In the summer of 1998, Denver-based Newmont Mining Corp. was gold mining’s rising star.
The company had just won a critical Supreme Court case in Peru that handed it control of Latin America’s richest gold mine at a bargain price.
That victory has haunted the company ever since.
In 2000, as the Peruvian government of President Alberto Fujimori crumbled under the pressure of massive corruption allegations, two tape recordings surfaced.
One captured a Newmont executive striking a bargain with Peru’s corrupt spymaster, Vladimiro Montesinos, to counter the efforts of competitors trying to sway the ’98 Supreme Court decision.
The second shows Montesinos fulfilling his promise. In a late-night meeting, he instructs the judge who would cast the case’s deciding vote to side with Newmont and offers him a promotion.
Within a few days, Newmont had its mine.
The tapes have spurred two investigations in Peru and a third – now concluded without the filing of any charges – by the U.S. Department of Justice.
“Our whole issue in a situation like this is that we wanted a fair playing field,” Newmont chief executive Wayne Murdy said in an interview with The Post.
“With Montesinos, everybody recognized that he was a very powerful behind-the- scenes person,” Murdy said.
|
GRAPHIC
|
|
|
Together with other evidence that has emerged over the past four years, critics say, the tapes offer a rare window into Newmont’s corporate soul – and an unadulterated look into the intrigue and power politics of international gold mining.
The battle between Newmont and a French rival that culminated in the Supreme Court decision is filled with a cast and events worthy of a James Bond film: former CIA agents and allegations of bugged telephones and botched kidnapping attempts on Peruvian streets.
One of the principal characters, Peru’s de facto intelligence chief, is too flamboyant even to fit on the pages of most spy novels.
Montesinos is accused of stealing at least $1 billion during the Fujimori presidency through corruption, but he also had long-standing ties to the CIA. Known as “the doctor,” Montesinos had power that reached into nearly every corner of Peruvian society, and he had the cream of Peruvian judges, lawmakers and journalists in his pocket.
In sworn testimony before a Peruvian judge, a top aide said he believed Montesinos received $4 million from Newmont and its partners for his services – $600,000 of which the aide says the spymaster later gave to his mistress and interpreter.
Newmont vehemently denies paying a bribe, but the company clearly spared few other efforts to win. A major contributor to the Clinton administration, Newmont asked for the help of the top State Department official for Latin America to push its case directly with the Peruvian president, then hired the official – Assistant Secretary of State Peter Romero – as a consultant after he left government service.
Fighting for influence
This corporate fight likely would have been entirely missed by a casual observer who watched the litigation as it moved through the Peruvian courts over four years in the mid-1990s.
Legally, the fight boiled down to an argument between one- time friends.
Ownership of the massive Peruvian gold mine known as Yanacocha was originally split among the French government, Newmont and the Denver-based company’s Peruvian partner, Buenaventura Mining Company Inc.
When the French government moved to privatize its share of Yanacocha in 1993, it decided to sell not to Newmont, but to Normandy Mining Limited, Newmont’s Australian rival. The Americans immediately sued, claiming the partnership agreement gave Newmont and Buenaventura first dibs.
At stake was not just who would control the hemisphere’s richest mine, but what they would pay: Newmont argued that it should get the shares at their estimated value when the French first decided to privatize their mining operations worldwide – before the mine’s deposits were fully explored and at a fraction of their ultimate worth.
With hundreds of millions of dollars at stake, both sides marshaled an international cast of power players and secret operators.
French diplomats in 1996 delivered an official letter to Peru’s foreign minister about the case, warning that business with French companies was at stake if Newmont won.
And Normandy sought aid in the case from French tycoon Patrick Maugein, a bullfighter turned shipping magnate who most recently has been accused of helping Saddam Hussein circumvent the sanctions imposed on Iraq by the U.N.
Not to be outdone, Newmont leveraged its own considerable influence.
Montesinos said that Romero, America’s top diplomat for the region, personally spoke to Fujimori about Newmont and the Supreme Court vote and kept in constant touch with lesser officials about the case by phone and fax.
Later Montesinos claimed that those communications included a threat to side with Ecuador in an ongoing border dispute with Peru unless Newmont prevailed – a claim that several U.S. officials, including Romero, have denied.
“I had one conversation with (Montesinos),” Romero said. “There was no implication of pressure except to let judges make their decisions free of any intimidation.”
