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Finally, a public hearing of sorts on the Petaquilla mine

Farmer Juan A. Valdéz isn't reassured

Gold mine sets off feverish arguments

by Eric Jackson

"I'm concerned about this. I'm concerned about what happens whenever you try to get information," farmer Juan A. Valdéz said to the special meeting of the Donoso municipal council.

At this point one of the representatives of the company that's the object of his concern, Petaquilla Minerals, interrupted with the plea that the company's mining concession only encompasses some 3,000 hectares. The representante chairing the meeting cut the interruption short, giving the floor back to Valdéz.

"Who can reassure a farmer? There are 20 communities around this mine, in which people have the sense that things aren't right."

At this point, Petaquilla's Leonel Arosemena interjected that "We are here to clarify all the doubts that you might have." He promised that the company would build a hospital. "Consider all the things that the Petaquilla project can do for the people," he asked. "We have students receiving scholarships. We have hot meals for schools --- how many schools in Donoso have this?"

Petaquilla's Leonel Arosemena came bearing promises

"Why, in Mollejon, are the birds and animals dying?" Valdéz retorted. "We must speak clearly now --- tomorrow is too late.

But Petaquilla's social development spokesman, Mario Julio, denied that the company is damaging the environment. "At this moment we are not using any chemicals," he claimed. "We haven't been using cyanide."

"Well, then, how do you extract gold from the ore?" someone asked from the audience of about 75 people.

"I'm not a technician, I'm a lawyer," Julio pleaded.

Mario Julio said the company isn't using cyanide --- for now

The cyanide issue may well be for the future. It's a standard method of separating the gold from the quartz in which it's embedded, but the mine is not yet in full production. What the local residents and environmental activists do know for the present is that work on the Petaquilla strip mine at El Mollejon is underway without the required environmental impact study, a permit from the National Environmental Authority (ANAM) or any apparent attempt to control erosion from the site. Those who live downhill can see it in the mud that flows down streams and rivers from the strip mine toward the Caribbean Sea.

Although Panamanian law requires the presentation of an environmental impact statement, public hearings and approval by ANAM before a mining project can start, Petaquilla, headed by former Cocle province governor Richard Fifer, sued in Panama's Supreme Court to have the country's environmental laws declared unconstitutional, and while that case is pending has begun its strip mine. The company has cordoned off 20 communities in the northern part of Cocle province and western Colon province's Donoso district, with security guards turning away environmentalists and journalists attempting to enter the area. The blockade is for the residents' safety, the company said when it imposed it.

The Petaquilla strip mine --- photo by ANCON

Credibility problems

However, apart from the defiance of environmental laws the company and its CEO have certain credibility problems. In February of 2005, for example, prosecutors alleged that Fifer, when he was the appointed governor of Cocle under the previous president's administration, put phantom employees -- "botellas" in the Panamanian Spanish jargon that describes common forms of public corruption -- on the provincial government's payroll and paid someone $68,000 by that ruse. They also alleged that Fifer had pocketed a $47,000 check from the government of Spain that was intended for a museum honoring two Cocle brothers who served as presidents of Panama, Harmodio and Arnulfo Arias. Criminal charges were filed.

Fifer went underground -- sort of. While he was a fugitive his lawyers negotiated the cancellation of the arrest order with the courts, Petaquilla's executives had meetings with President Martín Torrijos and, if Petaquilla's press releases are to be believed, Fifer himself met with government ministers. Shares of Petaquilla stock were sold on Canadian exchanges. The company issued a press released on Canada's SEDAR database and the US Securities Exchange Commission's Edgar system claiming that "The Company has been informed that there are no outstanding warrant orders, charges or arrest orders for Mr. Fifer, despite what some newspaper articles are currently reporting." Fifer paid the $115,000 that was alleged to be missing, the arrest order was lifted and replaced by travel restrictions and the case continued. Fifer was obliged to at least formally step down as CEO. By mid-2005, however, the court files were concealed from the public and prosecutors were under orders not to talk about the case.

So might that make embarrassing company for a president? Maybe. With the charges pending against Fifer, on January 26, 2006 Fifer met with Torrijos in the Cabinet Room of the presidential palace and a few days later issued a press release about it. When this reporter checked with the president's press office about it, press aide José Hernández said that the meeting "did not occur." That denial was published, whereupon the Petaquilla company website published a photo of the meeting and Hernández called this reporter back to clarify that the meeting did take place but he didn't know about it because it was a "private meeting" that wasn't on the president's official schedule, and to complain about this reporter delving into the president's private affairs.

In April of 2007 Fifer resumed the presidency of Petaquilla, after Canadian radio stock talk show host Michael Levy was obliged to quit that post amidst much public criticism of conflicts of interest in the stocks he plugged while wearing his imitation journalist hat.

