Freeport – McMoran Mining Corporate Greed
There is a U.S. multinational corporation on the loose that
watchdog organizations are keeping a close eye on. The company is a picture perfect
example of a multinational company that knows no bounds in the race for profit, say human
rights and environmental organizations.
The corporation is a New Orleans-based mining company named Freeport-McMoRan Copper and
Gold. Its critics call it a monolith of U.S. corporate greed that has successfully evaded
accountability for human rights violations and environmental devastation, escaped U.S.
government audits, bought out the reporters investigating its operations and dodged
responsibility for its crimes by blaming the very military forces that protect its
In 1969, the glitter of Indonesia’s abundant gold, silver and copper resources caught
Freeport’s eye. Today, Freeport’s Grasberg mine in Irian Jaya is the world’s largest gold
mine and third largest copper mine, valued at $50 billion to $60 billion; a virtual golden
egg of gargantuan proportions for its owners.
But for the people who live in Irian Jaya, the gold mine has been a nightmare. The
dispossession of their lands, forced resettlement into malaria-ridden lowlands, pollution
of rivers, and worse — torture and extrajudicial killings — have been the result of
Freeport’s mines for the Amungme, Dani, Moni, Komoro, Ekari and Nduga people, say human
"Freeport has taken over and occupied our land," said Tom Beanal, leader of
LEMASA, (which stands for Amungme Tribal Council) the community organization of the
indigenous Amungme people. "Even the sacred mountains we think of as our mother have
been arbitrarily torn up by them, and they have not felt the least bit guilty. Our
environment has been ruined, and our forests and rivers polluted by waste."
For his part in the financial success of Freeport-McMoRan, CEO Jim Bob Moffett raked in
$83 million for 1995 and 1996 combined. Business Week named Moffettt the tenth most highly
paid CEO in 1996.
"Looking at it another way," reported the Austin Chronicle in April,
"Moffett’s pay was nearly three times the total amount that (Freeport) has agreed to
pay several thousand Amungme tribal members who have been displaced by the company’s
mining projects in Indonesia."
The Multinational Monitor named Freeport as one of the ten worst corporations of 1996.
However, for the money-minded, Freeport-McMoRan Copper and Gold was listed as number 628
in the 1997 "Fortune 1000" listing of the biggest U.S.-based corporations.
Meanwhile, members of the indigenous Amungme tribe have literally watched their
mountain disappear — mining has removed enough earth to lower the mountain by 400 feet in
the last seven years, and now the Ajkwa river is so badly polluted from the mine, that
Kwamki-lama residents have been warned by Freeport’s own employees not to drink the water
or eat plants that grow near the water.
Mining the Earth, Undermining Justice
In its annual report, Freeport acknowledges its responsibility in
dumping over 125,000 tons of potentially toxic rock waste (tailings) into the rivers of
Irian Jaya every day. By Freeport’s own estimates, the Grasberg mine dumped more than 40
million tons of tailings into the Ajkwa River in 1996. This has created a wasteland in the
river valley below that pose major environmental, health and safety hazards for the
surrounding ecosystem and the local inhabitants, say environmental organizations. Moffettt
was quoted in the September/October issue of Mother Jones as saying that the environmental
impact of the mine is the equivalent of "me pissing in the Arafura Sea." But the
Amungme people and environmental organizations argue that the reality is quite different.
"The Amungme’s land rights have never been acknowledged by the company, nor has
the tribe been compensated for the ravages the mine has wrought on their land," said
Danny Kennedy, director of Project Underground, an organization that supports communities
threatened by mining and oil industries. "It has instead faced fierce repression and
injustice for demanding that the owners of the land recognize both the tribe’s right to
the land and its right to live in a clean environment." In response to the
controversy concerning land rights, Freeport said, "The land within Freeport’s
Contract of Work Area, like almost all land in Indonesia, is legally "tanah
negara" (state-owned land) under the terms of the Indonesian Constitution. Under the
Contract of Work with the government, Freeport has been granted clear legal right to use
specified are to conduct our operations during the term of the contract."
According to BBC reports, the repression of the local population has caused the deaths
of hundreds of people since the mine began operations in 1972. "We have not been
silent," said Beanal. We protest and are angry. But we have been arrested, beaten and
put into containers; we have been tortured, even killed."
The Australian Council for Overseas Aid and the Catholic Church of Jayapura both
reported that Freeport turned a blind eye while the Indonesian military killed and
tortured dozens of native people in the surrounding area near the mining concession.
"Villagers were beaten with rattan, sticks, and rifle butts, and kicked with
boots," one tribal leader told Catholic Church officials. "Some were tortured
’til they died."
Filling Suharto’s Pockets
Freeport adamantly claims no responsibility for human rights
violations, but the company’s critics point to the close relationship between Indonesia’s
President Suharto’s military regime and Freeport. The mining company provides housing,
food and transportation to the military, in return for their services guarding the mine.
The sub-district of Timika, the location of Freeport’s mining concession, is presently the
most militarized district of all Indonesia, including East Timor. The U.S. State
Department, in it’s 1995 report on Indonesia, stated, "where indigenous people clash
with development projects, the developers almost always win. Tensions with indigenous
people in Irian Jaya, including the vicinity of the Freeport McMoRan mining concession
near Timika, led to a crackdown by government security forces, resulting in the deaths of
civilians and other violent human rights abuses."
