Marcopper issues: Missing $13 million escrow fund. Senate investigation next?

Hiding heads in the sand

Non-disclosure of information important to local people by those in the know is the best formula to make them become continuing victims of manipulation and exploitation. A case in point is what's now being branded as a ‘myth built on hope’ – the matter concerning the escrow fund purportedly left behind by Placer Dome in 2001 to effect a clean-up of the Boac River after the Marcopper mine spill in 1996. For twelve years now the people of Marinduque were made to believe of its existence but a large number of the population chose to hide their heads in the sand on the question ‘ where did that money go?’.

Catherine Coumans is Research Coordinator responsible for the Asia-Pacific Program at MiningWatch Canada who has worked with many communities affected by mining in many Asian countries including the Philippines, and has extensive knowledge of issues related to the Marcopper mine-spill problem in Marinduque. She has provided expert testimony on mining in two congressional inquiries in the Philippines (1999, 2001). In a study, Placer Dome Case Study: Marcopper Mines, April 2002, she wrote:

“There is a long history in this case of information that was of critical importance to local people, local and national government in the Philippines and to shareholders being kept confidential. In fact, most important information that has become available has come out as a result of legal action, Congressional Inquiries and leaks.

"For example, information on Placer Dome's Cayman Island holding company, MR Holdings, came out through legal action, information on the low level of insurance held by Marcopper came out through a Congressional Inquiry, as did information on the agreements Placer Dome originally entered into with Marcopper after the spill. Information about the Klohn Crippen report (June 14, 2001) was leaked before a Congressional Inquiry in 2001, as was the information that Placer Dome has provided $13 million dollars to Marcopper to continue the clean up of the Boac River."

Coumans also wrote that the contents of an agreement between Marcopper and Placer Dome before the latter left the Philippines was not disclosed. “A "redacted" copy of this agreement was finally provided through a Congressional Inquiry in 2002 but this has had all relevant information removed including the signatories to the agreement”, she stated in the study.

One may assume that the process of spending the escrow fund would be included in that agreement. But where else could we find reference to those funds? What was stated and who said what?

One is a 2003 publication apparently aimed to promote the ‘positive role’ of mining in the Philippines. (Philippine Mining: It can play a positive role, The Wallace Business Forum, Inc. Dec. 2003):

"PDTS (Placer Dome Technical Services), re-applied for a deep-sea disposal permit during the final days of the Estrada government to clean up the remaining mine wastes, which then environment secretary Antonio Cerilles approved. Weeks later, the permit was cancelled under the new administration of President Gloria Macapagal-Arroyo.

"In November 2001, PDTS left the Philippines but it set aside $13 million in an escrow account for the completion of the clean-up and further compensation. An international fund management firm was hired to oversee the account and the completion of the clean-up work was passed on to Marcopper."

By 2004 we find the Inquirer with a story asking about the escrow money:

"THE $12 million earmarked for the cleanup of a Marinduque river - which has been polluted with mine tailings - appears to be missing, according to officials of the Mines and Geosciences Bureau.

"Environment Secretary Michael Defensor has directed the bureau to look for the $12 million the Canadian company Placer Dome Inc. released for the cleanup of the river…

"(The fund) is supposed to be held in escrow in a bank," said Horace Ramos, Mines and Geosciences Bureau director. "But as to which bank and to who's account (the fund is deposited), we still need to verify with Placer Dome and Marcopper."

By February 2005 Defensor appears to have additional information about the ‘missing’ fund: (MARCOPPER: Firm told to release funds for mine structures repair,  Posted: 2:29 AM | Feb. 07, 2005, Christine A. Gaylican)

"DENR Secretary Michael Defensor on Saturday said that the structures, particularly four vital dams, should be repaired immediately to avert another disaster.

"Based on the independent evaluation of the United States Geological Survey (USGS), repairs must be done and we will issue a demand letter for strict compliance of Marcopper to repair and extend the remediation funds," Defensor said.

"Defensor said the $12-million rehabilitation fund had been in escrow with an international bank before Marcopper's mother firm, Placer Dome, decided to transfer the fund to F. Holdings of businessman Teodoro Bernardino--the current majority shareholder in Marcopper.

"Some P62 million had been released to the local government units in Marinduque to compensate the affected residents."

