Confidential Witness reports related to class action against Barrick Gold
by compiled by Sakura Saunders (with protestbarrick.net), filer: Labaton Sucharow
August 3rd, 2013
The following is excerpts from court documents filed by Labaton Sucharow LLP on August 2, 2013 in the U.S. District Court for the Southern District of New York. These documents were related to a class action lawsuit filed on behalf of persons or entities who purchased the publicly-traded common stock of Barrick Gold Corporation on the New York Stock Exchange between May 7, 2009 and May 23, 2013.
The excerpts focus on information related to the testimony of former employees of Barrick Gold acting as confidential witnesses (CW1 - CW5) in the case.
Download the entire document here.
Glossary of Abbreviations
CW1: a former manager at the Pascua-Lama Project.
CW2: a former operations manager at the Pascua-Lama Project.
CW3: a former Barrick employee who took part in the Company's finacial reporting process during the latter part of the Class Period
CW4: a labor relations employee at the Pascua-Lama Project during the years 2010 and 2011.
EPCM: an estimate of development costs that Barrick sought in 2006 or 2007 from a prominent engineering, procurement, and construction management firm.
RCA: environmental review process conditions No24/ February 2006).
ORP: monthly report sent to Barrick's Toronto offices titled the Operational Readiness Plan
CW1 stated that as early as 2010 the Project was not in compliance with critical environmental requirements relating to glaciers. The same former employee related that, at the same time that the Company was informing investors that the Project's cost would be between $2.8 and $3 billion, Barrick already had in its possession an engineering report estimating costs for the Project at nearly twice that figure.
In 2010, CW1 learned that Barrick first sought an estimate of development costs in 2006 or 2007 from a prominent engineering, procurement, and construction management firm (the EPCM report), which concluded that developing the Pascua-Lama project would cost more than $5 billion. CW1 understood that the EPCM had been read by certain Project and construction directors at Barrick, and related that the EPCM report was known of and still discussed by the Company's staff between 2010 and 2011, but the company did not reveal these costs to the public.
CW2, a former operations manager at the Pascua-Lama Project for much of the Class Period, corroborated CW1's
assertions regarding the EPCM Report. According to CW2, the EPCM Report and its contents were known to senior Project directors and senior Company managers, including Potter, the Company's Senior Vice President for Capital Projects. CW2 further stated that he attended meetings in Chile with other managers and Ron Kettles, the Project Director at the time. After the meetings CW2 and other managers discussed the Project's cost projections and concurred that there was no way the Pascua-Lama Project could be completed for $3 billion.
In October 2011, according to CW1, Barrick's operations at the Pascua-Lama Project were not in compliance with environmental requirements, including the requirement to keep roads wet to prevent dust from mining operations from settling on near-by glaciers.
On Feb 18, 2011, Barrick indicated that the Pascua-Lama Project could exceed the initial cost estimate of $2.8 to $3 billion. However, CW1 indicated that at that time, estimates of the cost of operations at the Pascua-Lama Project for the remaining nine month of 2011 alone exceeded $1.05 billion - more than 30 percent of the publicly acknowledged cost estimate for the entire Project - and that the Project Director knew of these estimates. Additionally, CW1 stated that as late as March 2011, construction at the Pascua-Lama site had in fact only just begun.
According to CW2, reports detailing problems at the Pascua-Lama Project were prepared each month, and all information regarding the Project was forwarded to the Company's offices in Toronto. Among these reports was a monthly report titled the Operational Readiness Plan ("ORP"). Additionally, CW2 stated that operations staff at the Pascua-Lama Project communicated with staff in Barrick's Toronto office frequently by telephone, leading CW2 to conclude that Barrick's Toronto personnel were "completely aware of what was happening at Pascua Lama."
