Richard Ness of Newmont

Nov 12th, 2006, in Business & Economy, by

The cautionary tale of Newmont executive Richard Ness.

The trial of Richard Ness, president of Newmont Minahasa Raya, a gold mining concern, is underway in Manado, North Sulawesi, and prosecutors are requesting that Ness be sentenced to three years prison, if he is convicted. Ness is accused of overseeing or allowing the dumping of dangerous levels of mercury and arsenic-laced waste into Buyat Bay.

According to Ness’ son Eric, who maintains a website chronicling the fate of his father

….over 30 independent studies (most notably the United Nation’s World Health Organisation, Commonwealth Scientific and Industrial Research Organisation of Australia, and the National Institute for Minamata Disease) have repeatedly confirmed that there is no evidence of environmental damage and, most importantly, medical analysis has established that there is no incidence of arsenic or mercury poisoning among the local community.

Some believe that the origins of the case go back to 2000, when Newmont Indonesia was embroiled in a tax dispute with the local government over its Buyat Bay gold mine, and successfully fought off a court order to shut the operation down. After that the company became a target for anti-mining NGO’s that claimed its sub-sea mine tailings disposal system killed fish and caused illnesses, skin diseases, among villagers near the Bay.

North Sulawesi residents claim children have suffered skin illnesses
North Sulawesi residents claim children have suffered skin illnesses.

In 2004 various reports of environmental damage and illness attracted national attention. Ness dismissed them:

I was confident that Buyat Bay was not polluted and was comfortable with our fish monitoring.

In September 2004, Ness and five other Newmont employees (Jerry Konjansow, Bill Long, David Sompie, Phil Turner and Putra Widjayatatri) were arrested by Indonesian police. Ness was questioned for 13 hours but then allowed to go because he has a heart condition. The other men spent 30 days in jail where, according to Eric Ness, on the first night their mattresses were set on fire before being placed in the cells with them.

Richard Ness of Newmont
Richard Ness.

The Newmont employees then had a travel ban imposed on them, which meant they could not leave Indonesia. Early in 2005 this ban was lifted and replaced by mandatory weekly reporting to the court in Manado. Because of this Ness was unable to go to the funeral of his only granddaughter in Minnesota, even though he and Newmont provided all the legal and financial assurances that he would return to Indonesia within a week and report as the law required.

Ness joined the staff of PT Freeport Indonesia in 1981 and was a vice president when he left the company in 1996 to work as a consultant. He joined Newmont in 1998, two years after Buyat Bay began producing gold. As a long-term resident, who knew the Indonesian culture and had converted to Islam, he soon became a leading voice for mining reform in a country with a reputation for corruption and layers of bureaucracy. When Ness first went on trial, Andrew Wilson, president of BHP Billiton Indonesia, told an Associated Press reporter:

This is Indonesia at its worst in terms of picking the wrong guy and saying: you are a criminal. You couldn’t get a person who has given more back to Indonesia. He is community oriented. He looks for the long-term good, rather than taking short cuts.

For example, as First Vice President of the American Chamber of Commerce, Ness frequently travelled to Washington with others to lobby the US Government on behalf of Indonesia on an array of issues, ranging from trade and investment to foreign policy. He is currently on the executive board and is a former vice chairman of the Indonesian Mining Association, promoting mine development and legislative improvements that he believes would benefit the country and investors.

He was a delegate representing business at the UN’s World Summit for Sustainable Development, and has been a delegate representing Indonesia at the World Bank’s Extractive Industries Review. He co-authored the economic section of the plan for the Council of Foreign Relations on how economic development could reduce conflict in Papua. His son Eric Ness points out:

None of these activities were part of his formal job description and they took precious time away from his family. However, he firmly believes that, if one does not take the time to fight to reduce poverty in an ever growing world population, conditions for the poor and underprivileged will only get worse.

Eric believes that his father’s difficulties are now becoming infamous and says:

If you are considering doing any business in Indonesia, this case certainly gives you pause.

He goes on:

It has become clear to me that this case is much larger than a scientific debate or a legal squabble. Instead, it raises the deeper and more complex question of morality and about how something so unfair and unjust could happen at such a large scale “¦ It is evident through this case that political zeal can have an amazing blinding effect on human beings, and it can freeze the governance machinery from acting in a responsible manner.

