suing the company on the same pollution charges.

"At the same time, we will also sue the government for letting Newmont commit such a crime," he said.

NMC CEO and chairman Wayne Murdy said the settlement was no admission of guilt. "There has never been a scientific study showing that we have polluted the bay," he said.

State Minister of the Environment Rachmat Witoelar said his office would decide on the best way to use the funds. "Currently, the people of Buyat live in uncertainty. The fund will help ensure their future," he said.

NMR, which operates another mining site in East Nusa Tenggara and North Sumatra, claims that since its North Sulawesi operation started in the mid-1990s, total direct and indirect benefits to the Indonesian economy reached about 500m US dollars.

Source: BBC Monitoring Asia Pacific

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