Rio Tinto Reports Conceal Kelian Scandal

For over eighteen months Rio Tinto has failed to directly disclose either through its reports to shareholders or voluntary environmental and social reports that allegations of serious human rights abuses against staff at its 90 per cent owned Indonesian subsidiary Kelian Equatorial Mining PT KEM were being investigated.

As a result of negotiations with community leaders PT KEM agreed in January 1999 to an independent investigation into allegations that staff had sexually harassed and raped women and perpetrated other human rights abuses The report completed in February this year after a nine month investigation supported claims of a number of cases of sexual abuse over a ten year period to 1997 It also investigated claims that two mine opponents had died in mysterious circumstances at the hands of security forces.

The head of the inquiry Mr Benjamin Mangkoedilaga told the Australian Financial Review in June 2000 that employees who reported sexual abuse were threatened with dismissal while others were given money or promise of a job at the mine in return for sex.

In its Statement of Business Principles Rio Tinto states it is committed both in principle and in practice to the maximum level of transparency consistent with normal commercial confidentiality. However at no point has the investigation or its findings been referred to in any of the subsequent quarterly or annual reports produced directly by Rio Tinto Rio Tinto's voluntary 1999 Social and Environmental Report which was finalised in February 2000 devoted only three short paragraphs to human rights without making any reference to the Kelian investigation.

Rio Tinto's report was audited by the US based auditing company Arthur D Little which verified the results of the report based on a sampling of information provided by the company A sample of information it said is sufficient in our judgement to support virtually all of the statements made, Arthur D Little did not respond to inquiries from Mining Monitor (MM).

Only in PT KEM's unaudited Social and Environment Report released in May this year is there a passing reference to alleged human rights abuses which it downplays by stating many of which derive from the exploration and early development period of the mine PT KEM President Director John Vale told MM the report was produced before the inquiry was finalised Vale is uncertain what will be disclosed in future reports The outcome of that report will be privy to the parties involved he told MM.

While Rio Tinto released its half yearly report for 2000 to shareholders in August two months after the PT KEM report was released it avoids any mention of the findings from the human rights investigation Instead it referred only to the disruption to production as a result of a series of blockades by local people.

Rio Tinto did not respond to requests from MM for comment on the lack of disclosure.

The failure by Rio Tinto to fully disclose the investigation raises doubts about the value of voluntary social and environmental reports even when audited produced by companies as part of their obligations under the Minerals Council of Australia's Code of Environmental Management.

Bob Burton

Mining Monitor,
Monitoring The Mining Industry In Australia and the Pacific

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