Ottawa -The Canadian Friends of Burma (CFOB) is deeply concerned by reports that Export Development Canada (EDC), a state owned Crown corporation, intends to give as much as half a billion dollars in public subsidies to Ivanhoe Mines and its Chairman Robert Friedland for a controversial mining project in Mongolia. EDC’s apparent willingness to support Ivanhoe comes despite the fact that CFOB has obtained evidence that the Vancouver based firm violated Canadian sanctions by allowing its stake in Burma’s largest mine to be sold to blacklisted cronies of the Burmese regime.

CFOB is also is concerned that EDC in opting to consider giving money to Ivanhoe Mines has chosen to ignore its own protocol requiring that 30 days before becoming involved in a project in a non G7 nation the organization will publicly disclose on its website its intention to become involved in said project. EDC is also obliged to provide details about its potential involvement but the organization’s rules give EDC the right to opt out of doing so. The policy regarding this opt out however states that EDC must “disclose the justification for such waiver to the public via its website”, therefore requiring EDC to at a minimum acknowledge what project it is considering becoming involved in.

While Ivanhoe’s July 19 press release presented EDC’s involvement in the Oyu Tolgoi project as a fait accompli, the EDC website has yet to reveal that it intends to support Ivanhoe. The EDC website also does not give any indication that it has chosen to invoke its right not to disclose details about its involvement with Ivanhoe, instead EDC has opted to hide the fact that it is seriously considering supporting Ivanhoe’s Mongolian mine, something that deeply troubles CFOB Executvie Director Tin Maung Htoo.

“It is not in the interest of the Canadian public for EDC to give public money to Ivanhoe, when the government should instead be investigating Ivanhoe for its refusal to disclose key details about what has happened to its toxic Burmese mine. The fact that EDC appears unwilling to follow its own policy by not giving the public 30 days advance warning to comment on its intention to give support to Ivanhoe’s Mongolia mega mine raises serious questions about the organizations governance and apparent disregard for Canadian civil society” says Tin Maung Htoo.

After CFOB learned from our sources that Ivanhoe Mines violated Canadian sanctions by allowing its 50% stake in Burma’s largest mine to be sold to cronies of the Burmese junta we urged the Canadian government to investigate this allegation and force Ivanhoe to explain what has occurred. If EDC a Crown corporation goes ahead with a half billion dollar loan to Ivanhoe it would seriously and unnecessarily complicate any investigation by the Ministry of Foreign Affairs and International into CFOB’s allegations because EDC reports to parliament by way of the Minister of International Trade whose office is also in charge of implementing Canada’s sanctions policy.

CFOB has also learned that the blacklisted cronies were acting as middleman for the Chinese weapon’s firm Norinco and Chinese mining giant Chinalco. Coincidently Chinalco owns a substantial stake in Ivanhoe Mines by means of its ownership of a large stake in Rio Tinto which itself has a 30% stake in Ivanhoe. The Financial Times reported earlier this month that Rio Tinto has indicated that Chinalco is interested in buying a direct stake in Ivanhoe.

Last March MICCL General Manager Glenn Ford commented to an Australian news site that “Chinalco, in partnership with Chinese state-owned arms dealer Norinco, is buying the whole copper deposit of Ivanhoe and the Myanmar government.” CFOB later was able to confirm that this is indeed what did take place thanks to the involvement of blacklisted cronies of the Burmese military regime. Ivanhoe’s murky financial relationship with both Chinalco and Norinco (a Chinese firm penalized by the US for selling missile technology to Iran) has yet to be fully investigated but what is publicly known is ample proof that Ivanhoe must not be given Canadian subsidies to further the firm’s questionable business practices.

Using a secretive “independent trust” which assumed responsibility for Ivanhoe’s stake in the Myanmar Ivanhoe Copper Company Limited (MICCL), Ivanhoe has refused since the trust’s February 2007 creation to disclose any details about the continued operations of the Monywa copper mine. At the time of the establishment of the “independent trust” Ivanhoe disclosed that its creation was part the firm’s agreement with Rio Tinto to join forces in Mongolia.