CW3, a former Barrick employee who took part in the Company's finacial reporting process during the latter part of the Class Period, reported that Defendants held monthly financial meeting at the Company's offices in Toronto, Canada, at which detailed information was discussed with respect to each operating mine and project, such as the Pascua-Lama Project. These monthly financial reviews on occasion led to calls to regional reporting units for clarification of unusual or unexpected expense items, sometimes to the level of identifying specific equipment that needed replacement as a source of cost overruns. Similar project-level financial information and reports were circulated to the Company's capital projects team.
According to CW4, a labor relations employee at the Pascua-Lama Project during the years 2010 and 2011, by the end of 2011 the COmpany's management was well aware of numerous environmental violations at the Project related to the construction of a canal that was part of the Project's water management system. In connection with Barrick's responsibility to monitor and report on water quality, the canal included pH meters to detect contamination of the water. However, according to CW4, Project managers were attempting to rush Project construction, which led to water in the canal often being contaminated. CW4 further stated that senior Company managers held meeting during which employees were instructed not to bring cameras to work sites, not to speak to media representatives, and not to speak to government officials -- especialy environmental regulators -- because the Chilean officials could shut the Pascua-Lama Project down were they to learn of the environmental problems.
CW2 noted that many of the Company's environmental problems arose from unapproved changes to the original, approved plans relating to water channels -- changes Barrick had made in an attempt to reduce Project costs. CW2 stated that these changes were in place by the end of the first quarter of 2011, and that they were implemented without any notice to Chilean regulators. CW2 further asserted that by the end of 2011, Project managers including Igor Gonzalez (then Barrick's President of the South America region; currently the Company's Chief Operating Officer) were aware of at least three ORPs that described how these changes presented material problems and risks for the Project and the Company over the life of the Project.
CW5 is a former supply chain manager who was employed by Barrick at the Pascua-Lama Project during 2010 and 2011. According to CW5, in 2010 or 2011 the Company discovered that costs for the Project were bring[sic] manipulated after conducting it own internal investigation into the costs and progress of the Pascua-Lama Project. Based on the results of that investigation, the Company removed xxxx and his team.
According to CW2, even the self-reporting by Barrick that did take place only began after the summer thaw in 2011, once the problems with the secretly modified and poorly constructed water treatment canals had become so severe that the Company had no alternative but to inform the Chilean government.
According to CW2, reports detailing costs, progress, and problems at Pascua-Lama such as the monthly ORP were prepared regularly by Project personnel, and all information regarding the Project was sent to the Company's Toront offices. Additionally, operations staff at Pascua Lama communicated with Toronto frequently by telephone, leading CW2 to conclude that Barrick's Toronto personnel were "completely aware of what was happening at Pascua Lama."
As described by CW3, Barrick's managers held monthly meetings in Toronto, Canada, during which detailed mine - and project-level financial reports were discussed for operations such as the Pascua-Lama Project. As a result, the Individual Defendants had access to a regular stream of information detailing the costs, timeline, and regulatory compliance of Pascua-Lama.
According to CW1, at least as early as 2008 the Company was in possession of teh EPCM Report. According to CW1 and CW2, the EPCM Report projected a cost estimate of more than $5 billion for the development of the Pascua-Lama Project. According to CW2, multiple managers at the Project concurred that the Company's intially asserted cost projection of $3 billion was not possible."
According to CW1, "senior Company management who visited the Project site were directly informed of the environmental compliance failures and chose repeatedly to turn down requests by Project-site personnel for additional funding."
According to CW4, Barrick explicitly prohibited Project engineers and construction employees from bringing cameras to work sites and interactiong with media and government workers, in order to conceal environmental infractions from regulators. The Company specifically noted that the then-known environmental violations were sufficient for Chilean authorities to halt operations at the Pascua-Lama Project.
According to CW2, Barrick was "unilaterally modifying the regulator-approved Project plans without notifying environmental authorities."
