Canada: Home to a Dangerous Industry
How did it come to this? Canada, once known as a defender of international peace and noble principles, today has acquired a new reputation as the home of a highly controversial industry. Today, Canada is known around the world as home to oil, gas, and mining companies that choose to register here in order to benefit from our permissive mining regulations and preferential tax structure. Three out of four of the world’s mining companies operate out of Canada while often conducting exploration and extraction projects located elsewhere. Ontario alone accommodates more than fourteen hundred of these companies, even though only forty-three mines are in operation in the province. The damage these companies inflict is experienced generally not by Canadians, but by citizens of other countries. As a result, a troubling number of farmers, indigenous people, and other citizens of countries around the world are angry about the actions of Canadian-based mining companies. It is no longer unusual to see the Canadian flag torched or disfigured during public demonstrations in South Asia, Africa, or Latin America.
Canada’s controversial role in the world goes far beyond our exportation of uranium and asbestos.1 Mining corporations, often Canadian, are said to have contributed in one way or another to conflicts that have placed millions of people in jeopardy and have led to deaths, systematic rape, the forced recruitment of child soldiers, and legions of refugees. Multiple sources point out connections between some Canadian-based corporations and conflicts motivated by “economic development projects” that ultimately are associated with net losses to public treasuries, incidents of corruption (either proven or apparent), and smuggling that destroys people’s livelihood. Over the past twenty years, sources around the world have extensively recorded widespread malfeasance by Canadian mining companies, primarily in the South and in Eastern Europe: violent evictions of entire populations, massive unemployment, and homelessness instead of the promised “job creation,” long-lasting pollution of large tracts of land, major public- health problems, and tax evasion reaching into the billions. Overall, the record provides convincing evidence that “economic development projects” often leave host countries worse, and not better off, than they were before.
The sources that document these truths form the basis of our argument, specifically, that it is time to speak openly about Canadian government grants and other forms of regulatory and fiscal support that fund Canadian-based mining companies and allow them to develop controversial extractive sites abroad. Perhaps more crucially, it is time to speak openly about the ways in which our legal jurisdiction is used as a base-and-launch facility for questionable projects overseas. Canada stands out as a judicial and financial haven that shelters its mining industry from the political or legal consequences of its extraterritorial activities by providing a lax domestic regulatory structure that it seeks to export through international agencies, diplomatic channels, and “economic development projects.”
Although information critical of Canada is abundant overseas, it is hard to find in Canada. The owners or managers of the country’s media conglomerates, both private and public (and all of them major financial players), are committed to supporting the mining industry. As a matter of course, Canadian media suppress information about an exploitive process that is described in other countries as abusive or even criminal. Ironically, the citizens of Germany, Belgium, and the United States know more about our grim international reputation than do Canadians. How many of us are aware of the neo-colonial activities of Canadian-based mining companies abroad and the alleged (yet broadly documented) human-rights abuses and environmental tragedies associated with these activities?
Reports of the actions of Canadian-based mining companies in the South and in Eastern Europe come from international sources in Buenos Aires and Kinshasa; Berlin, Brussels, and London; Paris, New York, and Washington; Toronto, Ottawa, and Montreal. All have produced documents that enjoy three levels of credibility: first, they have been produced by authors recognized as credible by a significant number of their peers; second, they have been published by academic journals, public institutions, press agencies, independent organizations, or reputable media institutions; and third, they frequently corroborate one another, or at least arrive at similar conclusions, even though they originate with authors who do not know each other and who work in different disciplines and languages, for different organizations, and for audiences that are located in different cities and continents. This extremely abundant literature is not yet proof in the legal sense, and our purpose here is not to justify these allegations beyond the documents on which they are based. What is most troubling, however, is not their frightening number, but the consistency with which they reach similar conclusions.
Equally troubling are the difficulties that the publication of these documents has brought on the people and organizations that have shared them with us. Almost all have experienced pressure or faced absurd delay tactics or refusals. Their research into the highly problematic action of Canadian mining companies in the South and in Eastern Europe reflects an appalling reality that lies just out of sight, and it is likely that the evidence uncovered is only a fraction of the true extent of the problem.
Of course, the allegations in these reports must be viewed as unconfirmed until they are subject to scrupulous public investigation. Given the seriousness of the allegations, it is clear that under a truly democratic regime, Canadian authorities and the Canadian judicial system would already have launched official inquiries.