Freeport continues to maintain close relations with Suharto’s regime, which has a 10%
share in the mine. The Indonesian government will receive an estimated $480 million this
year in royalties, taxes, and benefits from the mine; not to mention a smelter to be built
on Java, which is being constructed in a joint venture between Freeport and Mitsubishi. In
a statement released to address Freeport’s relationship with the Indonesian military, the
company said that its "relationship with the Indonesian Government is stipulated in
its Contract of Work, which requires Freeport to grant the Indonesian Government,
including the military, access to its infrastructure. The company is contractually obliged
to provide logistical support for any government official, including the army."
Company critics believe Freeport’s hides behind its relationship with the Indonesia
government, in order to dodge responsibility for the violations committed by the
government’s security forces protecting the mine.
Freeport’s ties with the Indonesian Government do not stop with the military. In March
of 1997, an Indonesian company known as PT Nusamba acquired about 4.5 percent of Freeport
Indonesia, in a bizarre business deal by which the $254 million commercial loans for the
purchase were guaranteed by Freeport-McMoRan Copper and Gold itself. As it turns out, PT
Nusamba is controlled by a prominent Indonesian businessman named Mohanad "Bob"
Hasan, a close friend of President Suharto. And Nusamba is a subsidiary of the Nusamba
Group, of which the majority is owned by foundations chaired by Suharto.
"Essentially, this created a situation where an American business is underwriting
the purchase of its stock by the President of Indonesia," said Kennedy.
Furthering the Power Block
According to Federal Election Commission documents,
Freeport-McMoRan gave the Democratic National Committee $40,000 on August 26, 1996. On
September 6, the wives of Freeport’s top executives, Chief Financial Officer Richard
Adkerson, vice chairman Rene Latiolais, and chief investment officer Charles Goodyear,
wrote checks to the DNC totaling $35,000. Four days later, Jim-Bob Moffettt’s wife Louise
wrote a check to the DNC for $2,500, for a total of $77,500 in donations from sources
related to Freeport- McMoRan.
In order to solidify its collaborative power-block even further, Freeport has lobbied
Washington for military aid to Indonesia, has strengthened its links to other
multinationals such as Fluor Daniel, Mitsubishi, RTZ-CRA and Asarco. In October of 1995,
the Overseas Private Investment Corp. (OPIC), a US federal agency that supports American
companies doing business overseas, canceled Freeport’s $100 million political-risk policy,
after a lengthy investigation. The report cited environmental problems at the mine. In a
letter dated October 10, OPIC told Freeport that the mine "had created and continues
to pose unreasonable or major environmental, health, or safety hazards with respect to the
rivers that are being impacted by the tailings, the surrounding terrestrial ecosystem and
the local inhabitants." The OPIC insurance policy was reinstated in April 1996, after
Freeport threatened to file a protracted lawsuit against the federal agency, but then
Freeport instead decided to cancel its insurance policies with both OPIC and the World
Bank’s Multilateral Investment Guarantee Agency (MIGA) five months later. In so doing,
Freeport avoided an imminent investigation by the World Bank agency into its mining
operations. This powerful collaboration of multinational corporations, government ties and
military force has supported Freeport in its battle against the protests of the local
population, international human rights organizations and environmental organizations.
On April 29, 1996, Tom Beanal filed a $6 billion class-action
lawsuit against Freeport on behalf of the Amungme people. Beanal’s lawyer, Martin Regan,
has charged Freeport with "eco-terrorism" and "cultural genocide." He
has stated that the company’s private security guards, acting under corporate policy, have
engaged in arbitrary arrests and detention, torture and property destruction.
A federal judge rejected the case, on the grounds that the environmental claims could
not be tested against any international law, and the human rights charges were unclear.
However, the lawsuit has been refiled, with clarifications of Freeport-McMoRan’s alleged
human rights violations. The suit now appears to have a good chance in court under the
Alien Tort Compensation Act, said Kennedy. However, Freeport believes the lawsuit has no
basis in law or fact. "It is clear that the Irianese supporting the suit are being
misled by lawyers and activist groups seeking to advance their own agendas," the
Attempting to placate the local indigenous people, Freeport offered to invest one
percent of its annual profits (roughly US $15 million) in local "development"
schemes. The offer was rejected by Beanal. He pointed out that Freeport had failed to ever
consult with the indigenous community or to compensate them for the years of environmental
damage and human rights abuse. Although the Amungme people have received some material
assistance from the company, tribal elders say their people’s living standards are low.
Only 13% of the 17,000 employees working at Freeport are people from Irian Jaya.
"Speaking on behalf of the entire Amungme community, from Delematagal to Jigimugi,
[we] will continue to wage a struggle for the rights of the Amungme people, with regards
to their rights to their natural resources and their environment which has been damaged by
Freeport," Beanal said. Beanal was recently awarded the Jane Begley Lehman Award in
recognition for his commitment to addressing social justice issues.
Jenna E. Ziman is a Washington, D.C.-based freelance reporter.