The UK Government must investigate the British-Australian mining corporation Rio Tinto over a possible breach of EU economic sanctions on Myanmar, Amnesty International said ahead of the company’s annual shareholder meeting in London today (16 April).

Rio Tinto was instrumental in the setting up of the secretive ‘Monywa Trust’ which enabled Canadian-based Ivanhoe Mines (now Turquoise Hill Resources) to divest its stake in the controversial Monywa copper mine project in central Myanmar, where abuses have included forced evictions and extreme pollution. Rio Tinto has been a major shareholder of Ivanhoe since 2006 and took a controlling stake in the company in 2012. The Trust was established in 2007 as a condition for Rio Tinto’s investment in Ivanhoe.

Information obtained by Amnesty International suggests that the Trust’s subsequent sale of Ivanhoe’s stake could have involved a breach of economic sanctions on Myanmar, by making assets available to the military-owned conglomerate the Union of Myanmar Economic Holding (UMEHL) and Tay Za, a ‘broker’ for the Myanmar government.

At the time the Trust sold Ivanhoe’s stake in the Monywa Project in 2011, Rio Tinto owned 46.5% of Ivanhoe’s shares and appointed half of its Directors. An employee of Rio Tinto also sat on the board of the protector company for the Monywa Trust between 2012 and 2013.

Amnesty International UK’s Economic Relations Programme Director Peter Frankental said:

“Rio Tinto’s role in the creation of this trust raises serious questions about whether the company was involved in activities which may have had the effect of circumventing EU economic sanctions, a criminal offence under UK law.

“Rio Tinto has a responsibility to its shareholders. As they meet in London today, the shareholders should demand that Rio Tinto disclose full details of all transactions related to the Trust and the divestment of Ivanhoe’s interest in the Monywa project.

“If as Rio Tinto claims there was no breach of sanctions, then what does the company have to hide?”

In a letter to Amnesty International, Rio Tinto states that “it was, and remains, our understanding that the measures required by Rio Tinto and put in place by Ivanhoe on the disposal of the Myanmar asset were fully compliant with all applicable laws giving effect to sanctions.”

The controversial Monywa Project

Since its inception, and throughout various changes in ownership, the Monywa project – which includes the notorious Letpadaung mine – has been characterised by serious human rights abuses and a lack of transparency.

In February 2015, Amnesty International released a ground-breaking report exposing how companies linked to the Monywa project have profited from serious human rights violations and illegal activity committed by the Burmese authorities, including large-scale forced evictions.

The report also documents how community protests about the Letpadaung mine have, on multiple occasions, been met with excessive use of force by the police. In November 2012, security forces used white phosphorous, a highly toxic explosive substance, in a deliberate attack on villagers and monks who were protesting about the mine.

The Monywa project was taken over by UMEHL and Chinese company Wanbao Mining in 2010-2011. In August 2011, Ivanhoe Mines announced that the Trust had sold its stake in the project. But, it remains unclear who the Trust sold the project to and how it ended up in the hands of its current owners.

Ivanhoe Mines set up the Trust in the British Virgin Islands – a territory of the United Kingdom – and used secrecy provisions to keep details of the sale secret. Rio Tinto, as current majority shareholder of Ivanhoe Mines (now Turquoise Hill Resources), has never responded to calls to make this information public.

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Amnesty Calls for Rio Tinto Probe for Role in Monywa Mine Sale

By Seamus Martov

THE IRRAWADDY – http://www.irrawaddy.org/burma/amnesty-calls-for-rio-tinto-probe-for-rol...

23 April 2015

London-based rights group Amnesty International has called on British authorities to investigate British-Australian mining giant Rio Tinto for “a possible breach of EU economic sanctions on Burma” over the role it played in a controversial sale of the Burmese assets of a Canadian firm Ivanhoe Mines, a sale that according to a leaked US State Department cable may have involved internationally blacklisted billionaire Tay Za as a middle man.

Vancouver-based Ivanhoe Mines was involved in the Monywa copper mining project by way of its 50 percent stake in a joint venture called Myanmar Ivanhoe Company Limited (MICCL), a partnership with a Burmese state-owned company, which began operating the mine in the late 1990s. When Ivanhoe announced in August 2011 that its Burmese assets had been sold off, Rio Tinto owned a 46.5 percent stake in the Canadian mining firm—founded by mining mogul Robert Friedland—and had appointed half of its directors. Rio Tinto has subsequently increased its stake in Ivanhoe, and since 2012 has owned a majority stake in the firm—now called Turquoise Hill Resources and primarily focused in Mongolia.

