A mining company based in Wisconsin is suing the government of El Salvador for one hundred million dollars under the Central America Free Trade Agreement, also known as CAFTA.
The company is taking advantage of “foreign investor protections” in the free trade agreement. These protections for capital can undercut local environmental laws. And that’s the case in El Salvador.
Commerce Group, which is based in Milwaukee, owns the San Sebastian Gold Mine near the town of Santa Rose de Lima in eastern El Salvador.
A few years ago, the government of El Salvador revoked the Commerce Group’s environmental permits for its gold mining and milling operations after the company failed its environmental audit.
Commerce Group says it has been denied the ability to develop and process gold and has filed a lawsuit under CAFTA. The case is playing out as a binding arbitration case before the World Bank’s International Centre for Settlement of Investment Disputes.
According to filings with the international tribunal handling the case, Commerce Group estimates it “has been denied the ability to develop and process an estimated 3.5 million ounces of gold.”
But according the its own annual report for the last fiscal year, Commerce Group reported a net loss of nearly five million dollars. In the year before, Commerce Group reported a loss of thirty million dollars. Commerce Group’s filings with the U.S. Securities and Exchange Commission (SEC) reveal that the company has had no earnings since 2002, four year before their permit was revoked. So the company is essentially suing for lost profits even though it has not turned a profit in El Salvador in about a decade.
The backdrop to all of this is the terrible impact mining can have in communities.
Environmental damage is a great concern to the people living near the San Sebastian mine. A 2006 study by a team of earth scientists from the University of El Salvador reported cadmium levels 72 times higher than EPA recommendations, and mercury levels 36 times higher than EPA recommended levels.
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John Machulak, a Milwaukee attorney (and brother of Edward A. Machulak, Commerce Group CEO) representing the company, strongly denied the allegations. “There was nothing we were doing that was environmentally unsound to begin with,” he told Milwaukee Magazine. “We were inspected all the way and had no complaints.”
Right now, mining is a hot button issue in El Salvador. Intimidation and threats against civil society groups raising concerns about mining issues have escalated. In the past year and a half, three anti-mining activists were murdered.
Miguel Rivera, an environmental organizer with the Association for Economic and Social Development in El Salvador, warned that the case and the international trade rules that allow it “limit the government’s ability to defend the lives of the residents” and “put economic rights above the people’s right to life.”
Commerce Group has upset many Wisconsinites, who organized a group called The Midwest Coalition Against Lethal Mining. It’s a coalition of local, national, and international groups and churches and it’s calling on Commerce Group to drop its suit against the government of El Salvador.
The Midwest Coalition Against Lethal Mining has organized a national call in day to Commerce Group on Friday, January 14.
The group is asking folks to call the Commerce Group’s Milwaukee office (414) 462-5310 during business hours and tell the company to drop the lawsuit.
This is a simple way to actually make a difference.
SAMPLE CALL SCRIPT: Hello. My name is _______________(if you are a Milwaukee or Wisconsin resident, say so up front!) and I have been following Commerce Group’s lawsuit against the government of El Salvador. I am calling on Ed Machulak and the Board of Directors to respect the right of the government of El Salvador to protect the environment and the health of the people near the San Sebastian mine by immediately withdrawing your lawsuit against the government of El Salvador. I will be telling my friends and neighbors about the damage you are causing, as well as calling on my Congressional Representatives to take action. Thank you.