According to CW2 and CW4, "by the end of 2011 Project managers -- including at least one senior company executive -- were aware of at least two internal reports describing ongoing environmental compliance problems due to the company's choices to cut costs rather than comply with the terms of the environmental approvals upon which the entire Pascua-Lama Project relied."
CW1 "as a direct consequence of Defendants' refusal to provide funding for adequate water or dust suppressants over a period of more than a year -- operations at Pascua-Lama were continually being assessed fines for drawing excessive water from local waterways in knowing violation of their environmental agreements. CWI1 concluded that, regarding water use and dust suppression, "Barrick wasn't compliant from day one."
ABX with its BILLION$ of dollars only needed $22 to $29 million to complete the environmental management systems required by the 2006 permitting application. Since 2006, according to the legal evidence, Barrick did nothing at Pascua Lama until 2011. Even after 2011, ABX wasn't in compliance with the 2006 permitting!
So why did Barrick choose to not build Pascua Lama and build any of the environmental systems they were required to finish and build first?
With the Pascua Lama 2001 Chile Court injunction Barrick reported in their regulatory filings in 2005 shows why. Barrick claimed ownership of titles affected by the Pascua Lama 2001 injunction into Barricks Pascua Lama SEC 6K and OSC 43-101 filings, those areas have been recently awarded certified domain to Mr Lopehandia with his restituted titles that cover the injunctioned areas.
Furthermore, the titles affected by the injunction of 2001 is AMARILLO 1-3000, which is superimposed by Tesoro 1 1/30 to Tesoro 12 1/5. Expert 3rd Part technical reports place the deposit of Pascua Lama on Amarillo 1-3000, the same property under the 2001 injunction which Mr Lopehandia now owns with his Certified Domain and restituted titles.
I would bet that abx has not even spent really what they have claimed to have spent on infrastructure, why would they build something like the books perhaps have read to something they know they have no titles to, they are smart but like MAdof they will be taken down at least I hope so for transparency and also to warn other bullies, they cannot beat the little guys up AT LAW
I guess you are to stupid to read all the paper work that backs up the statements by the ABX employees. I see you are an investors who would like to see criminals prevail so you can make a buck, get a life #$%$.
More are coming forward to testify against ABX. How many lawsuits is Barrick facing with Pascua Lama?
"Attention: Sybil E. Veenman
Senior Vice-President and General Counsel
Re: Barrick Gold Corporation and its subsidiaries, Cia Minera Nevada Ltda., Cia Minera Nevada SpA (together, “Barrick”): Pascua Lama Project (the “Project”), the “Pascua Lama Protocol”, the Securities Act of 1933 and Ontario Securities Act continuous disclosure requirements, related news publications
We are the solicitors for Mountainstar Gold Inc. (formerly Mountain-West Resources Inc.). We are writing further to Barrick's numerous filings on SEDAR and EDGAR, and Barrick's December 21, 2011 Info Release respecting Barrick's Pascua Lama Project, which publications make false assertions of ownership over a portion of the mining concessions on the Chilean side of the Project.
In particular, Barrick has asserted ownership of the concessions called Tesoro Uno 1 -30 to Tesoro Doce 1 - 5, inclusive (the "Tesoro Concessions"), as shown in the list of concessions included in the Pascua Lama Protocol, published on page 8 of the "Diario Oficial de la Republica de Chile".
Barrick has also asserted ownership of all concessions included in Appendix A of Barrick's Technical Report dated March 31, 2011, specifically including:
108 TESORO TRES 1 AL 30 109 TESORO CUATRO 1 AL 30 110 TESORO SETS 1 AL 20
111 TESORO DIEZ 1 AL 20
112 TESORO ONCE 1 AL 20
These assertions of Barrick’s ownership of the Tesoro Concessions are manifestly false. The Tesoro Concessions are in fact owned by “Hector Unda Llanos”, not Barrick. There is no notation of Barrick’s interest in the Tesoro Concessions in the margins of the Tesoro Concessions’ titles.