The handling of Ivanhoe’s Burmese assets was mired in controversy long before Wikileaks published diplomatic cables implicating Tay Za in the eventual sale. In February 2007, Ivanhoe established what it claimed at the time was an independent third party trust called the Monywa Trust to take control of its 50percent stake in MICCL in preparation for a sale. The Trust was established as part of an agreement between Ivanhoe and Rio Tinto that was reached prior to Rio Tinto buying a substantial stake in the Vancouver-based firm, which already had the rights to a giant copper deposit in Mongolia that underpinned their partnership.

Ivanhoe’s founder and long time chairman, Robert Friedland, has described Rio Tinto’s role in creating the trust as, “a matter of public record, that the creation of the Monywa Trust structure was dictated entirely by Rio Tinto as a condition of its significant equity investment in the Company [Ivanhoe Mines].”

Following the creation of the Trust, Ivanhoe claimed that it no longer had anything to do with the mine’s operations, a claim Amnesty challenged in a lengthy report released in February citing leaked diplomatic cables quoting the mine’s acting general manager as saying that “Ivanhoe Headquarters” was still giving him instructions on how to operate the mine nearly two years after the ostensibly independent trust was created. In a detailed press release issued on April 16, timed to coincide with Rio Tinto’s annual shareholders meeting, Amnesty highlighted Rio Tinto’s connection to the controversial disposal of Ivanhoe’s Burmese assets and the possible violation of sanctions.

“Rio Tinto’s role in the creation of this trust raises serious questions about whether the company was involved in activities which may have had the effect of circumventing EU economic sanctions, a criminal offence under UK law”, Amnesty International UK’s Economic Relations Program Director Peter Frankental said in the press release.

“Information obtained by Amnesty International suggests that the Trust’s subsequent sale of Ivanhoe’s stake could have involved a breach of economic sanctions on Myanmar [Burma], by making assets available to the military-owned conglomerate the Union of Myanmar Economic Holding (UMEHL) and Tay Za, a ‘broker’ for the Myanmar government,” read Amnesty’s press release, a reference to a number of leaked cables which quote MICCL’s acting general manager Glenn Ford detailing Tay Za’s involvement in the negotiations for the sale.

Amnesty’s extensive research found that Ivanhoe established the trust in the British Virgin Islands (BVI), an overseas British territory. Because it was based in BVI the Trust’s activities were subject to British and EU sanctions, which were in effect at the time of the sale, targeting Tay Za, the apparent broker of the sale and the military holding company UMEHL which took over the project. Following Ivanhoe’s departure, UMEHL and a subsidiary of Chinese weapons manufacturer Norinco—called Wanbao Mining—have moved to significantly expand the mine and develop the Letpadaung deposit against the wishes of local farmers whose protests have been harshly dealt with by government authorities. Responding to the Irrawaddy’s questions a spokesperson from Britain’s Foreign and Commonwealth office indicated that Amnesty’s concerns were being looked into.

“The UK is a leading advocate of strengthening financial and sanctions compliance worldwide. We have alerted authorities in the British Virgin Islands to this alleged breach, and requested that appropriate steps are taken to investigate,” read an emailed statement from the UK Foreign & Commonwealth Office. Despite this assurance, it remains far from certain whether the British Virgin Islands, an autonomous jurisdiction known as the home of a financial system with extremely lax regulatory enforcement, will actually follow up on the matter,

Rio Tinto, which did not did not respond to The Irrawaddy’s request for comment, has repeatedly sought to distance itself from the controversy over the sale of Ivanhoe’s assets. In a letter to Amnesty earlier this year, Rio Tinto CEO Sam Walsh took issue with allegations raised in Amnesty’s report on the Monywa mine. “We do not agree with a number of your assertions, or the conclusions you seek to draw from them,” read the letter, which was re-published in Amnesty’s report.

“It was, and remains, our understanding that the measures required by Rio Tinto and put in place by Ivanhoe on the disposal of the Myanmar asset were fully compliant with all applicable laws giving effect to sanctions. Rio Tinto was not aware of any facts or circumstances that would suggest any non-compliance with those laws at the time of, or prior to, the apparent divestment of the interest in mid-2011,” Walsh concluded.

Although Walsh claimed in his letter to Amnesty that the “conditions which Rio Tinto placed on Ivanhoe’s disposal of the Myanmar assets also illustrated our recognition of the importance of meeting the high social, environmental and human rights standards to which we are committed,” his firm has long been the focus of heavy criticism from rights groups over allegations relating to rights abuses and environmental destruction at various Rio Tinto project sites around the world.

In 2008, the Norwegian Government Pension Fund—Global divested itself of its $850 million stake in Rio Tinto, citing environmental concerns over the firm’s 40 percent stake in a massive mine in Indonesian-controlled West Paupa, operated by the firm’s partner Freeport McMoRan. According to the fund, the decision to dump the Rio Tinto shares was made because of the “unacceptable risk that the Fund, through continued ownership in the company, would contribute to ongoing and future severe environmental damage.”