Speech to Mining Industry Representatives Addressing Criticisms of C-300, April 15, 2010

Friday, April 16, 2010

I could take you on a world tour of allegations concerning Canadian mining companies but you probably already know the countries involved:

Chile, Argentina, Papúa New Guinea, Peru, Honduras, Guatemala, Tanzania,  El Salvador, Ecuador etc.
What happens now is a flurry of headlines - usually bad- bad for the company- bad for the industry- bad for Canada- the damage is done no redress for anyone.

The lawyers show up - threaten a few slapsuits, and the PR people do their magic - end of story. But is it?

It’s not a good day for anyone when our own Governor General has to face down protestors in Mexico chanting Canada go home- not good for Blackfire to be accused of assassinations, bribery and corruption. Hard to meet with the son of the murder victim (as I have) and not feel some level of shame and embarrassment.

This is repeated over and over again.

In Guatemala, it’s better to describe yourself as an American.

El Salvador, just released a film about Canadian mining injustice narrated by none other than Martin Sheen.
In Ecuador there was another film, “Under the Rich Earth” by Malcolm Rugge. It screened at the Toronto International Film Festival, was a top ten winner in the Vancouver Film Festival, won best Documentary in Hamburg, as well as awards in Mexico City, Warsaw, etc.

Now all of this may be smoke and no fire or there is something to it. I’m in the latter camp. So what to do?

Ideally the Roundtable report of 2007 would have been implemented by now, but it will be a frosty Friday before we see any real action by this government. The CSR counsellor is supposed to be the response, but she is toothless because she has neither the investigative authority nor the ability to sanction. Much of what she is doing is already being done by PDAC through E3 plus.

I wrote to her a number of months ago to find out how many files had been opened. Haven’t heard back. Must be Canada Post. I also wrote to CPP and EDC to ask if they considered themselves bound by the CSR counsellor’s findings. Canada Post again.

So into this maelstrom of activity and non activity comes C-300- a modest Private Member’s Bill by anyone’s standards. It merely provides for a withdrawal of Canadian taxpayer money through EDC and CPP in the event of a company being found to be outside of recognized CSR and environmental standards.

To listen to the industry you would think that this is the end of “Western Civilization” as we know it.

Interestingly while C-300 applies to both the extraction sector and oil and gas, it has been largely the mining companies that have done most of the screaming. So I thought that I’d take a page from David Letterman and talk about the top ten reasons why the world will not end if C-300 becomes law.

Actually if we did top 10 we would be here all afternoon, so top 10 became top 5 with some editorial comment.

Drum roll please:

5. Bill C-300 will lead to reputational damage

I thought that the industry was doing a pretty good job all by itself. It doesn’t need any help from C-300. On the contrary - In the world of Youtube, Facebook, and Twitter, a problem with a mine in Papua New Guinea can go global in minutes; with the court of public opinion being the only judge.

In this context there is no mechanism for companies defend complaints or proclaim their innocence.
C-300 will provide the mining industry with a legitimate and effective way to respond to allegations and clear the air.

4. Bill C-300 will lead to a tsunami of complaints

One of the Conservative Members on the Foreign Affairs Committee suggested there could be a billion complaints.

The World Bank and IFS have received 110 since 2001, 80 of which were dismissed. Not quite a billion. The Bill provides for dismissal by the crown if a complaint is frivolous or vexatious. The rules of Natural Justice will apply. Complaints will have to be substantial and show a prima facie case to be answered. If an NGO chooses to pursue a complaint considerable resources will be required. Mining companies seem to be able to attract the best lawyers (see present company) and will have very little trouble dealing with the issues.

I want a credible process so that everyone will respect the outcome. If I’m counsel for a mining company (not likely to happen anytime soon) I’d like my chances under C-300.

3. If C-300 passes all the mining companies will leave Canada.

To go where?

The Americans recently passed similar legislation to Bill C-300, which places comparable regulations on the American version of EDC, and requires companies receiving government funding to adhere to a set standard of environmental and social guidelines.

