High in the Andean mountains of Peru is a gold mine, Yanacocha, run by Newmont Mining
Corporation of Denver, Colorado, the largest gold mining company in the world. Once part of the
Incan Empire, this land was conquered by the Spanish, who came in search of gold and silver.
Descendants of the Incas remain suspicious to this day of outsiders seeking fortune here.
FRONTLINE/World and New York Times reporter Lowell Bergman arrives to investigate a
growing conflict between the local people and the Yanacocha Mine, which has already produced $7
billion worth of gold.
"In the language of the local Indians, Yanacocha means `black lake,' but the lake is long
gone," says Bergman, "a casualty of this massive mining operation."
Today, the Yanacocha Mine spreads across more than 60 square miles at altitudes as high as
14,000 feet. Mine manager Brant Hinze tells Bergman that nearly $2 billion has been invested in
the mine. Dressed in protective gear and wearing a respirator, Bergman is allowed to enter the
heavily guarded "gold room," where ore is melted at a temperature of 2000 degrees Fahrenheit and
the liquid gold is poured into bars worth more than $180,000 each. The golden scene of flowing
molten metal resembles some ancient rite.
"There's a tradition among gold miners," says Bergman. "They say if you can lift a brick with
one hand, it's yours to keep." Bergman makes a valiant effort, but it proves impossible.
The Yanacocha Mine recently celebrated the pouring of its 19 millionth ounce of gold. It is
said to be the world's most productive gold mine.
"But behind the company's success is a dark and troubled history with allegations of corruption
and bribery," says Bergman. It is a story that begins in 1994 during the presidency of Alberto
Fujimori -- and provides a case study of "how a multinational company does business in a
developing country rife with corruption."
The original owners of the Yanacocha Mine were Newmont; Buenaventura, a Peruvian company; and
Bureau de Recherches Géologiques et Minières (BRGM), a French government-owned
company. But the partnership collapsed when the French tried to sell part of their shares to an
Australian company that was a competitor of Newmont. Newmont and Buenaventura went to court to
stop the French, and an epic battle ensued, pitting Newmont against the French company. Billions
of dollars were at stake.
"The French government was behaving inappropriately in the litigation," says Larry Kurlander, a
former Newmont senior executive. "In fact, I have seen with my own eyes a letter from [French
president] Jacques Chirac to President Fujimori asking for his intervention in the case." Newmont
sent Kurlander, a troubleshooter and former prosecutor, to Peru to "level the playing field" and
help the company win their court case against the French. This is the first time Kurlander, an
insider, has spoken publicly about what happened.
The legal fight went all the way to Peru's notoriously corrupt Supreme Court. Kurlander claims
that the French were trying to bribe Peruvian politicians to influence the judges. But Antoine
Blanca, France's ambassador to Peru at the time, denies that the French were paying bribes. On the
contrary, Blanca tells Bergman, it was Newmont who was bribing people. Kurlander insists that is
not true, but he does admit that he met privately with Vladimiro Montesinos, a very unsavory
character who was President Fujimori's right-hand man, in an effort to enlist his help in
thwarting the French. Kurlander argues that he had no choice, that he had to meet with Montesinos
because "if the French were to be stopped, he was the only one in Peru who would dare to do
Montesinos is a notorious figure, "a crooked lawyer who made a short career of defending drug
traffickers" before becoming "for all practical purposes" the man in charge of the Peruvian army
and intelligence services, according to Mirko Lauer, a leading Peruvian journalist. It turns out
that Montesinos was in the habit of secretly recording most of the meetings in his office. Many of
these videotapes were later leaked to the press, causing the downfall of President Fujimori in
2000 and the arrest of Montesinos. "The videotapes show Montesinos cutting deals, bribing
officials and handing out bricks of cash," says Bergman, as we see excerpts from these tapes,
never before shown on television in the United States.
In one audio tape, Newmont's Kurlander meets with Montesinos, and
the men part with a pledge of loyalty: "Now you have a friend for life."
Kurlander also lobbies the U.S. State Department to come to the aid of Newmont. Peter Romero,
who was Assistant Secretary of State in charge of Latin America, tells Bergman that he actually
called Montesinos on behalf of Newmont, though he was only trying to level the playing field.
After the case was finally decided in Newmont's favor, Romero went to work for Newmont as a
Blanca says the French refused to meet with a criminal like Montesinos; moreover, they knew
something else: "He was a CIA man."
Bergman's former CIA sources confirm that the CIA was paying Montesinos's secret police
organization at least a million dollars a year and had done so for more than a decade. And in two
of the secret videotapes, Montesinos is seen meeting with the CIA station chief in Lima, Peru's
capital. On one tape, Montesinos vows to block what he says is evidence of French pressure on Peru's courts in the gold mine
In the most revealing of the tapes, Montesinos meets with the judge who will cast the deciding
vote in the case, explaining that Peru needs Washington's support in a border dispute with
Ecuador. A week later, the judge casts his vote in favor of Newmont, and Newmont wins controlling
interest in the Yanacocha Mine.