To our knowledge, none of the extractive sector corporations mentioned in these damning reports has ever acknowledged the truth of the allegations made against them. The corporate response has been either silence or the usual denials claiming that detailed reports are biased and fancifully imagined. Corporations would have us believe that dozens of critical observers, analysts, thinkers, experts, and witnesses to the activities of the Canadian establishment throughout the world are all aligned in the same conspiracy.
What the sources say about Africa is intolerable. Women living near the Sadiola mine in Mali (partly owned by Toronto-based Iamgold) suffered multiple miscarriages, probably caused by polluted sources of drinking water.2 Several Canadian-based mining companies (Golden Knight Resources, Prestea Sankofa Gold and Prestea Resources Ltd., and Birim Goldfields) carried out violent expropriations of land in Ghana.3 Corporations active in Congo-Kinshasa (Lundin, First Quantum Min- erals, and Emaxon) signed one-sided deals during wartime with actual or future political authorities of the country, giving them privileged access to promising mining concessions or public assets of high value.4 DiamondWorks and other companies established themselves in Sierra Leone thanks to a devastating civil war.5 Heritage Oil profited from instability in Angola.6 And the list goes on.7
But abuses are not restricted to the mining industry. The Canadian International Development Agency supported massive dam projects in West Africa to the benefit of Canadian firms, even though these projects produce large-scale environmental damage without significantly improving the quality of life of people living in the region.8 Canac, a transportation firm, privatized strategic railway lines in West Africa with the support of Canadian public funds, then closed most train stations to the public.9 A pharmaceutical company, Millenia Hope, sold drugs in Africa that did not meet the standards of Health Canada or the World Health Organization.10
The worst example is surely the presence of Canadian mining firms in the Great Lakes region of Africa in the 1990s, surrounded by belligerents looking for arms and shady business deals. Fought on many fronts, their wars led to millions of deaths, mostly from disease and starvation.11 Canadian corporations often obtained concessions in the region by negotiating with politicians or warlords who were either preparing for or already engaged in conflict.12 The United Nations considers it likely that most of the clashes took place for the control of mining deposits.13
Mining corporations such as Barrick Gold do not hesitate to use the services of major political and business figures to support their interests at home and abroad. In the 1990s, the firm set up an international advisory board, made up of influential people such as former U.S. president George H. W. Bush, former Canadian prime minister Brian Mulroney, and Canadian businessmen Paul Desmarais Sr. and Peter Munk, to lobby for its interests around the globe.14 Barrick Gold executives found the advisory board’s work highly satisfactory, as shown by the praise lavished on it by CEO Randall Oliphant in a speech to shareholders.15 That may be because Brian Mulroney has admitted he spent “a fair amount of time in Latin America and China and Africa working with senior management and governments around the world” to represent the corporation’s interests.16 Other former Canadian prime ministers have tackled similar jobs: Joe Clark represented the interests of First Quantum Mining in Africa,17 while Jean Chrétien represented mining and oil companies in relations with controversial political regimes in Nigeria and the Congo.
A number of international sources raise further troubling questions about the consequences of the presence of Canadian mining companies abroad and the ways in which their presence may have intensified conflicts. In Congo-Kinshasa, for example, a country ravaged by years of warfare, a project known as the Moanda Leasehold involves a ninety-nine-year lease that will formally deprive the Congolese of political and economic sovereignty over resources in the western part of their country.18 Unless the project is halted, a consortium of investors will gain political authority over the area, where three massive industrial developments are planned. According to the advocates of this neo-colonial project, Canada will participate in the project along with European Union countries, the United States, the World Bank, and the International Monetary Fund (IMF).19
Africa is not the only continent having to cope with Canadian neo-colonialism. In Eastern Europe, the pollution caused by mining projects continues to worry local populations. In Latin America, where Canadian mining assets are concentrated,20 accusations of abuse are as numerous as those on the African continent, and citizens protesting against them are severely repressed by local police forces. One example among far too many, related by the Toronto Star, concerns a junior mining firm (Copper Mesa) accused of hiring paramilitaries in 2006 to repress demonstrators opposed to mines in Ecuador that “threaten rainforests and their way of life.”21 In the Montreal Gazette, Janet Bagnall reported the assassination in December 2009 of two Salvadorians opposed to Pacific Rim Mining Corp.’s El Dorado project.22
In El Salvador, the Episcopal Conference in May 2007 denounced the environmental destruction and public-health problems caused by the use of cyanide by gold-mining corporations, many of them Canadian.23