The United States also happens to be one of the most litigious societies in the world, so would our mining companies move there? Not likely. What about Britain? Their Parliament recently released a report calling for more stringent CSR standards, so not likely? Somewhere in Europe? Not likely. Russia or China, not likely? Australia? Maybe, but again- not likely. Switzerland maybe- that’s where all the dirty money goes to hide. I suppose if you have something to hide you might consider Switzerland.

Canada is the world center for mining.

It has the best technology, the biggest companies, the most expertise and the most favourable conditions.
When C-300 passes, these facts will remain the same. So not only will C-300 not be the end of civilization as we know it, it will also not be the end of Canada’s dominance in this field.

2. C-300 will destroy Canadian competitiveness.

This is the race to the bottom argument. China and Russia will eat our lunch because they don’t have to put up with CSR and C-300. The recent global meltdown has made investors more risk adverse. A company and country that adheres to good CSR with sanctions for those that do not, is a less risky investment and more attractive to conservative ethical funds with cheaper money. C-300 can also create a more appealing environment for host countries and their stakeholders.

Mining is not always about having the technological advantage. Anyone can dig a hole, and Canada faces fierce competition from various international companies who are looking to take over Canada’s dominance in this field. What distinguishes a Canadian company from a Chinese company is that Canadian companies are held to certain standards of environmental and human rights.

Recently I met with the Mining Minister and the Ambassador from Mongolia, they had just decided to go with a Canadian company for a large project.  One of the most significant reasons for going with a Canadian company is because Canadian companies are held to higher standards of practice and would more likely fulfil licensing conditions.

Bill C-300 would help enhance this reputation, and give our companies a competitive advantage when it come to safety, social issues, respect for human rights, community engagement, contribution to local economies and environmental protections. This makes our companies more attractive in the international market, and the desired choice for host countries and stakeholders.

Enlightened self interest.

This point was also reinforced by the former Minister of the Environment from Argentina, who was asked whether she thought that C-300 was just another form of neo-colonialism. She replied that a country like Argentina will have a much easier time enforcing its own laws if it knows that Canada stands behind its companies with a meaningful CSR regime.

The foreign Minister from Tanzania made a similar point in a recent interview in Embassy Newpaper.

1. The sanctions in C-300 are draconian

The sanctions C-300 would implement are neither drastic, nor unreasonable.

If a Canadian company, which receives government support, is found to be non-compliant, the Minister of the Crown will then withdraw investments made by Export Development Canada (EDC) and the Canadian Pension Plan (CPP). In the grand scheme of mining financing these are very minor sanctions, and far from radical.

It should be the responsibility of companies operating overseas to use mining practices that respect basic human rights.
If Canada invests in companies through EDC & CPP, surely it’s not too much to ask that Canadian mining companies account to the Canadian taxpayers and pensioners in a transparent fashion.

Mr. Justice Ian Binnie has said ““that you cannot have a functioning global economy with a dysfunctional global legal system, there has to be somewhere, somehow, that people who feel that their rights have been trampled on can attempt redress— and if the complaints turn out to be unfounded, so be it”.

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In summary I would have preferred a comprehensive approach such as the Round Table Reports. That’s not happening anytime soon - so the industry is getting nibbled to death. Murray Kippelstein’s lawsuit has settled the forum non conveniens argument, so the TSX and the Canadian directors are now brought into the Ecuador suit. The CSR counsellor might be toothless but she stands for something.

Pressure is building from the universities, the law schools the business schools and the mining schools. I had no idea how many letters I would receive, how many universities I would tour, how many reporters I would speak too, or how many mining industry luncheons I would attend. This teeny tiny bill has taken on a life of its own.

There are though, a small minority of people, most of whom are concentrated within the mining industry (or the National Post) who would argue that this minuscule bill is set to destroy the Canadian mining industry and drive companies out of Canada.

In my view this is just silly. Their “sky is falling” argument is losing credibility.

Mr. Justice Ian Binnie sums up my arguments much better than I can.

He recently stated:

“It is beyond question that companies have the ability to significantly influence human rights around the world for good or for ill. Sometimes influence implies obligation. In light of the mounting evidence of corporate complicity in human rights abuses, there is at the very least an obligation upon the legal community to clarify the human rights related duties of companies as a matter of national and international civil and criminal law”.      
 
Thank you.

Hon. John McKay P.C., M.P.