Spinning Gold

International outrage over the human rights abuses in Irian Jaya has helped the native Amungme people draw attention to the devastating impact Freeport's mining practices have had on the local environment. Freeport's Grasberg mine is essentially grinding the Indonesian mountain into dust, skimming off the precious metals, and dumping the remainder into the Ajkwa River. The pulverized rock (called "tailings") has created a wasteland in the river valley below. By its own estimates the company will dump more than 40 million tons of tailings into the river this year alone.

The mine's tailings have already "severely impacted" more than 11 square miles of rainforest, according to a 1996 Dames & Moore environmental audit. The report, endorsed by Freeport, also estimates that over the life of the mine 3.2 billion tons of waste rock -- a great part of which generates acid -- will be dumped into the local river system. The acid has already polluted a nearby lake.

"They take our land and our grandparents' land," says Tom Beanal, a leader of the Amungme people. "They ruined the mountains. They ruined our environment by putting the waste in the river. We can't drink our water anymore."

Last October, after a lengthy investigation, the Overseas Private Investment Corp., a federal agency that supports American companies doing business overseas, canceled Freeport's $100 million political-risk insurance policy, citing environmental problems at the mine. In a letter dated October 10, OPIC told Freeport the mine had "created and continues to pose unreasonable or major environmental, health, or safety hazards with respect to the rivers that are being impacted by the tailings, the surrounding terrestrial ecosystem, and the local inhabitants."

Freeport CEO Jim Bob Moffett has little patience with anyone who doesn't see the world exactly as he does. The son of a department store clerk, Moffett began his career in the oil business before becoming CEO of Freeport-McMoRan in 1985. Until recently, he was best known for his 1987 attempt to dump 12 million tons of low-level radioactive gypsum into the Mississippi River. Graef Crystal, publisher of the "Crystal Report," a newsletter about corporate executives' pay, has often singled out Moffett as being overpaid. In 1995, Moffett's salary, bonuses, and stock options exceeded $42 million. (By comparison, Robert Allen, CEO of AT&T -- a company with revenues 40 times greater than Freeport's -- received less than half as much.)

On November 2, the day news of the OPIC insurance cancellation broke, an indignant Moffett went on live television in New Orleans, telling WWL-TV anchorman Bill Elder, "There's been no claim by OPIC that we have an environmental problem."

The next day, Elder saw OPIC's letter to Freeport, which explicitly cited environmental concerns. "Moffett clearly lied," says Elder. Furious, Elder called Moffett and asked permission to visit the mine. The CEO agreed to take Elder the following week, but there was a hitch: He couldn't take his own cameras and would have to use equipment provided by the company.

Elder turned down Moffett's offer and decided to go to Indonesia on his own. But in Sydney, Australia, he spent a fruitless week trying to get an entry visa. The Indonesian consulate told him he had to get permission from Freeport. Freeport said he had to get permission from the consulate. "It was clear [Freeport] blocked me," says Elder.

When he returned to New Orleans, Elder learned Freeport officials had visited WWL, making veiled threats that they might sue the station. And while Elder had been stuck in Australia, Freeport had allowed a Times-Picayune reporter to tour the mine. Elder called Moffett again. "How come they are there and we're not?" he asked. "Well," said Moffett, "you should've just done what we told you."

Bill Elder is just one in a long line of journalists and critics to be threatened with lawsuits by Freeport. Over the past year, the company has sent letters to at least three journalists (including this reporter), two activists, and three professors at the University of Texas at Austin, claiming it would seek "legal recourse" against any party who made "false and damaging accusations." (The company did not cite specific examples.)

Freeport has quieted other journalists by hiring them. In the late 1980s, Elder's former co-worker, WWL anchorman Garland Robinette, did a five-part series critical of Freeport's environmental practices. In 1990, Moffett offered him a job as Freeport's vice president of communications. Robinette accepted, taking three of WWL's best people with him. In 1993, Robinette's department was spun off to form Planit Communications, Freeport's public relations firm.

In 1992, Bill Collier, formerly an environmental reporter with the Austin American-Statesman, became Freeport's spokesman in Austin, where the company's real estate project has run into strong opposition from local environmentalists. (Robinette and Collier declined to be interviewed for this article.) In 1994, Planit also hired Gerard Braud, a reporter for WDSU-TV in New Orleans, whose stories had raised questions about Freeport's environmental record.

Freeport's multimillion-dollar media strategy includes a massive ad campaign intended to answer critical reports. "The press will communicate maybe a half-dozen times," Robinette told the Columbia Journalism Review earlier this year. "We'll communicate with the public a couple hundred times."

In November, after the OPIC cancellation, Freeport aired a half-hour infomercial in Austin and New Orleans. (Freeport paid for the airtime in Austin. But in New Orleans, according to the Times-Picayune, PBS station WLAE-TV broadcast the company's infomercial as an educational special at no charge. Freeport, one of WLAE's corporate sponsors, gave the station $15,000 last year.)