An Oxfam International report highlights continuing problems in Marinduque, April 14, 2005. With Keith Ferguson, vice president for safety and sustainability of Placer Dome a few things were established:

"In all, it spent about $80 million US, although Ferguson says some of that money also went to pay off Marcopper's debts. The company also paid $1.8 million US in compensation to victims of the spill.

"We came forward in 1996 to deal with the river spill and then we stayed from 1996 to 2001 through (the subsidiary) and we left money aside to effect a cleanup and to pay for compensation,'' Ferguson says. Placer Dome Technical Services left those funds in an escrow account for the mine and its new owner, registered as F Holdings."

In that year, 2005, this blogger, as a concerned Marinduque citizen was privileged to have some e-mail exchanges with Dr. Coumans of MiningWatch Canada on prevailing issues then. The escrow fund was one such topic among others. Am now sharing excerpts of some email to somehow shed some light on this matter: 
  

"After leaving the Philippines in 2001 Placer Dome did make pre statements about leaving money behind in escrow to cover clean up and compensation (the company has never divulged the amounts as keeping this secret was probably part of the agreement). As Congressman Reyes was coming to Canada with GMA in March of 2002, I visited government departments here involved in the visit to "warn" that she may raise the issue of Placer's sudden departure without fulfilling its post spill promises…

"To make a long story short, one bureaucrat came to Placer's defense using a briefing note Placer has provided government ahead of the GMA visit. The briefing note clearly set out the amounts 12 million for clean up and 1 million for compensation in it… I can assure you - the amounts being quoted come from that briefing note and from no other source. 

 "I also raised it at the AGM in 2003 and Keith Ferguson explained that the money was in escrow - he did not deny it existed…"

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On the mysterious escrow fund which this blogger also inquired about as mentioned, information available here being scant, the following forwarded message was received:

-----Original Message-----From: Keith_Ferguson@placerdome.com
Sent: Sat 12/03/2005 10:18 AMTo:
“XXXXXX, you asked me about the process to release funds from the escrow account for the remaining river clean-up at Marcopper.  Following is the process.

“Placer Dome deposited sufficient funds in the bank account of an escrowholder to remediate the remaining tailing in levee banks, spillovers andpatches along the Boac River.  The escrow holder is a large institutionalBank in New York, New York.  The international engineering consulting firmURS must certify that F Holdings (a major shareholder in Marcopper at thetime Placer entered into the clean-up arrangements), has completed theremediation work at specified milestones.  Once the Bank receives certaindocumentation, including a copy of the certification statement from URS, itreleases a portion of the escrowed funds from the bank account to F  Holdings.
RegardsKeith”

xxxxxxxx

By April 2006 The Sangguniang Panlalawigan of Marinduque was holding a special session jointly with the six municipal councils of the province to come up with “urgent alternative solutions to the imminent and present danger” posed by the Upper and Lower Makulapnit Dams in the abandoned mine site.

The following report is from a MACEC press release, Repeat of Boac River Disaster of 1996 alarmed Marinduqueofficials, April 4, 2006:

“… The Joint Session also adopted a resolution requesting President Gloria Macapagal-Arroyo to allocate funds for the immediate remediation works in Marinduque, assign technical teams from concerned national government agencies which will come up with comprehensive remediation plan in accordance with the recommendations contained in the Khlon Crippen and the United States Geological Survey (USGS) reports.

"The officials also called on Marinduque Representative Edmundo O. Reyes, Jr. to help them trace the paper trail of the funds deposited by Placer Dome, Inc. through an escrow holder bank in New York. They also unanimously agreed that it is important to know the whereabouts and status of these funds in order to finance the remediation works in Marinduque."

Then in November 2006: An ‘expiration’ on the escrow account was divulged by DENR engineer Mike Cabalda. (Marinduque exec wary of DENR dam report, PDI, Nov. 13, 2006)

"… the entire provincial board and the vice governor of this province met with (Secretary) Reyes and other DENR officials on Nov. 7 (2006), to discuss the integrity of the Marcopper dams and their immediate repair to prevent a repeat of the mine spill tragedy of 1996 in Boac River. Nepomuceno said they agreed that the repair of the dams would be funded by the $12 million escrow deposited by the mining company in a bank in Hong Kong known only to select government and Marcopper officials.

"The escrow was initially intended for the cleanup of the Boac River. Nepomuceno said Reyes told them that the amount was still intact as assured by a former Placer Dome executive who is now working for an international non-government organization that is willing to undertake repairs of the Legacy Mines in the Philippines, including the Marcopper dams.