The spymaster’s evidence
But neither side left its fate to mere diplomatic maneuvers.
A series of e-mails supposedly intercepted by Peruvian intelligence described a shadowy plot by a French operator to bribe Supreme Court judges with $7 million – and to kidnap them if necessary.
Newmont’s Peruvian attorney, Guillermo Gulman, recounts a hair-raising chase of his daughter by a group of machine-gun wielding thugs through the streets of Lima. His daughter managed to escape but was shot twice, according to Gulman’s 2002 testimony before a Peruvian congressional committee investigating Yanacocha. In the testimony, Gulman speculated these events were related to his work on the mine dispute.
Maugein, the French tycoon, claims in turn in a lawsuit filed in Denver’s U.S. District Court that Newmont’s partner, Buenaventura, bribed lower- court judges to turn the initial verdicts in its favor. He cites account numbers and specific amounts – $70,000 in one case, $100,000 in another.
The bank in question, Lima’s Banco de Credito, claims the accounts didn’t exist.
The lawsuit also gives a very different explanation of the intercepted e-mails.
Supposedly communications between two French operators, the e-mails strangely are written in English. Some do not take into account the time difference between Peru and France, so they appear to have arrived before they were sent.
Maugein believes Montesinos fabricated the messages, using them as an excuse to place the justices under Secret Police guard.
In fact, in an episode marked by plots within plots, Montesinos always kept center stage.
When Fujimori’s government collapsed in 2000, police found a cache of hundreds of video and audio tapes hidden in Montesinos’ luxury home.
The tapes show Montesinos bribing some of Peru’s most prominent leaders, tapes he apparently kept to blackmail his subjects later.
Unaware that he was being recorded during a visit to Peru in February, 1998, Newmont vice president Larry Kurlander offered to help Montesinos with a brewing diplomatic scandal in exchange for help with the Supreme Court case in Peru. The tape of that conversation was introduced in a lawsuit in Denver.
The men discussed the two outstanding votes in Newmont’s Supreme Court case, and Montesinos offered to exert “pressure” over the decision.
“Tell him I’m going to help him with the vote,” Montesinos told the translator, who relayed it to Kurlander. “We are going to help each other mutually.”
In a memo written to current Peruvian President Alejandro Toledo in November 2000, Rafael Merino, one of Montesinos’ closest aides, said his boss routinely tracked high-stakes litigation moving through Peruvian courts and offered to intervene for either side for the right price.
Secret meetings, payoffs
If the cases reached the Supreme Court, the justices were summoned to intelligence headquarters for a late-night meeting.
“In such meetings, they ‘arranged’ what was to be the final decision and the amount of money to which each court member was entitled,” the memo explained.
In the Yanacocha case, “Montesinos received $4 million in cash ‘for his work’ (‘in a suitcase,’ as he used to say) handed over by Mr. Alberto Benavides de la Quintana, a partner of the American company.”
Under oath, Merino later clarified that statement: He didn’t personally see any money handed over, but he was told of a bribe by Pedro Huertas, Montesinos’ liaison to Peruvian judges.
U.S. investigators subpoenaed documents from Newmont related to possible violations of the Foreign Corrupt Practices Act last year, the company reported. That investigation was closed without any charges last month. Investigations in Peru also have produced no charges. Newmont strongly denies paying any bribe.
Newmont and Buenaventura paid their Lima attorney $10.5 million in attorneys’ fees for the case, including a deposit of more than $6 million in September 1998, the lawyer, Gulman, testified to the Peruvian Congress.
Bank statements suggest $7 million of it was withdrawn in cash a week after it arrived, and Peruvian lawmakers were initially investigating whether some of that money may have been used to pay off Montesinos.
Meanwhile, Montesinos is facing dozens of trials on charges that range from corruption to drug trafficking.
During a 2002 Peruvian congressional investigation into his activities, the spymaster was questioned at length about the Yanacocha case.
“One little question. Do they owe this verdict to you?” a congressman asked.
“Yes,” Montesinos replied.
A second panelist pushed him further.
You mean the case “was decided by you and … the lawyers who, it has become known, charged the Buenaventura mine $10 million to win this lawsuit? They have collected for a job they did not perform?” the spymaster was asked.
“I was given a task, and I carried out that task,” Montesinos replied.
Staff writer Greg Griffin contributed to this report.
