Fort Knox on Poydras
Freeport Shareholders Are Secured
But getting to hear that revelatory statement was no simple matter. Security at Freeport's headquarters was tight. Three different types of security uniforms were in evidence: New Orleans Police Department, Swiss Security, a Metairie-based firm, and Freeport's own security detail. Between the building entrance on Poydras Street directly across from the Superdome, and the third floor meeting room where the meeting was held, there were at least seven uniformed security people carrying sidearms. Another half dozen unarmed, uniformed security personnel were also on duty. Everyone who entered the meeting was sent through a metal detector. In the meeting room itself, three New Orleans police officers (without pistols) and two plainclothes security men wearing earpieces and cuff microphones monitored the 70 or so shareholders who attended the meeting. In front of the building, a handful of plainclothes security people monitored the street.
Why so paranoid? There had been talk during the weeks leading up to the meeting that a protest would take place at the company's headquarters. In addition, three members of the Seattle Mennonite Church were at the meeting to present a shareholder resolution regarding the company's controversial mining operation in western Papua, New Guinea. The Mennonites, led by Bob Pauw, a Seattle immigration attorney, were asking the company to sever its ties to the Indonesian military and delay the expansion of the Grasberg mine until the social and environmental problems at the mine have been rectified.
Reporters were not allowed to attend the meeting itself. Told there wasn't enough room, even though more than a dozen chairs in the meeting room were empty, reporters from the New Orleans Times-Picayune, New York Times, AP, and several Canadian publications were corralled into a separate room to watch the meeting via closed circuit video. Tape recorders, still cameras, and video cameras were not allowed, even to take photos of the television. (The Chronicle was allowed into the meeting room because a shareholder in Austin provided a proxy card, along with a notarized letter authorizing the use of the proxy).
Before the meeting began, Moffett slowly paced the front of the room. Wearing a double-breasted blue suit with peak lapels, a white shirt with French cuffs, and a pink print tie, Moffett conferred with various deputies. He did not smile at any time during the meeting.
When Henry Kissinger entered the room a few minutes after 9am, Moffett started the meeting. He gave a short statement about the $6 billion lawsuit against the company that was recently re-filed on behalf of several Amungme tribal leaders for a range of human rights violations. Calling it an effort to "intimidate and shake down" the shareholders, he said, "We expect this lawsuit to be dismissed."
Moffett then delivered a 20-minute lecture on the company's finances and future prospects at Grasberg. He said the average cost of copper production worldwide is about 70 cents per pound. In 1996, FMCG was able to produce a pound of copper for less than 17 cents a pound at Grasberg, he said, and once the company completes its expansion project, that number is expected to fall even further. Calling Grasberg the "discovery of the century" Moffett said the company now has a 50-year contract on the site with the Indonesian government, along with the rights to explore some 5.1 million acres. Discussing environmental issues, Moffett said, "We have done a lot of work in our environmental operations. There's a lot of scrutiny of this project because it's the largest gold mine in the world." But he said that the company's environmental efforts "adequately address the concerns of the people from the outside."
After Moffett gave his presentation, he announced that it was time to discuss the Mennonite proposal. "Sir, limit your remarks to two minutes, please," Moffett told Pauw. In short order, Pauw laid out the Mennonites' plan, but he was interrupted by Moffett. "You have 20 seconds," Moffett told him. Pauw quickly resumed his presentation but was cut off by Moffett again. "Your time is up," he said.
During Pauw's presentation, Kissinger, the former Secretary of State and 1973 Nobel Peace Prize winner who was paid $200,000 last year by Freeport for his foreign affairs expertise, slouched in his chair and appeared to briefly doze off. Other august members of Freeport's board of directors showed similar disinterest, including new boardmember, and former U.S. Senator, J. Bennett Johnston.
After Pauw's presentation, Danny Kennedy of Project Underground spoke in support of the Mennonite proposal. "You have one minute," Moffett told Kennedy.
Kennedy, who visited the region near the mine in February, told the Freeport board members that they should support the shareholders' resolution because it made good business sense. "You have been irresponsible in managing this mine," he told them. Kennedy pointed out that the revised lawsuit filed by Amungme leader Tom Beanal on behalf of his tribespeople is very similar to one now pending in Los Angeles Federal Court against Unocal, which has been sued for human rights violations that occurred in relation to its natural gas pipeline project in Burma. "You have another 10 seconds," Moffett told Kennedy.
After Kennedy's comments, Moffett told the audience that anyone could speak to the three issues on the proxy card, which included the election of the board of directors, selection of an auditor, and the Mennonite proposal. No other issues would be addressed.
However, this reporter couldn't resist asking about Moffett's $33.7 million pay package, which amounted to about 15% of FMCG's net income for 1996. The question: "Business Week magazine reported last week that your pay package was $33.7 million last year. Is that justified?"
"We are not going to discuss items that are not on the ballot," replied Moffett.
When the votes were tallied, the Mennonite proposal garnered 2.5% of the shares that were voted. If it had received 3%, the resolution would have carried over to next year's meeting.
"There being no further business before the company, this meeting is adjourned," Moffett announced, less than an hour after the meeting started. With that, Kissinger, Johnston, and the other members of Freeport's executive staff headed for a side door. Moffett did not speak with any shareholders individually.
After the meeting, Pauw was upbeat. "We plan to continue working on these issues," he said. "They aren't issues that go away because of one shareholder meeting."
Busang a Bust
"Busang I'll mention quickly," said Moffett during the annual meeting. "We have the right to participate if development is economically feasible. To date, we haven't been able to confirm mineralization found by Bre-X." Neither did Strathcona Minerals Services, the Toronto-based firm that was hired to confirm Bre-X's claim that Busang was the motherlode to end all motherlodes. In a May 3 letter to David Walsh, the CEO of Bre-X Minerals, G. Farquharson of Strathcona said, "We very much regret having to express the firm opinion that an economic gold deposit has not been identified in the Southeast Zone of the Busang property and is unlikely to be."
Strathcona's assay results on the Busang deposit confirm that Bre-X officials have pulled a masterful scam. In the letter to Walsh, Strathcona wrote, "The magnitude of the tampering with core samples that we believe has occurred and resulting falsification of assay values at Busang, is of a scale and over a period of time and with a precision that, to our knowledge, is without precedent in the history of mining anywhere in the world."
Strathcona's report and other info is available on the
Bre-X website, at http://www.bre-x.com. Or see Freeport's comments at http://www.fcx.com. And for atranscript of a recent speech given in New Orleans by Amungme tribe leader Tom Beanal, go to the Chronicle website, at /.