Today, Montesinos is being held in a maximum-security prison in Peru, standing trial on dozens
of counts of corruption. Kurlander tells Bergman he regrets meeting with Montesinos: "… the
fact that you are in a country and you are forced to deal with a guy like this, it's a terrible
In Peru, Ronald Gamarra -- the special prosecutor assigned to investigate judicial corruption
under Montesinos -- tells Bergman, "My theory is that both sides [the French and the Americans]
were trying to get a favorable decision by any means necessary, but only one side got to
Montesinos and that is the side that won." But Gamarra says he was removed from the case before he
could complete his investigation. Nevertheless, he declares, "I am sure bribes were paid."
Neither Newmont nor the French nor the Peruvian judge who met with Montesinos was ever
convicted of participating in illegal activities in connection with the gold mine case. Under the
Foreign Corrupt Practices Act, the U.S. government did investigate allegations that Newmont paid
bribes. "But that investigation ended late last year after the Peruvian government failed to fully
cooperate and the statute of limitations ran out," says Bergman.
Today, Newmont is firmly in control of the Yanacocha Mine, but the company has encountered
resistance from the local population. Some of the distrust of the mine and its operators may go
back to the story of Atahualpa, the Incan emperor who was captured and held for ransom by the
Spanish. To win his freedom, Atahualpa promised his captors to fill a room with gold, but the
Spanish betrayed him -- they took the gold and killed him anyway.
Foreigners have been taking Peru's mineral wealth ever since, says Lauer: "And this is the
basic historical lesson of these times, no? Unhappy people surrounded, watching very happy
transnational corporations moving earth and digging gold."
In part, the sheer scale of the mining operation -- and its reliance on cyanide to recover the
microscopic bits of gold in the crushed rock -- worries many campesinos in the region. "They are
destroying our water, our hills, our flora and fauna," Miguel Garcia, a dairy farmer, tells
Bergman, though Newmont says they safely contain the cyanide solution in lined holding ponds.
Trust between the campesinos and the mine really broke down in June 2000, when a truck
contracted to carry mercury from the mine accidentally spilled 330 pounds of its toxic cargo over
a 25-mile stretch of road around the village of Choropampa. Not knowing what it was, but attracted
by the mercury's glimmer, villagers picked it up and took it home. They later fell sick, and many
ended up in hospitals with symptoms of mercury poisoning. More than a thousand people are suing
Newmont in a U.S. federal court for damages.
"Nobody was dead," says Roque Benavides, the CEO of Newmont's partner, Buenaventura. He also
says that the company provided health insurance. "So it was not all that bad."
But the mercury spill provoked violent clashes between angry villagers and the police. It
became a public relations nightmare for Newmont, and the company decided to dispatch Kurlander
back to Yanacocha to see how the mine was operating. Kurlander's environmental audit found 20
high-priority problems at the mine. The findings were so serious that Kurlander warned in a memo
to Newmont CEO Wayne Murdy that senior executives could be subject to "criminal prosecution and
For Kurlander, the environmental report was a turning point: "When we are out there preaching
that we are guardians of the environment and you suddenly discover that we are not, it's like
someone hits you in the stomach real hard."
Less than a year later, Kurlander retired from Newmont. Bergman requested an interview with
Murdy to discuss the Yanacocha case, but Murdy declined. Since Kurlander's environmental audit,
however, the company says they have spent more than $100 million on environmental improvements at
the mine in Peru. They also provide more than 2,000 full-time staff jobs at the mine and pay
The problem now for Newmont, according to Kurlander, is that the company has not regained the
trust of many local people in Peru. Kurlander argues that Newmont needs something more than the
government license it has to operate the Yanacocha Mine -- it needs a "social license" from the
community. Benavides is skeptical of the "social license" concept, but the mine's manager tells
Bergman he recognizes the need to work with and help the Indians in this impoverished region.
Hinze says he hopes the mine "will be a neighbor here for a very long time'" and will continue to
However, protesters have blocked the mine's plans to expand operations into a mountain called
Cerro Quilish, which Newmont believes contains more than a billion dollars' worth of gold. For
campesinos, Quilish is a sacred mountain and a source of precious water. "For Yanacocha, Quilish
is a mountain of gold," says Catholic priest and local activist Father Marco Arana, "and for the
people, it is a mountain of water. And Yanacocha didn't listen to the people."
Last fall, thousands of Peruvians filled the town square in Cajamarca, the city closest to the
mine, protesting the expansion. Later they blockaded mining roads and forced the company to cancel
its expansion plans.
"Communities are becoming more and more involved in their own destinies," says a chastened
Kurlander. "When I say a social license, I mean it. Without the community support, you'll be out
of business eventually. They will force you out of their community, and it doesn't matter how much
government support you have."
NATASHA DEL TORO
New York Times
A FRONTLINE/World Co-Production with The New York Times
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