The British government is examining allegations by Amnesty International that the British Virgin Islands was used to skirt international sanctions on the sale of a controversial copper mining project at Monywa.
Canadian company Ivanhoe Mines, which sold its stake in the mine in 2011, has denied knowledge of any wrongdoing.
Amnesty also accused Ivanhoe and the current Chinese operator of having “profited from, and in some cases colluded with the Myanmar authorities in serious human rights abuses and illegal activity around the Monywa copper mine complex”.
While Canadian authorities have not issued any formal response, Amnesty says it is in talks with both the government and parliamentarians on how to proceed with an investigation.
The Monywa project is now run by the Chinese firm Wanbao – a subsidiary of arms manufacturer Norinco – with profits shared between the state, Wanbao and army-owned Myanmar Economic Holdings Limited. A planned US$1 billion expansion has brought Wanbao into renewed conflict with local residents, who have refused to accept compensation for their land.
The Amnesty publication – Open for Business? Corporate Crime and Abuses at Myanmar Copper Mine – details large-scale forced evictions, environmental pollution and the use of “excessive force” by police against protestors. The mining project, which includes the Letpadaung mine and two sites developed in the 1990s, has been the subject of ongoing demonstrations, including one in December 2014, in which a 56-year-old woman was shot dead by police.
The report called on Canadian and British authorities to investigate whether Ivanhoe Mines, which has since rebranded as Turqoise Hill, and any linked legal entities breached Canadian and British economic sanctions in relation to operations at Monywa.
Canada had the strictest sanctions in the world at the time of the sale, with a total ban on investment in or trade with Myanmar.
The United Kingdom has been drawn into the controversy over details in the report that say Ivanhoe set up a trust in the British Virgin Islands to divest its Myanmar assets in order to take advantage of contentious legal secrecy provisions there that have allowed details of the transfer to remain hidden from scrutiny.
Ivanhoe announced in 2007 it had placed its stake in the Monywa mine in an “independent third-party trust”, pending the sale of the asset. Ivanhoe received US$103 million for its stake in August 2011 following the completion of the sale.
The divesture of the Monywa mine was demanded by Anglo-Australian mining giant Rio Tinto as part of a deal between the two companies to jointly develop a giant copper mine project in Mongolia, Oyu Tolgoi. Rio Tinto is now a major stakeholder in Turquoise Hill.
The British Virgin Islands, an offshore tax-haven, provides an opportunity for companies to operate without the disclosure requirements of most other jurisdictions. Campaigners for responsible business in Myanmar have pointed out that much of what appears as official figures for investment by British companies in Myanmar in fact comes from offshore traders based in the British Virgin Islands.
A spokesperson for the UK Foreign Office said it had “seen Amnesty International’s report and are examining the findings in detail”.
She said she was unable to provide further information about who would be following up on the report or when an announcement might be made on what, if any, action would be taken by British authorities.
The Canadian government did not respond to questions from The Myanmar Times on whether it would undertake an investigation or what form an investigation could take.
But an Amnesty spokesperson said last week that the watchdog had met a range of Canadian government officials and parliamentarians, and had begun discussions about options for how to move forward with an investigation in Canada. “While there have not yet been any commitments, there is willingness to examine the information we have presented, consider the various possibilities, and ensure that the right government departments and law enforcement agencies are apprised,” the spokesperson said.
Amnesty International’s corporate crimes researcher Meghna Abraham said it was important that the British government “stopped allowing its overseas territory to be used as a haven for secrecy”.
“The evidence we have uncovered shows how companies can shelter behind British Virgin Islands’ secrecy even for transactions which may breach the territory’s criminal law. This demands a full investigation by the UK government,” she said.
A spokesperson for Turquoise Hill did not respond to the allegations in detail but said the company’s management was “not aware of any facts or circumstances” that suggested a breach of sanctions or any other law at the time of the “apparent” sale of the Monywa assets.
“It remains our understanding that the measures proposed by Rio Tinto and put in place by Ivanhoe Mines on the disposal of the Myanmar asset were fully compliant with all applicable laws giving effect to sanctions,” he said.
An Amnesty International Myanmar spokesperson responded that Turquoise Hills’ statement “does not address the evidence that Amnesty International has uncovered about its so-called independent third party trust and possible breaches of economic sanctions. It needs to disclose information publicly and to the United Kingdom and Canadian authorities.”
Current mine operator Wanbao issued a statement following the release of the publication describing it as “groundless”.
“We strongly refute its wild allegations and unsubstantiated claims. This report is not acceptable as it relies on hearsay and conjecture rather than on hard facts,” the company stated, adding that it “vehemently den[ies] collusion with authorities to use force against protestors and villagers”.
The Wanbao statement also asserted that the Amnesty report was based on what the mine company says was an outdated Environmental and Social Impact Assessment (ESIA).
“The ESIA was carried out by the internationally renowned and respected Australian consultancy, Knight Piesold. The ESIA has taken over two years to prepare and review, and it was based on community consultations and followed an exhaustive process.
“During the consultation process a number of environmental and technical issues were raised and these issues were able to be addressed and resolved,” it said.
It also said Amnesty had not properly consulted with the company prior to the release of the report.
However, an Amnesty spokesperson stood by the report.
“Wanbao keeps repeating the numbers of people who support the project without providing any proof to substantiate these claims,” he said. “Amnesty International shared a draft of the report with the company, analysed all its public documents, gave it an opportunity to meet and to respond, and has included the company’s full response in our report.”