Now Petaquilla stock has run into new credibility problems in the United States, where for years it had been traded over the counter. (It's listed and traded on Canadian, German and Australian exchanges.) In a July 27, 2007 document posted with the SEC on EDGAR, the company admitted that "The design of the Company’s internal control systems over financial reporting and the effectiveness of its disclosure controls and procedures were reviewed during the year ended July 31, 2007, and determined not to be effective." The company defaulted on filings that were due at the end of July. In a November 1, 2007 press release about another issue of Petaquilla stock, the company warned that "The securities offered will not be and have not been registered under the United States Securities Act of 1933, as amended, or applicable state securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This news release shall not constitute an offer to sell or an offer to buy the securities in any jurisdiction."

Since then the nature of the charges against Fifer has again been misrepresented online. On the Panama Guide website, whose owner has for years been pumping Petaquilla stock, there appeared a November 13 article entitled "The (Lack of A) Case Against Richard Fifer." This item, which quickly came down from that website but meanwhile was reproduced on others, blew off the charges against Fifer as follows: "When Richard Fifer was named as the Governor of Cocle he moved into the Governor's (mansion?) and there was no furniture in the building. So, using his own funds, he bought some furniture. When his time was up he moved out and took his furniture with him. The new guy, finding there was no furniture in the building, filed a complaint. It was investigated and when the facts came out and were verified it was dropped. It was never prosecuted, and never will be, because (in truth and in fact) there was no crime committed."

Fifer, Torrijos and a Petaquilla publicist, in the Cabinet Room with Fifer under indictment

Photo from the Petaquilla website

So are Fifer and Petaquilla in trouble with Panama's government?

In Panama private parties can press criminal charges, and Petaquilla has been charged with environmental crimes by both ANAM and privately by a number of environmentalist groups. As best can be told with court documents sealed and prosecutors ordered not to talk, the embezzlement of public funds charges against Fifer are still pending.

However, on November 15 the number two man on President Torrijos's National Security Council, Marcel Salamín, resigned his public post to become a Petaquilla director. Salamín had been an advisor to the president's father, military dictator Omar Torrijos. As La Prensa journalist and environmental activist Lina Vega Abad commented about Salamín in one of her columns, "More power and influence [are] impossible." By all appearances, and despite the Torrijos administration's assurances to visiting US congressional delegations that Panama enforces its environmental laws, the government is backing Fifer and his company regardless of any legal questions.

Rancher Amancio Villarreta doesn't believe Petaquilla's promises

Public relations problems are another matter

Because most people in the sparsely populated Donoso district make their livings from farming, ranching or fishing, suddenly mud-laden streams are a big political issue. Not only do people and cattle drink the surface water, but people eat the fish that spawn in the rivers or that thrive around the coral reefs near the rivers' mouths. "This is a mockery, an insult, a direct attack on the people of Donoso," charged Pedro Camargo, a member of the anti-mine Committee for the Defense of Donoso. "We live off this land."

Mine opponent Pedro Camargo blasted Petaquilla the politicians

But Mario Julio promised "a better quality of life for the farmers." Answering Camargo and the others, he said "we respect your doubts but you must take account of realities. The Republic of Panama is in a process of expansion."

That didn't convince rancher Amancío Villareta. "The presentation has been very pretty, but I have a concern. The pay is very good, but everyone here isn't qualified. You have to know how to run a big machine." He added that the money offered to people displaced from their lands is insufficient and that the lure of high wages that a few will earn at the mine mean that nobody will work for ranchers at the customary pay scales anymore.

Representante Eliseo Rivera Miller (Partido Popular - Gobea)

Politicians under pressure

Donoso's representantes -- elected members of the municipal and provincial councils -- called their public hearing in the absence of the hearings that would ordinarily take place under the environmental laws. Under Panama's highly centralized form of government, what these officials think or do will be of little legal consequence. However, they have anxious constituents.

Judging by who applauded whom and what those who spoke said, the great majority of the people at the hearing opposed the mine, but a few thought it would be good for the economy. The representantes surely have their opinions, but took the occasion to listen.

Raúl Esquina Luján, who represents the corregimiento (municipal ward) of Rio Indio, is a member of the Panameñista Party, which on the national level is part of the opposition. "We have very complex problems in this district," he pointed out. "We need technical disclosure by the government and by the company, which can lead us to an understanding. We need a solution that makes the most rational use of resources."

Esquina's colleague Eliseo Rivera Miller represents the neighboring community of Gobea and is a member of the Partido Popular, the formerly Christian democratic party that's a junior partner with Torrijos's Democratic Revolutionary Party (PRD) in the national government coalition. "The company has mishandled information going to this community," he charged, arguing that the local government needs to set up a committee to visit the mine and investigate its effects.

Environmentalist Raisa Banfield gave a PowerPoint

presentation that argued against strip mining in general

Extra update:
Dixon rejected for International Criminal Court post
Finally, a public hearing of sorts on the Petaquilla mine