The Multinational Monitor



BHP's Dirty Deeds

THE SAGA OF ONE OF THE MOST DESPICABLE ABUSES of corporate power in recent history has come to an apparent close.

Through a settlement of a landmark lawsuit filed by Australian lawyers in Australian courts, some measure of compensation has been extracted from BHP, the Australian mining giant which operates the large Ok Tedi copper mine in Papua New Guinea (PNG).

But the company's gambit that it could defeat or at least derail a meritorious suit in Australian courts through absolute abuse of the PNG law-making process succeeded. As a result, the company has managed to forestall any truly just resolution of the conflict it engendered with communities living downstream from the mine, and a horrific law has been entered on the PNG books. That law will protect other foreign companies operating in PNG and may soon be copied in other countries, at the behest of multinational corporations whose power increasingly matches that of sovereign governments.

The Ok Tedi mine is one of the world's great mining disasters [see "The Big, Ugly Australian Goes to Ok Tedi," Multinational Monitor, March 1996]. BHP refused to build a tailings (rock waste) dam or construct another means to dispose of the enormous amount of waste rock generated at the mine, choosing instead to dump 80,000 tons of completely untreated rock waste into the Ok Tedi and Fly Rivers every day. The resultant siltation and toxic leaching has poisoned and practically killed the Ok Tedi for 120 miles downstream. Tens of thousands of landholders who relied on the rivers for fish, clean water and support of riverside ecosystems have seen their primary means of sustenance destroyed.

In 1994, the Australian law firm Slater & Gordon filed suit against the company on behalf of 30,000 landholders harmed by the downstream pollution.

In June of this year, BHP and Slater & Gordon announced a settlement of the suit, the value of which is estimated at roughly US$350 million to US$450 million. The terms of the settlement call for BHP to:

Although the amount of money involved appears to be substantial, the terms of the settlement constitute only a partial victory for the landholders.

The commitment to stop the tailings dumping, the most important element of the settlement because it should prevent future harms, is rather shaky. BHP has agreed only to submit its favored tailings disposal option to a PNG government inquiry, and to implement the option if it proves feasible. Slater & Gordon lawyers believe the settlement agreement, enforceable by Australian courts, provides them with the means to ensure BHP carries out the disposal option, but the actual language of the agreement does not inspire confidence.

Even if BHP does abide by the deal, its "preferred option" is to build a 70-mile-long piping system to a downstream dump. This option, estimated to cost between $250 million and $360 million, is the cheapest of several alternatives available to BHP. It is also the least environmentally friendly option. Among other problems, it will still allow 40,000 tons of waste to be dumped into the Ok Tedi every day.

The dredging scheme faces the same uncertainty problems as the tailings disposal plan; BHP states it "has under serious consideration" a dredging plan, but does not guarantee it will carry it out. Even if the dredging of the most polluted parts of the Ok Tedi does take place, it will probably be too little, too late. The upper part of the river is almost biologically dead, and unlikely to regenerate any time soon.

The compensation will constitute a lot of money for the PNG plaintiffs, but it is paltry compared to the sums BHP has raked in from the mine (which earned $120 million last year alone) or to the enormous damage BHP has inflicted on the area.

In any case, money is a poor substitute for the theft of the PNG landholders' way of life. And, unless the compensation dispensation is administered very carefully, the sudden introduction of relatively large money sums in PNG communities which were only recently forced into the cash economy may disrupt the communities still further.

Although the settlement prohibits the PNG landholders and their lawyers from criticizing the agreement publicly, Slater & Gordon lawyers are well aware of the settlement's shortcomings.

They were coerced into settling, however, by a recently enacted PNG law -- drafted by BHP lawyers -- which makes it a crime to bring suits against resource companies in foreign courts. That law essentially criminalized the plaintiffs' actions in the case against BHP.

BHP was willing to settle because of a constitutional challenge to the law (in PNG courts) which was dropped as a condition of the settlement.

Although still vulnerable to constitutional challenge by lawyers other than Slater & Gordon, the law now stands on the books, a dark testament to BHP's insidiousness and shamelessness. It will protect BHP from an OK Tedi-style suit for its other operations in PNG, and, worse, will afford similar protection to the other mining, oil and timber companies ravaging the PNG countryside. Most alarmingly, it may serve as a dangerous model that BHP or other multinational corporations may try to replicate in other countries.

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