While adamantly denying CFOB’s reports that blacklisted cronies of the junta have taken over Ivanhoe’s stake in Monywa, the firm has declined to reveal who controls the alleged “independent trust”, thus preventing CFOB or other concerned parties from verifying Ivanhoe’s claim that the stake has not been sold.

In any case if the stake in the Monywa mine was not sold as Ivanhoe claims, EDC should not be involving itself with a firm that by way of anonymous “independent trust” owns a joint venture with the Burmese military regime. Ivanhoe’s increasingly bizarre attempts to claim that nobody owns what was the firm’s 50% stake in the Myanmar Ivanhoe Copper Company Limited raises serious questions about the firm’s credibility.

Ivanhoe’s deliberated attempts to limit financial transparency of its Burmese operations by resorting to questionable accounting practices further proves that the firm is not a suitable recipient of Canadian government financial aid. Despite the fact that its Burmese mine was functioning at the end of 2007 Ivanhoe, citing a lack of knowledge about what was occurring at the Monywa copper mine, Ivanhoe claimed that it was “prudent to record a $134.3 million write-down” in the value of their 50% holding in MICCL thus reducing its value to zero. As recently as last year however, MICCL’s managing director Glenn Ford was quoted boasting to reporters that the Monywa mine remains “one of the lowest-cost production mines in the world”.

Reducing the value of its 50% stake in MICCL to zero enabled Ivanhoe to justify no longer including any financial information about its Burmese holdings in their annual reports or company financial statements. Furthermore by valuing its stake in a lucrative copper mine at zero, Ivanhoe would be be able to essentially give away its stake in MICCL to a third party, such as cronies of the Burmese regime, for an artificially low cost. CFOB has received credible evidence that this is indeed what has transpired.

Tin Maung Htoo is not surprised by Ivanhoe’s actions: “General Than Shwe and his cronies are hard negotiators and recent events have shown that the price extracted from Ivanhoe for withdrawing from Burma was a multimillion dollar give away to individuals closely linked to the Burmese regime. I’m sure that for many years to come they will be making millions from Ivanhoe’s supposedly worthless stake in Monywa.”

Responding to recent CFOB press releases Ivanhoe has resorted to labeling CFOB and other critics of the firm’s activities in Burma as anti-Burmese, a tactic remarkably similar to the angry and paranoid taunts of Burma’s state controlled media, more evidence that Ivanhoe should not be receiving government support to build a controversial mine in Mongolia.

CFOB’s Tin Maung Htoo urges EDC not give Ivanhoe financial support, “Robert Friedland’s business dealings have made him an incredibly wealthy man, if he wants to build a giant mine in Mongolia he can pay for it himself. Canadians will be outraged to learn that they are financing Toxic Bob’s quest to build a massive mine against the will of a majority of the Mongolian people”.

EDC should also take note that Ivanhoe Mines deliberately chose not to inform its shareholders that the Myanmar Ivanhoe Copper Company Limited (MICCL) was added to the European Union’s Burma’s sanctions blacklist in late 2007. This glaring omission was also repeated in January 2009 when the US Treasury Department’s Office of Foreign Asset Control (OFAC) added MICCL to its own list of black listed Burmese entities.

Burma’s opposition urge Canadian government probe Ivanhoe

The party of Burma’s detained opposition leader Aung San Suu Kyi, the National League for Democracy last week formally asked the Canadian government to investigate whether Ivanhoe has violated Canadian sanctions by secretly selling its stake in MICCL to cronies of the Burmese regime.

The NLD also asked Canada to investigate the jailing of Ivanhoe’s Burmese driver Ko Thet Lwin. Ko Thet Lwin who was arrested in 2003 after a senior Ivanhoe Mines employee demanded that he be driven to Aung San Suu Kyi’s place of residence despite it being a restricted military zone. Ko Thet Lwin was charged with kidnapping his boss and after an extremely unfairly trial sentenced to a lengthy imprisonment in notorious Insein prison where it appears he may have died.

