Sister Cities
Milwaukee Company´s Controversial Lawsuit Draws International Opposition
WASHINGTON, D.C. – While a World Bank tribunal deliberates on whether to allow a Milwaukee gold mining company’s controversial $100 million lawsuit against the government of El Salvador to move forward, local and international activists continue to pressure the company to withdraw the suit. Commerce Group Corporation is pursuing its suit under the U.S.-Dominican Republic-Central America Free Trade Agreement (DR-CAFTA) and critics of the trade pact say that the decision reveals a grave lack of environmental protections in current U.S. policy.
In 2006, El Salvador revoked Commerce Group’s mining permits for failure to comply with the country’s mining law, including failure to meet the requirements for an environmental permit. A 2006 study of the local waterways surrounding the San Sebastian river revealed elevated levels of cyanide and heavy metals, for example, an aluminum level 1800 times higher than even the World Bank’s own recommended limit.
In retaliation, Commerce Group filed a 2009 suit before the International Centre for the Settlement of Investment Disputes (ICSID) of the World Bank, demanding $100 million in compensation from the Salvadoran government, including for alleged “lost profits.” However, according to SEC filings, Commerce Group had already ceased mining activity in El Salvador years earlier in December 1999, after decades of legal and financial troubles, including bankruptcy.
Over seventy human rights, environmental and religious organizations, including U.S-El Salvador Sister Cities, MCALM, the Maryknoll Center for Global Concerns and Mining Watch Canada, called on Commerce Group to withdraw its lawsuit and clean up the damage in November of 2010. In January of 2011 over a hundred of concerned U.S. and Canadian citizens called and emailed the Commerce Group offices to express their concern about the case and ask the company to drop the suit.
Representatives of the Midwest Coalition Against Lethal Mining (MCALM) brought these demands to a December meeting with Commerce Group’s legal counsel, John Machulak, brother of company president, Ed Machulak. However, "It appeared obvious that the comments by John (Machulak) throughout the meeting either attempted to either minimize culpability or prove willfully ignorant of the obvious environmental and health impact of the Commerce Group's mining operations," according to Dan Kasun, who has traveled to El Salvador with his church, St. Elizabeth Ann Seton in New Berlin, WI.
“It’s pretty outrageous that the government of El Salvador is under attack for protecting the health and safety of its people,” said Al Gedicks, professor of sociology at University of Wisconsin LaCrosse, and author of Resource Rebels, who also attended the meeting. “If anything, it is Commerce Group who should be paying for the toxic legacy they have left behind.”
Nationally, public policy organizations including Public Citizen, Oxfam, the Sierra Club and Friends of the Earth, have stressed the dangers of far-reaching investor rights in CAFTA and other NAFTA-style trade agreements, which allow foreign companies to challenge national regulations through private arbitration. "The investment rules in our trade agreements must be reformed in order to rein in the excessive powers currently granted to foreign corporations to attack our hard-won environmental and labor standards in anti-democratic tribunals," said Rachel Ackoff of the Sierra Club's Responsible Trade Program.
While January 13th was the deadline for the ICSID arbitrators to decide on the Salvadoran government’s preliminary objections to the suit, which could have led to the dismissal of Commerce Group’s claim, they seem to have taken a month long extension in releasing the decision. The affected communities and international solidarity organizations anxiously await the ruling and hope for a favorable decision, but are prepared to continue the fight against the suit if necessary.
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