Moreover, the Tesoro Concessions have been encumbered with a Court-Ordered Injunction (the "Injunction") continuously since 2001, in a Chilean legal action having case No. C-1912-2001 (Villar-Compania) in the 14th Civil Court of Santiago; we are certain Barrick is aware of both the legal action and the referenced Injunction. The Injunction prohibits, inter alia, the sale, contracting, encumbering or commercial exploitation of the Tesoro Concessions, including the minerals contained therein.
As regarding the Amarillos 1-3000 concessions ("Amarillo Concessions") which are super-positioned with the Tesoro Concessions, our client’s Chilean mining expert, Catalino Albanez, advises that the Amarillo Concessions are non-metallic (salts and nitrates) concessions, and as such cannot support exploitation of the metallic (gold, silver and copper) mining Project. Notwithstanding this inability of the Amarillo Concessions to support the Project, the Amarillo Concessions are included in Barrick's Project Technical Report and in the Pascua Lama Protocol, as published on page 8 of the "Diario Oficial de la Republica de Chile".
Both the Tesoro Concessions and the Amarillo concessions are effectively super- positioned with the Amarillo Norte and Amarillo Sur concessions ("Restituted Amarillo"), which constitutes a portion of the mining concessions in which our client, Mountainstar Gold Inc., has obtained certain rights. These rights are set out in the Option Agreement filed on SEDAR May 28, 2012 (the "Option Agreement").
Barrick's improper inclusion of the Tesoro Concessions and the Amarillo Concessions in the Project Technical Report and related publications is interfering with our client's ability to carry on its business described in the Option Agreement and accordingly, we hereby demand on behalf of our client that Barrick (and its employees and representatives) immediately cease and desist from repeating allegations of this nature. Mountainstar Gold Inc. takes its reputation extremely seriously and will take all necessary steps to protect that reputation. This includes, without limitation, commencing proceedings against Barrick for defamation and slander of title and/or filing a complaint with the applicable securities commissions. In any such proceedings Mountainstar will seek substantial damages, including general, aggravated, and punitive damages and Mountainstar reserves the right to share this letter with the applicable securities commissions."
Put a little money in some people hand and they will say anything you want. Let's all hope Barricks get some of their money back. Beware of any information that come out of New York. Long live Barricks,
In addition, Barrick has been affected by an injunction in 2001 resulting from a dispute from as far back as 1996 over title to the deposit of Pascua on the Chile side. Barrick doesn't want to report any of this just as the class action have said. Barrick failed to report anything negitive about the project and including why ABX did not even build the required water management facilities in Chile. Barrick can't build it in chile they don't have the legal rights to mine the deposit on the chile side.
2005 SEC Form 40-F ( Filed 03/31/05 for the Period Ending 12/31/04 ) @ EDGAR Online
"In 2001, an action was filed in Chile by Rudolfo Francisco Villar against Barrick’s Chilean subsidiary, Compania Minera Nevada Limitada (“CMN”), claiming that it had failed to fully honor an agreement to purchase certain mining claims of Villar located near the Pascua Lama project. Villar’s suit seeks to rescind the purchase agreement with CMN or, alternatively, damages of approximately US$ 1 million. At the outset of the litigation, Villar obtained an ex parte injunction barring CMN from selling or encumbering the claims while the suit is pending before the Chilean courts. Barrick intends to vigorously defend the action."
If you care to know, Barrick never built the water management facilities they were required to build as per the 2006 permitting process. Barrick simply never built it. That's what happens when you do not legally own the titles to Pascua, ask ABX to remove AMARILLO 1-3000 and the Superimposed Tesoro 1 1/30 to Tesoro 12 1/5 from Barrick fraudulent books. Experts have already reported in a Pascua lama technical report that the properties affected by the 2001 chile court injunction that Barrick does not want to report on, those properties cover the deposit of Pascua lama on the Chile side of the project.