Ivanhoe Chairman Friedland despised by Mongolian public

In April 2006 Ivanhoe Chairman Friedland was burned in effigy at a massive protest in the Mongolian capital against the firm’s proposed mine, one of the largest protests in Mongolian history.

Friedland had drawn the wrath of a large segment of the Mongolian population when the Mongolian media reported that he had boasted at an international mining conference of the supposed benefits doing business in the sparsely populated landlocked nation, “The nice thing about this, there’s no people around. ... There’s no NGOs … You’ve got lots of room for waste dumps without disrupting the population.”

Robert Friedland’s toxic Past

Prior to launching his partnership with Burma’s killer generals Ivanhoe Chairman Robert Friedland was CEO of another Vancouver based mining firm Galactic Resources. Galactic ran a disastrous gold mine in the San Juan Mountains of Colorado called Summitville. Thousands of liters of toxic mining waste leaked from the mine into a nearby river killing all aquatic life downstream for at least 17 miles, earning Friedland the nickname Toxic Bob.

In December 2000 after nearly a decade long legal fight with US government authorities, Friedland agreed to personally pay US $27.5 million towards the clean up of the mine, the largest such fine in US history. To date US taxpayers have spent more than $200 million to clean up Summitville, called by many the costliest environmental mining disaster in US history.

Friedland’s last venture with EDC ended in disaster

Friedland was a member of the board of Montreal based Golden Star Resources and was involved with the establishment of their Omai gold mine in Guyana, made possible by EDC’s providing Political Risk Insurance. Friedland played a key role in ensuring the mine was constructed following the departure of the firm’s Canadian partner Placer Dome. In 1993 Friedland told the Canadian mining weekly the Northern Miner “Golden Star’s stock was beat when I came on the scene because of Placer Dome’s withdrawal from Omai … It was a bird with a broken wing, and I helped it mend.”

Friedland stepped down from the board of Golden Star in 1991 and in 1993 sold all of his shares in the firm, the same year Omai went into operation. At Omai in August 19 1995 a dam containing a massive pond of cyanide sludge broke causing a huge amount of the cyanide and heavy metal fluid to dump into the Omai river, a major tributary of Guyana’s most important river the Essequibo. Golden star’s own consultants estimated that more than 3 million cubic meters of cyanide laced liquid flowed into the river as a result of the accident. The cyanide spill exceeded Summitville as being the worst of its kind in the western hemisphere dumping enough cyanide fluid to make a lethal dose of Guyanese cool aid for the entire population of Canada.

Friedland and the Apartheid era death squads

In the mid 1990’s Friedland controlled DiamondWorks, a Vancouver based firm headed by his brother Eric who was CEO. While under the Friedland’s control DiamondWorks acquired a controlling stake in a firm which owned the paramilitary mercenary company Executive Outcomes (EO). EO operated using a squad largely made up of decommissioned Apartheid era South African soldiers. It was widely believed that as payback for EO’s involvement in providing “security” for the government in Sierra Leone, Diamond Works received lucrative concessions at the Koidu Mine fields. EO’s notorious head Eeben Barlow, apartheid era intelligence officer who conducted Pretoria sanctions busting schemes, was also a DiamondWorks shareholder and according to company filings received the shares for services he provided to DiamondWorks.

In 1998 Angolan rebels killed eight DiamondWorks employees. That DiamondWorks staff members were working in a part of the country that most other firms had withdrawn from is an indication of the Friedland brother’s total disregard for employee safety.

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The Canadian Friends of Burma (CFOB) is federally incorporated, national non-governmental organization working for democracy and human rights in Burma. Contact: Suite 206, 145 Spruce St., Ottawa, K1R 6P1 Web: www.cfob.org