Eric Ness is not optimistic about the outcome of the trial.

One of my biggest concerns is that the law hasn’t been followed. It sometimes feels like the law doesn’t matter.

April 2nd 2007. The gold mining firm Newmont Mining Corporation might reconsider its investments in Indonesia if Richard Ness is found guilty of dumping toxic waste, the company spokesman Omar Jabara said. reuters

We would have to reevaluate, given the exposure and risk. First, we would look at future potential investments.

The Manado court where the case has been tried since August 2005 initially planned to give its verdict on April 4th however Chief Judge Ridwan Damanik said the judges needed two more weeks to draw up the verdict.

There is growing concern that other foreign companies would be less likely to invest in Indonesia if Newmont were convicted. Tom Donohue, president of the U.S. Chamber of Commerce, recently told the Rocky Mountain News in Denver, Colorado, where Newmont is based:

Disposition of that case will most definitely have an impact on the foreign investment climate in Indonesia.

In 2006 Newmont settled a civil case without admitting wrongdoing and agreed to pay $30 million to an environmental foundation in North Sulawesi.

The company, mining in Indonesia for over ten years, has plans on the table to spend $400 to $500 million to expand its operating mine at Batu Hijau. It has made another gold discovery in the country that could involve investments of hundreds of millions of dollars additionally.

Chairman and Chief Executive Wayne Murdy told the Rocky Mountain News recently:

We’d have to reconsider our investment if we got an unfavorable decision. But we are being optimistic about everything.

April 24th 2007. Both Richard Ness and the company Newmont Minahasa Raya were found not guilty by the State Court of Manado. The five judge panel said there was no good evidence Newmont had polluted the Teluk Bayat area. International testing of the waters found no abnormal levels of mercury or arsenic while the national police’s testing, which did find abnormalities, could not be trusted, said the judges. detik

May 7th 2007. The prosecution have decided to appeal against the verdict. sharewatch

4 Comments on “Richard Ness of Newmont”

  1. O. Bule says:

    This is an example of “Indonesia at its worst”. The Indonesian criminal and civil court systems are deeply flawed and corrupt to their cores. Ness is being persecuted because he wouldn’t go along with a shakedown scam being perpetrated against his company by the corrupt local Indonesian authorities.

    This is precisely why more businesses don’t try to do business in Indonesia.

    O. Bule

  2. Robert says:

    It seems to me that the Newmont mining operation in Sulawesi is smaller than Freeport mining operation in West-Papua. When is there going to be a trial against Freeport for the misery and pollution they caused there? It looks to me that this whole situation is very arbitrary.

    Richard Ness maybe a tough businessman, but I don’t believe he is the evil genius for which some people keep him. If the Indonesian Government is so concerned with the environment they should come up with decent legislation in the first place and deal with all companies who are polluting.

    If Ness and colleagues are convicted, the consequences can be very serious.
    It would mean that every foreigner that works for a foreign company who is held accountable (as an individual) for the acts of his company, might end up in jail. The already shaky legal status of foreigners would become even more unstable. The impact on foreign investments could be devastating.
    It would be better that the Indonesian Government co-operate more with foreign companies to deal with environmental problems and find sustainable solutions, than strive for a one-time victory. Anyway, the outcome of this trial will be very decisive as far as Indonesia’s economic future is concerned.

  3. Dymal says:

    So now Ness and Newmont are found not guilty by the court, finally the court decision is in line with those independent studies.

    It will be interesting to see how the famous east java hot mud lumpur lapindo case ends up, (if it ever go to the court), natural disaster like some local experts opinions?

  4. Dragonwall says:

    He converted to Islam! Is he in so that he could take 4 wives?? or has he taken that for assimilation purposes. If so why is he still targeted for? Over some tax problems? Must be the job of those corrupt pejabats.

    To provide detainees with burnt mattress is too much.

    If he has been a Muslim and Abu Rizal Bakery also the same then I don’t think Lapindo will get any farther.

    Usually when the pie is big and he reluctant to “ulur tangan” “ya penyakitan kan?” These are the usual ploy of corrupt officials.

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