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Canadian Pensions Are Being Invested In a Mining Company with a Questionable Human Rights Record

The double shooting of activists near a mine in Guatemala owned by Vancouver-based Tahoe Resources is raising questions about how mining activities are increasing violent conflict in the area, and what role the Canadian public may be playing in it.

by Tim McSorley
May 22 2014, 6:56pm



Photo via the Network in Solidarity with the People of Guatemala.
Sixteen year old Merilyn Topacio Reynoso Pacheco and her father Edwin Alexander Reynoso were both shot on April 3, 2014 by unknown assailants. Topacio died of her wounds, and in mid-May her father was still recovering in hospital. Both have been active and vocal critics of Tahoe's Escobal mine located near their community of Mataquescuintla in southeastern Guatemala. Tahoe is a mining company that was founded in Vancouver, and trades on the Toronto Stock Exchange.

The murder of Topacio and the shooting of her father are the latest acts of violence around a mining project that critics in Guatemala and Canada say has failed to gain a “social license” from locals, and that its continued operation will only lead to more conflict. Concerns about the mine are primarily environmental, with fears that water contamination will affect agricultural production and local water sources. Just as central is that despite the concerns, the government ignored over 250 complaints before approving the mine. In an appeal of one rejected complaint, a judge ruled that the government did not follow regulations and that the complaint should have been investigated before a license was granted. That case is still winding its way through appeal. Opposition, though, has continued.

Over the past three years, referenda against the mine have passed by large majorities in the various communities around the mine, with tens of thousands voting against Tahoe's operations. In Mataquescuintla itself, 96 percent voted against the mining project. The latest referendum, in the neighbouring municipality of Jalapa in November 2013, voted 98 percent against the mine. However, the local municipal government where the mine is found, San Rafael de Las Flores, has so far refused to hold a public referendum.

To make matters worse, local indigenous leaders have also have been kidnapped and threatened for their opposition to the mine, gun shots have been fired outside the offices of anti-mining community organizations, and peaceful blockades have been violently ejected by police. While these actions have not been linked directly to Tahoe, the mine's security forces have also used violent force against peaceful protesters. Escobal's former head of security is currently on trial for assault, causing bodily harm, and obstructing an investigation for his role in the shooting of six non-violent anti-mining protesters in April 2013, while he was still working for the mine.

Watchdogs and human rights organizations in Canada like Amnesty International, Breaking the Silence and MiningWatch, along with partner organizations in Guatemala, have been calling for greater accountability and repercussions for Tahoe, saying the company is simply ignoring the conflict in the pursuit of profit.

While Tahoe declined an interview with VICE, in an email response they said that they maintain good relationships with the communities in proximity to their mine. “We have great local support, with 96 percent of our total workforce Guatemalan and most from our local area,” wrote Ira M. Gostin, vice-president investor relations with Tahoe.

“It's simply not true that the company has strong community support,” said Jen Moore, Latin America Program Coordinator with MiningWatch Canada in an interview with VICE, pointing to the local referenda. She said she finds it “disturbing” that a company like Tahoe, which is a spin-off of veteran Canadian gold-mining company GoldCorp that operates in several Latin American countries, wouldn't recognize the degree of community opposition and the tension and violence that it has led to.

“These [mining] companies' actions raise the stake significantly in these areas,” Moore said, adding that even if they have not been found directly responsible for the violence, they have a responsibility to try and find a solution. “We have called for a full and complete investigation into these and other murders," he said. "The company should be calling for the same.”

While MiningWatch and others have been trying to pressure the Guatemalan government and Tahoe itself to address these concerns, they recently turned their sights on the millions of Canadian taxpayer dollars invested in the company.

On May 8, 2014, MiningWatch issued an open letter to the Canadian Pension Plan Investment Board (CPPIB), calling on the Crown corporation to divest the $26 million of public funds it has sunk into Tahoe—an amount that has tripled over the last three years, as tension around the mine has grown.

MiningWatch argues that as a crown corporation managing public funds, they have a responsibility to invest ethically and not fund a project like the Escobal mine that has led to violence, and will likely cause more. Beyond the moral argument, they also say that the community conflict presents a risk to the CPPIB's investment, as it could hurt Tahoe's bottom-line. As an example, following Canadian mining company Hudbay Minerals Inc. being brought to court in Canada for negligence over the alleged attacks and gang rapes of 11 women in 2007, allegedly committed by members of their security force, the police, and the military, the company sold their mine for $176 million—half what it paid for the mine three years earlier.

So, should Canada's manager of our pension money be held to a stricter account than other investment funds? For their part, the CPPIB says their hands are tied: based on their founding legislation from 1997, they are not allowed to consider any “non-investment objectives” when making decisions of where to place Canadians' retirement money.

“However,” wrote Linda Sims, the CPPIB's director of media relations, “as long-term investors we believe that organizations that manage ESG [environmental, sustainable and governance] factors effectively are more likely to create sustainable value over the long term, than those that do not. We also believe that we have a responsibility as long-term investors to conduct ourselves as principled, constructive and active owners.”

While Sims said the CPPIB does not believe it is helpful or constructive to speak about the engagement with specific companies, she did point to their efforts to work closely with companies to improve their community relations and environmental records. In their 2013 Report on Responsible Investing, for example, the CPPIB is currently focusing on extractive industries in particular, working with company executives to increase transparency around community relations, human rights issues, and environmental concerns.

Moore sees investing millions in a company when human rights concerns are already apparent and then pressuring them afterwards as a “naïve” approach. “It's part and parcel of the lack of accountability [for crown corporations like the CPPIB],” she said. “I don't see any leverage for the CPPIB in talking nicely with Tahoe.”

Balancing return on investment and ethical choices can be difficult, said Deb Abbey, CEO of the Responsible Investment Association, a non-profit that works to promote the use of ESG criteria among Canada's investment companies.

“While engagement is an effective process, at some point, an investment manager must assess whether the company is effectively managing risk,” she told VICE by email. “Clearly companies that are involved in risky behaviours abroad are not... There is no trade off between human rights abuses and good returns.”

Until there is an impact on the bottom-line, though, Canadians' money may be staying with Tahoe. This past summer, the CPPIB dropped its shares in Excellon Resources, a Toronto-based company with a controversial gold mine in Durango state, Mexico. The mine was so controversial that community conflict (and the drop in silver prices) caused the company's stock price to drop to the point where the CPPIB pulled their funding. While the CPPIB has said the decision was simply based on stock price, critics of Excellon said that without sustained opposition to the mine, the CPPIB may never have had a reason to divest.

MiningWatch and their partners plan to continue to publicly speak out and pressure the CPPIB to divest from the company. At the end of the day, it isn't so much about how much money the CPPIB has in Tahoe resources—Moore admits that a CPPIB divestment wouldn't have that big an impact on Tahoe's cash flow—but about sending a clear message that companies like Tahoe cannot continue to ignore the impact of their mines without consequence.

“This is a company that very much knows what it is doing. This company [as a spin-off of GoldCorp] knows Guatemala,” Moore said. Community organizers in Guatemala have told her that the degree of violence and criminalization of mining opponents has been much worse here than at other controversial Guatemalan mines. “It's only going to get worse.”

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Merilyn Topacio Reynoso Pacheco
Merilyn Topacio Reynoso Pacheco murder
mining and murder
Edwin Alexander Reynoso
Tahoe's Escobal Mine
Canadian Pension Plan Investment Board