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Barrick�s mea culpa

At AGM, Peter Munk laments gold giant�s mess at Chile project

by Christian PenaNow Magazine
May 2nd, 2013

photo: Christian Pena

Fireworks must have been expected at this year�s Barrick Gold annual meeting of shareholders on April 24. 

Inside and out, police and security lined the Metro Toronto Convention Centre. Many more shareholders came out for this important annual meeting than ever before � so many, in fact, that some were left outside.

�Bad times bring out more people,� quipped Peter Munk, the octogenarian company founder who arrived in his signature fedora.

But while there were no full-on pyrotechnics, the annual check-in was far from business as usual.

It�s been bad times indeed for the 30-year-old Canadian gold company, which has seen its share price drop almost 50% since the beginning of this year. And now its crown jewel, the Pascua Lama mine on the border of Chile and Argentina, has had its budget rise from $3 to $8.5 billion and faces more delays on its start date, pushed to early 2014 from mid-2013 thanks to a court injunction for possible environmental violations. 

If spirits were low inside the venue, outside the mood was buoyant. Activists cheerfully propped up a monster puppet of Munk with a Pinocchio nose to illustrate their view of the company�s claims to social responsibility and drew attention to Barrick�s incursions on indigenous land and its reaction to alleged gang rapes and abuses by company security in Papua New Guinea. 


The meeting begins with Barrick CEO Jamie Sokalsky�s opening statement. �It�s been a tough year and a challenging year for Barrick. We faced some significant challenges, some out of our control, some within our control,� he says with masterful understatement.

Seated in the front row are the board of directions, a who�s who of international movers and shakers, from former PM Brian Mulroney to Venezuelan media mogul Gustavo Cisneros and economist and anti-foreign-aid theorist Dambisa Moyo, who does not look impressed. 

There is no mistaking the general amazement at chairman Munk�s candid mea culpa. �We shot ourselves through the foot,� he tells the room. �We could have stayed put in [a] great financial position [and] not started Pascua Lama, not started Pueblo Viejo [in the Dominican Republic].� 

Without these projects, he says, �I think your treasury would be $10 billion, $15 billion.�

The problem he identifies is that countries like the Dominican Republic, Argentina and Chile that once welcomed his company with open arms are now paralyzing projects. The culprit is an �enormously altered public perception of environmental concern, NGOs, human rights, water quality, air quality, et cetera. Gold is under attack. This is the essence of this enormously, rapidly growing resource nationalism.�

But, alas, despite acknowledged errors and obvious investor worries, there is no major shareholder rebellion here, and the board�s slate of officers is voted in unanimously. 

The only overt conflict occurs over a $17 million payoff, including a signing bonus of $11.9 mil, to Barrick co-chair John Thornton. Pension fund reps and other investors are so vexed by it that they defeat a resolution outlining Munk�s method for rewarding executives.

One Quebec shareholder, Philippe B�langer from the RRSE (Regroupement pour la Responsabilit� Sociale des Entreprises), tells NOW he�s stunned by Munk�s self-criticism. �This was the first time I have ever heard a chair say, �We made a mistake to begin this project,�� he says.

B�langer has been tracking the Pascua Lama project and made several recommendations in both 2005 and 08 for an independent study on the risks to the water and the glaciers. �What we said back then at the AGM about the risks has now materialized,� he says.

All the confessions are music to the ears of Sakura Saunders, editor of Protest Barrick. The company �should never have gone to these remote areas of the world; no one forced them, and it ended up being a bad decision. When I hear Peter Munk speak, I know we are winning.�


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