Billions, Millions, and the Peasant

Jamie Kneen

National Program Co-Lead

by Albert Koehl

What do poor farmers (campesinos) in Guatemala’s western highlands have in common with the former CEO of a multi-billion dollar Canadian gold mining company? Quite a bit, actually, when the former CEO is Rob McEwen and the issue is a battle against cavalier corporate decision-making. And then again, not much at all when it comes to the doting attention the Canadian media gave McEwen while ignoring the farmers, even though their battle involves their livelihoods -- and lives -- and the same gold.

The Guatemalan farmers in the farming villages of Sipakapa and McEwen are linked to each other by a massive open-pit gold mine. Canadian mining giant Goldcorp acquired the mine and its estimated 2.4 million ounces of gold, along with other Central American mines, after the recent takeover of another Canadian company, Glamis Gold. The farmers oppose the open-pit mine. McEwen opposed the merger. Apparently neither of their opinions matter much.

The farmers' battle

The farmers and generations before them have worked the marginal lands in Sipakapa for several hundred years, since being pushed off more fertile coastal plains. Several years ago, foreigners again arrived in their midst -- quietly at first -- to explore for gold. The foreigners identified a gold deposit, bought parcels of land at inflated prices from neighouring farmers, made various deals among themselves about who would exploit the asset, and obtained permits from the national government.

No one asked the farmers in Sipakapa or the adjacent community to approve this violent intrusion on their lands, even though international law requires the Guatemalan government to consult indigenous peoples before authorizing mining activity on their lands. Guatemala’s own Human Rights Ombudsman recommended that the government revoke the Glamis licence because of the failure to consult.

In June 2005, the farmers organized their own consultation in the form of a referendum. The mine was rejected by 98% of voters. The vote did nothing to slow the project. The company -- Glamis Gold at that time -- challenged the vote all the way to Guatemala’s highest court. No decision has emerged from the bizarre workings of the court in over one year – and no decision is expected any time soon.

The farmers worry that the mine, including its cyanide-leaching process, will contaminate and use up the water they depend on to produce their crops. They also worry that social tensions caused by the mine -- and anxieties provoked by the company’s armed security force -- will open wounds still raw from 36 years of bloodshed that only officially ended in 1996. In January 2005, when protesters blocked a truck carrying a huge cylinder destined for the mine, the police and army arrived in force. One person was killed and twenty injured.

The farmers also brought their opposition directly to Canada in time for Glamis’ Annual General Meeting in May 2006. Juan Tema, the community leader they sent, got an opportunity to address shareholders about the turmoil being caused by the project in their community. Tema was surprised by their total indifference.

The CEO’s battle

McEwen had dedicated twenty years of his career to building up Goldcorp and its forerunner companies. Although McEwen stepped down as CEO in February 2005, he remained a major shareholder.

In the late summer of 2006, the directors of Goldcorp and Glamis worked out a deal to combine the companies. The deal was generous for Glamis stockholders who would ultimately own 40% of Goldcorp. McEwen protested, arguing that he and other Goldcorp shareholders, as the owners of the company, should be called on to approve or reject the deal. Under corporate law, shareholders must usually be consulted and approve changes that fundamentally affect their rights or interests in a company.

McEwen took the matter to an Ontario Court. The court rejected the shareholder vote he sought. McEwen appealed, and lost again. The court decided that the merger did not fit a particular definition under Ontario corporate law that would have required a vote. A disappointed McEwen said, “It is time Canada provided shareholders with fundamental rights that are standard throughout the world.”

The media’s focus

Business reporters in Canada’s leading dailies doted on every detail of McEwen’s fight against the corporate merger. His battle was described as one between 'ideals and reality’ -- a ‘rebel’ engaged in a fight against ‘corporate tyranny.’ The same writers ignored the drama being played out in Guatemala -- a fight that involved people’s livelihoods, and in the case of the violent confrontation, their lives.

There was one rare exception to the lack of coverage of the farmers' battle: a brief on-line story in the Globe and Mail mentioned the community leader’s presentation at the Glamis AGM. The article was headlined: ‘Glamis profit skyrockets’.

Despite his loss in Ontario’s courts, McEwen will remain a wealthy man. The farmers, on the other hand, already live on the margins; their losses are not so easily absorbed. If risks created by the mine turn into consequences, they won’t be able to just move on. Weak local mining laws and a lack of enforcement capacity, along with the absence of enforceable international regulations, simply increases their peril. Low wages paid to locals at the mine, miserly royalties, ambiguities in the Guatemalan tax system, and imported management and machinery mean that most of the benefits from Guatemala’s gold will go to foreigners like Glamis, and its acquirer Goldcorp. The environmental and social risks and consequences will remain local.

“Gold is money!” McEwen had written to other shareholders during his court case. The indigenous campesinos see it differently. For them it is also about the land. The recent words of an Ontario judge, presiding over an ongoing dispute between a First Nations community -- with whom Tema met when he came to Canada -- and a Canadian mining company, could equally be applied to the indigenous farmers: “The land is the very essence of their being. It is their very heart and soul. No amount of money can compensate for its loss.”

“Rob McEwen needs more allies,” concluded one business columnist about McEwen’s battle to be consulted about the merger. The Guatemalan farmers could use a few more allies too and a bit more media attention would be nice as well.

Albert Koehl is a lawyer with Sierra Legal, a Canadian environmental law organization, and a former United Nations investigator in Guatemala. He recently visited the communities near the Glamis-Goldcorp mine in Guatemala, in part as a member of an educational delegation organized by Rights Action, a non-profit group that works with communities in developing countries.