"…Government authorities, meanwhile, have to work double time because DENR engineer Mike Cabalda said during the meeting that the escrow fund is about to expire next year. "We have to find ways to have it released as soon as possible," Nepomuceno added."

Came 2007. Some twists and turns. (Marinduque dad unhappy over pace of suit vs mining firm. By Gerald Gene R. Querubin, posted 03/25/2007 Inquirer.net). Philippine Daily Inquirer reported that former provincial board member Melecio Go was concerned about the expenses already incurred by US lawyer Scott in the Nevada case and that among other concerns, Scott was able to persuade the provincial government to attach to his contract with the government the “escrow fund deposited in 2001 by Placer Dome in a financial institution intended for the rehabilitation of the Boac River.”

Excepts from the rather lengthy news report:

"(US lawyer) Scott had already incurred as of December 2004 the amount of $3.4 million (roughly P170 million) in expenses and attorney’s fees -- and counting -- since he was hired to represent the province in the Nevada courts.

"Scott’s billing statement to the province said the total expenses they had incurred was $3,429,317.93, representing expenses paid of $225,010 and attorney’s fees of $3,204,307.93. The statement also said there were 38 individuals working on the case who had served a total of 10,517.9 hours.

"…In the Special Outside Appointment and Engagement Agreement that Scott signed with the representatives of the province in July 2005, the lawyer will be paid 10 percent of the first $15 million recovered, with reimbursement of expenses from the first $15 million not to exceed $500,000 or 40 percent of the next $35 million of recovery or 33 percent of any recovery above $50 million.

"Further, the agreement provides that the counsel may withdraw any time, either for cause (such as nonpayment of fees or expenses and costs upon recovery, or a settlement made without the counsel’s knowledge).
"If the counsel withdraws for cause, he will be entitled to reimbursement of expenses and costs he advanced from any recovery and payment of the contingent fees from any recovery attributed to counsel’s efforts prior to withdrawal and 20 percent of any other and further recovery thereafter.

"If the counsel withdraws without cause, he will be entitled to reimbursement of expenses and costs he advanced from any recovery and the fair value of his services in connection with any efforts that have not yet resulted in any recovery, payable solely out of recovery ultimately obtained and the payment of contingent fees from any recovery attributable to his efforts prior to withdrawal.

"The stipulated compensation package, Go said, was detrimental to the province because Scott was able to persuade the provincial government to attach to the contract the $15 million escrow fund deposited in 2001 by Placer Dome in a financial institution intended for the rehabilitation of the Boac River.

“With the compensation provisions of the contract, Scott is already assured of getting 10 percent from the $15 million escrow fund which is already in place at the time that he signed the agreement to represent the province. That fund is intended for the rehabilitation of the river and should not be included in the contract at all,” Go said."

Until recently, that was probably the last time something about the escrow fund was mentioned in mainstream media. Then last Wednesday, Sept. 11, 2013, PDI ran the story wherein the Mines and Geociences Bureau of the Department of Environment and Natural Resources denied the existence of the escrow fund.  In the same report, Walter Scott, the lead counsel of the Provincial Government of Marinduque in the Nevada case branded the escrow fund as a “myth built on hope but no less a myth”.

The said story adds:

“A 2006 Inquirer report also quoted another board member, Alan Nepomuceno, as saying that the money was deposited in a bank in Hong Kong with details “known only to selected government and Marcopper officials.”

“Lawyer Miguel Ongsiako, counsel of former Marinduque Representative Edmund Reyes, said in an earlier phone interview that the escrow deal was entered into by the DENR and Barrick.

“But Jasareno (MGB Director), said the DENR had no knowledge of any such fund."

How is it possible then that numerous government agencies, non-government organizations, even scientific communities and local communities have spent hundreds of days, thousands of hours, altogether incurred millions of pesos in the process of finding solutions to a poor, defeated people’s pleadings – from numerous health issues related to mining to remediation and rehabilitation of bays, rivers, shores and earth dams that are ticking time-bombs – could be had and continue to be fooled?

The Senate’s turn?

Relevant Congressional inquiries appear to have failed to produce tangible results except the leaking of information that merely raised more questions than answers.

Maybe it’s the turn of the Philippine Senate to conduct an investigation into this important issue - to include related concerns of today in this continuing saga on corruption where the people of Marinduque are systematically kept in the dark on matters directly affecting many aspects of their lives? Our lives?