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Kurlander letter to Newmont senior management
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This letter from Larry Kurlander to Newmont Mining senior management reveals his frustration following the April 2001 environmental audit of the company's Yanacocha Mine in Peru. Kurlander argues that the board of directors does not have what he calls "an accurate understanding of the facts" set forth in the audit. He warns that the company could be subject to fines of up to $500,000 for each violation and that the senior operating executives might be "subjected to criminal prosecution and imprisonment."
After serious consideration, I have reached the conclusion that, as an Officer of Newmont, I am obligated to communicate to you regarding a matter of critical importance to the Company. Newmont's Board of Directors does not have an accurate understanding of the facts set forth in the April 20, 2001 Mineral Yanacocha SRL 2001 Environmental Audit and attachments. The lack of understanding on the part of the Board was clearly evidenced in the July 18, 2001 Environmental Committee Meeting attended by all Board members. The facts set forth in the Audit are material to the Company, because their existence may jeopardize continued operation and expansion of the Yanacocha Mine.
We must advise the Board of the Audit's findings, including that we are in non-compliance with our operating permits (not simply over "high standards") and that non-compliance occurs virtually 100% of the time. We run a risk that the company could be subjected to fines up to $500,000 for each violation (this would amount to $24,000,000 for the year 2000 (the audit period.) Furthermore, the senior operating executives might be subjected to criminal prosecution and imprisonment.
Implicit in the Audit are the shortcuts we took during the construction of LaQuina. We eliminated many environmental safeguards that were in the construction and environmental management plans, seven serpentines not constructed; road cuts changed from 2.2 to 1 ration to 1.5 to 1; concurrent reclamation eliminated; and dumping side cut material over the embankment, where acid and sediment are visible to the naked eye in the runoff. In so doing, we have created serious issues with the community - issues which threaten our continuing operations and plans to expand.
One of the most obvious reactions to our environmental performance has been the enactment of laws forbidding the development of Cerro Quilish. While we are challenging those laws in Court, you should be aware that all of us who have followed the situation closely believe that, win or lose in Court, we cannot permit Quilish for at least five years. Some of us believe it will never be permitted. The community will not allow it.
We have come to this because we are in denial. We have not heeded the voices of those most intimate with our mine - those who live and work nearby. We have lost our social license and the Court proceeding is largely irrelevant.
We must regain the community's trust by behaving as good citizens. We will never be able to achieve our goals unless we are honest with ourselves and our Board. John Dow and Carlos Santa Cruz are working very hard to restore that trust. But they will never succeed without our help... NOW.
This is a defining moment of your leadership of Newmont. The message you convey to everyone who was present at the Board meeting will define their behavior going forward. The presentation to the Environmental Committee presents you with a wonderful opportunity to change, for the better, our culture. It provides you with an opportunity to safeguard Newmont's economic future by bringing new practices to our operating and environmental groups. Conversely, our failure to act will, I'm afraid, have terrible consequences for all of us.
Sincerely yours,
Lawrence T. Kurlander