Freeport has also spent hundreds of thousands of dollars buying ads in magazines such as Newsweek and U.S. News & World Report, and has placed dozens of full-page ads in Austin and New Orleans newspapers. In December, Freeport bought three full-page ads in the New York Times, one of which blamed the OPIC insurance cancellation on "foreign interests" spreading "false or misleading accusations."

In April, Freeport spent $162,000 on an eight-page ad in Texas Monthly. In return, Michael Levy, the magazine's publisher, sent a letter to Austin community leaders repeating much of Freeport's message. (Levy wrote that the challenge "is to mine responsibly so that the environmental effect is minimized and the economic benefits for the surrounding communities are maximized.") Levy says it is standard procedure for him to write letters on behalf of big advertisers. "We do it for anybody that spends a lot of money with us," Levy said.

Freeport's money has also purchased allies in politics and academia. Moffett ranked 400th on Mother Jones' list of the country's top individual political contributors ("The Mother Jones 400," March/April 1996), donating $52,000 from 1993 to June 1995. Meanwhile, Freeport's PAC has given nearly $1 million to federal candidates since 1980.

After OPIC canceled the company's political-risk insurance policy, Louisiana politicians, including Democrat Sen. John Breaux and Republican Rep. Billy Tauzin (who have each received at least $6,500 from Freeport and its directors since 1989), quickly rallied to the company's side and criticized OPIC's decision. Freeport also enlisted the help of international affairs guru Henry Kissinger, who sits on the company's board; his firm receives a yearly retainer fee of $200,000 from Freeport, according to the Los Angeles Times.

But politicos weren't the only ones who leaped to Freeport's defense. The company has developed unexpected allies by giving millions to academic and charitable institutions in New Orleans and Austin. Tulane University (which has received $1.25 million from Freeport in charitable donations) joined the University of New Orleans ($1.6 million), Loyola University ($1.1 million), and Louisiana State University ($4.1 million) in taking out a full-page ad in the Times-Picayune calling Freeport a "caring corporate citizen."

In April, OPIC backtracked, reinstating Freeport's insurance until the end of the year. In turn, the company agreed to create a $100 million trust fund for the remediation of the site after the mine shuts down. (Freeport signed a 30-year lease on the mine in 1991, with options to extend it for up to 20 more years.)

Yet controversy around Freeport is growing in the United States. Professors and students at the University of Texas at Austin have denounced its close ties to Freeport. Specifically, they protested the school's decision two years ago to name its new molecular biology building after Moffett, a former UT football player who has given some $3.6 million to his alma mater. Last December, after Freeport threatened to sue UT professors critical of the company, Chancellor William Cunningham stepped down from his position on Freeport's board of directors. Nonetheless, Cunningham cashed out big, earning $650,422 in one day by exercising stock options given him by the company, according to the Austin American-Statesman; Freeport even covered Cunningham's federal tax liability on the transaction.

In Indonesia, tensions are escalating over the growing military presence near Freeport's operation. In March, several thousand villagers rioted in the towns of Timika and Tembagapura, located near the mine. Four people were killed and more than a dozen injured. Protesters damaged Freeport's equipment, and the mine closed for more than two days.

On April 29, Tom Beanal filed a $6 billion class-action lawsuit against Freeport on behalf of the Amungme people, charging that the mining company has engaged in "ecoterrorism" and "cultural genocide," among other claims. "From all the mining, what do we get?" asks Beanal. "They ask us to leave our land. They've taken away our tradition and our culture. We've become alienated in our own land."

The suit may pose a larger threat to Freeport than any negative press coverage. On June 11, Broken Hill Proprietary Ltd., one of Australia's largest companies, settled a lawsuit brought by indigenous leaders from the area surrounding its Ok Tedi mine -- located in Papua New Guinea, 300 miles east of Freeport's operation. The mine was dumping 80,000 tons of mine tailings into the local river system each day. The settlement, which could cost BHP more than $400 million, requires the company to prepare a plan to stop dumping tailings in the river and to give local indigenous groups a 10 percent equity stake in the mine.

While Beanal waits for his suit -- modeled on the BHP suit -- to go to trial, the military presence around the mine has increased. After the March riots, the Indonesian military brought in thousands of heavily armed soldiers to protect the mine, heightening fears of further violence. During a hearing on the lawsuit, a Freeport lawyer asked Beanal if he feared for his safety. Beanal paused for a moment before replying slowly, "With the situation in Timika, anyone would be afraid."

Far from backing down, Freeport plans a huge expansion of its mining operation. At present, the company mines 125,000 tons of ore daily. The company intends to increase that amount to 190,000 tons per day. At that rate, Freeport will dump enough tailings in the Ajkwa River to fill Houston's Astrodome every three weeks.

Nor is Moffett striking a conciliatory pose, recently telling the London Times that he is in a "new Cold War" with his critics. He continues to deny that the mine has any adverse environmental effects, describing its pollution as "the equivalent of me pissing in the Arafura Sea." Last year, Moffett described his mining operation in the Nation magazine as "thrusting a spear of economic development into the heartland of Irian Jaya."

It's an odd choice of words, but for a modern conquistador, the metaphor has proved deadly accurate.

Robert Bryce is a contributing editor at the Austin Chronicle.