In Guatemala, Canadian gold giant Goldcorp faces a complaint filed with the Canadian Department of Foreign Affairs and International Trade by communities living near the Marlin gold mine. Their com- plaint cites depletion of fresh drinking water and pollution, in violation of guidelines set out by the Organisation for Economic Co-operation and Development.24 In Honduras, the same company’s activities are alleged to have led to a massive degradation of the Siria River valley: two studies carried out by academics from Newcastle University describe heavy-metal pollution and acidic-mine drainage, said to be responsible for poisoning people and cattle.25 In Mexico, Mariano Abarca Roblero, an opponent of an exploration project carried out in Chiapas by a Canadian mining corporation, Blackfire, was killed in November 2009; the suspects are alleged to be actual or former Blackfire employees.26 Moreover, there are persistent allegations of corruption of local authorities by Blackfire in order to silence the project’s many opponents.27 In Bolivar province, Colombia, small-scale artisanal miners have accused Canadian junior companies of hiring paramilitary forces during the 1990s in order to expropriate the territories where they were mining gold. During this period of nation-wide political violence, more than eight thousand people were displaced after the intervention of “death squads” in the region.28
In our previous book, Noir Canada: Pillage, corruption, et criminalité en Afrique,29 we set out to achieve two goals: first, to bridge the public information gap in this country about the practices attributed to Canadian mining companies under our jurisdiction in many countries; and second, to suggest ways of ending the practices that need to be stopped. We called on Canadian authorities to institute an independent commission of inquiry into the practices of the extractive industries based in Canada. Four years later, it is becoming more and more urgent that we shed light on the many cases of abuse and crime allegedly committed by these companies and reported at an international level. The discrepancy between accusations and defence in these cases could hardly be larger. On the one hand, we have a substantial number of alleged misdeeds and dubious, if not criminal, practices attributed to Canadian mining companies by a host of different and reliable sources. On the other, we have the offended denials of the accused firms; denials that they regularly back up with legal actions for libel. An independent commission of inquiry could recommend criminal charges against these corporations if and where appropriate, offer public apologies to the peoples wronged by them, and make strong recommendations as to how to stop such practices and undertake the necessary reparation programs in cooperation with local populations. Because every Canadian government to date has supported the mining industry, this commission cannot take the form of a parliamentary commission consisting only of members of Parliament. This is the reason that, as the authors of Noir Canada, we called for an independent commission, at arm’s length from governments, which would gather input from parties representing all the interests involved.
While government agencies, private foundations, corporations listed on Canadian stock exchanges, and media groups owned by the country’s most powerful financial interests continue to sing the praises of Canada’s humanitarian actions around the world, there has been little if any open discussion, scrutiny, or critical analysis of this country’s role in the ongoing rapacious practices of the extractive industry, either at home or abroad. Critical information about the mining industry rarely makes the headlines, but fortunately, the authors of this book by no means stand alone. Yves Engler’s The Black Book on Canadian Foreign Policy30 and Joan Baxter’s Dust from Our Eyes31 have added their voices to Amnesty International, Halifax Initiative, MiningWatch Canada, and The Dominion Newspaper Cooperative to alert public opinion and foster critical thinking about Canada’s role abroad. Moreover, in 2009, after evaluating Barrick Gold’s environmental and social performance in Papua New Guinea, the Norwegian government publicly announced that its sovereign investment fund would divest its shares in Barrick Gold.32
Hence the opening line in the introduction to this new book: “How did it come to this?” This book tries to answer that question in two ways. First, we provide a history that shows Canada could not have become what it is – a legal haven for the extractive sector – if it had not allowed the establishment of stock exchanges that orchestrate irresponsible financial speculation on real or imagined resources, leading many small investors to lose their savings in numerous cases of fraud. Since the nineteenth century, Canadian stock exchanges have based the capitalization of shares on financial speculation rather than on the real economy, diverting financial institutions from their original goal of raising capital. Financial speculation is not unique to Canadian stock exchanges: London, Paris, and New York have all had their share of speculative frenzies, leading to appalling social dislocation and global economic decline. The history of Canadian stock exchanges, however, and specifically that of the Toronto Stock Exchange, has been singularly shaped by dubious practices of speculation, primarily on natural resources.
