I'd like to congratulate Ian McGugan for his January column ("All's fair in love and
Canadian Business
March, 1997 issue
Letters
Kudos to columnist
I'd like to congratulate Ian McGugan for his January column ("All's fair in love and banana republics, Globetrotter). I have followed the Bre-X/Barrick saga with much agape. I cannot understand how one big Canadian company gets to go overseas and bully a little but enterprising, gutsy and risk-taking Canadian company and get away with it. I don't know what the federal government can do about it, but it seems to me that least someone at Industry Canada should say, "If you're looking for handouts in the future, forget it-- we don't like your corporate culture."
Pat Porth
Here is the article Pat is refering to :
Canadian Business
January, 1997 issue
Globetrotter
by Ian McGugan, Executive Editor
"ALL'S FAIR IN LOVE AND BANANA REPUBLICS"
Why are our pundits exultant and our governments silent about the scandalous treatment of Bre-X minerals?
You would think that when a Canadian company gets ambushed in a corrupt banana republic, the guardians of public morality would be front and centre with condemnations. Not, apparently in the case of Bre-X Minerals Ltd. of Calgary.
Here's what is known for sure: Bre-X stumbled upon what might be the world's richest gold deposit in the jungles of Indonesia. Then Peter Munk, chairman of Barrick Gold Corp. of Toronto, paid a visit to the Indonesian capital in November. Shortly thereafter the Indonesian government ordered Bre-X to sell most of its business to Munk's
company. The government also expressed its desire for a 10% stake in the property.
Outrageous? For sure. Imagine that you had spent your time and energy building a
successful company. Then one day a government flunky shows up on your doorstep,
orders you to sell most of your firm to one of your biggest competitors and informs you
he wants a slice for himself.
ENTER THE SWORDSMAN
That's precisely the situation that Bre-X finds itself in. Yet the Globe and Mail called
the appalling situation "a triumph of international intrigue" and predicted Munk's
Indonesian exploit could prove to be one of his shrewdest." Peter Newman, writing in
Maclean's, also lavished praise upon Munk for his ability to move in on his prey "with
the sophistication and precision of a skilled swordsman, knowing presisely when to
feign and when to thrust."
Now c'mon, guys. Yes Barrick's chief showed cunning. No, there's no evidence that
he broke any Canadian laws. (In fact there are amazingly few laws to restrict the
actions of Canadian companies outside Canada.) But it's fair comment to suggest that
what Munk did in Indonesia and would never have been allowed in any developed
nation. For reasons that are known only to Munk and to the famously corrupt
Indonesian government, Barrick has been allowed to step in and scoop up a gold mine
it didn't discover and has no right to own.
The defences put forward by friends of the Indonesian government and the ruling
Suharto clan are paper-thin. According to the apologists, Bre-X was running into
problems putting the mine into production. Desperate to create jobs, the Indonesian
government had a right to make sure the deposit was exploited as rapidly as possible.
Even if you buy that hokum, the only fair response is so what? If Indonesia really
wanted to speed up production, it could have ordered Bre-X to auction off its
property among the top world's gold companies. It didn't have to direct Bre-X to sell
the mine to the government's favorite, Barrick. And it certainly didn't have to demand a
cut for itself.
Anothe line of defence holds that Bre-X shareholders are going to make out just fine
anyway. They put a few million into exploration; they are walking away with billions.
Nothing wrong with that, say the Suhartos' cronies.
Except that it ignores any concept of of property rights. It also ignores the fact that
Munk and the Suhartos are already fabously rich. If Bre-X was stripped of some of its
wealth to pay for hospitals in Indonesia, it would be one thing. Instead, it's being
divested to further enrich already wealthy plutocrats.
HEAR NO EVIL
IF THERE IS ANYTHING THAT EXCUSES THE MEDIA'S BLINDNESS ON
THE ISSUE IT'S THE CANADIAN GOVERNMENT'S EVEN GREATER
DERELICTION OF ITS DUTY. IT HASN'T RAISED A PEEP OF PROTEST.
"WE REGARD THIS AS A PRIVATE COMMERCIAL MATTER BETWEEN
THESE COMPANIES AND THEIR INDONESIAN PARTNERS, "SAYS A
REPRESENTATIVE OF THE DEPARTMENT OF FOREIGN AFFAIRS AND
INTERNATIONAL TRADE, WHO ADDS THAT BRE-X HAS NOT ASKED
FOR THE GOVERNMENT'S HELP.
SORRY, GUYS BUT THAT JUST WON'T DO. BY REMAINING SILENT,
YOU'RE SETTING A PRECEDENT. WHEN ANOTHER CANADIAN
COMPANY GETS BLINDSIDED IN INDONESIA AND ASKS FOR
OTTAWA'S INTERVENTION, IT'S GOING TO BE AWFULLY DIFFICULT TO
EXPLAIN WHY ITS CASE IS SOMEHOW DIFFERENT FROM BRE-X'S. AND
AS FOR BRE-X'S SILENCE, IT'S PERFECTLY UNDERSTANDABLE. IF THE
FIRM COMPLAINS TO OTTAWA, IT MAY OCCUR THE WRATH OF THE
SUHARTOS AND LOSE EVEN MORE OF ITS FIND.
Ironically the only hope for Bre-X's shareholders is the US courts. A class-action suit
against the NYSE-listed BARRICK could capitalize on the US FOREIGN
CORRUPT PRACTISES ACT, which bars payoffs to foreign government officials.
Still it's a sad day when Canadians have to cross the border to find justice. |