Second, we offer a case study that demonstrates the crucial influence of Canada’s origins as a colony of the British Empire. The British North America Act of 186733 did not liberate Canada from its colonial past. The federal and provincial governments of this country have continued to support practices inherited from their colonial origins. Colonial elites and foreign investors have made immense profits from the ongoing exploitation of natural resources in the “Northwest Territories” (a huge land mass consisting of all of the North American continent that drains into the Hudson Bay), and they have shaped Canada according to their interests, making it a country based on mineral extraction and the exploitation of natural resources. The practices of the extractive industry in Canada from the late-nineteenth century onward, which include exploiting natural resources without any concern other than that of rapid profits, dispossessing first Aboriginal and then any other populations that might have a legitimate interest in and therefore a say on the issues, and continuing to fight for highly accommodating legislation to the benefit of their industry, have driven their economic growth in Canada.
This is not unique to Canada: other colonies and ex-colonies around the world have also channelled their economic activity into one core sector, be it bananas, rubber, or coca. What is specifically Canadian is the fact that practices related to the development of the mining industry, which took shape under colonial conditions in Canada, have been exported abroad. This systemic approach has provided Canada’s mining companies with a clear advantage at the highest level of international competition. Now they claim for themselves, wherever they go – in Africa, Asia, Latin America, or elsewhere – the same extralegal status from which they profited so outrageously in their original domestic colonial environment. Our case study unravels the ultra-permissive character of Quebec legislation covering the extractive sector, then discusses the impact of these deficient regulatory measures on democracy and the environment, both at home and abroad.
In this context, it is worth recalling the fact that the Canadian banking sector played a key role in encouraging the development of tax havens in the Caribbean throughout the twentieth century.34 It would have been logical for Canada, as an advocate of sound legal principles, to oppose such structures. And yet, with the support of the Canadian government, Canadian banks have played a key part in setting up systems to circumvent public taxation or even eliminate it in some Caribbean countries. As a result, the prosperous Canadian extractive industry pays almost no taxes, either in Canada or abroad.35
Astonishingly, Canada has supported and continues to support a banking industry whose actions are contrary to the financial interest of its own citizens (and usually the interests of the citizens of the Caribbean tax havens as well).
Our country is linked to the tax havens of the Caribbean via Barbados, which as a rule allows companies registered there to access an entire network of offshore jurisdictions providing financial, legal, and fiscal shelters for their profits. There are no unpleasant consequences in Canada for companies that follow this course. The profits they record in jurisdictions of convenience never end up in any bank account opened in Canada, much less as tax revenue in the treasury of Canadian governments. Secrecy is the rule.36 The fact that these tax havens contradict the fundamental principles of the legal state has never stopped Canada from considering these countries as friends and allies. In fact, Canada formally shares its seat at international institutions such as the World Bank and the IMF with such countries and has even signed a free-trade agreement with Panama.37
In Canada, critical thinkers face a political conundrum: their government, which in theory is responsible for looking after the common good and the rule of law, is in cahoots with the extractive industry, which means that it is now part of the problem. As for “civil society,” it is led by “experts” who sometimes fail to make clear what position they are defending in woolly discussions about “governance,” while citizens see that they have no control over their savings as soon as institutional investors and public fund managers take charge of them.
This book is intended to provide Canadian and international public opinion with tools to help it ask critical questions about Canadian activities in the South and in Eastern Europe, as well as about the role of the Canadian government in relation to these activities. It is hoped that the evidence presented here will encourage Canadians to enter public debate about how the mining industry is regulated in Canada and to form an opinion on this topic independent from the one suggested by official agencies or media that belong to large Canadian financial conglomerates and tend to espouse their interests. Our goal is to deepen understanding of an aspect brought up in Noir Canada: the harmful consequences of our ultra-permissive laws regarding the extractive industry, both for countries in the South, and indirectly, for all of us in Canada.
As a state wedded to the interests of mining companies, Canada recently has behaved in ways we may find unrecognizable, doing everything in its power – at the legislative, judicial, economic, financial, and diplomatic levels – to make itself into a legal paradise for the world’s extractive industry. Canadian citizens are concerned in this matter. We help fund the extractive industry through their savings, channelled toward the Toronto Stock Exchange by pension funds, insurance companies, and other institutions. We need to talk about the fact that our economy is still shaped by our colonial past. Public debate cannot be stifled forever, and the reality is that we are responsible for how the mining industry is regulated in Canada and how the world extractive industry is regulated here from now on, whether the companies involved were born in our country or have only recently become our guests.