VZCZCXRO4819
OO RUEHCHI RUEHDT RUEHHM
DE RUEHJA #1148/01 1140818
ZNR UUUUU ZZH
O 240818Z APR 07
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4467
RHMFIUU/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHDC
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHKO/AMEMBASSY TOKYO 0488
RUEHBY/AMEMBASSY CANBERRA 0689
RUEHBJ/AMEMBASSY BEIJING 4064

UNCLAS SECTION 01 OF 02 JAKARTA 001148 
 
SIPDIS 
 
DEPT FOR EAP/MTS, EAP/PD AND EB/ESC/IEC 
DEPT PASS OPIC, EXIM, TDA 
DOE FOR CUTLER/PI-32 AND GILLESPIE/PI-32 
COMMERCE FOR 4430/BERLINGUETTE 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EMIN CASC EINV PREL KPAO ID
SUBJECT: NEWMONT POLLUTION CASE: NOT GUILTY ON ALL COUNTS 
 
¶1. (SBU) Summary:  American citizen Richard Ness and U.S. mining 
firm Newmont were declared not guilty on all counts of environmental 
pollution by a five judge panel in Manado, North Sulawesi on April 
¶24.  In dismissing all counts, the chief judge Ridwan Damanik said 
both Ness and Newmont had "the right to reclaim their good name." 
The panel said it found no evidence of pollution at the Buyat Bay 
mine site and that Newmont had complied with all GOI laws and 
regulations.  The chief judge also decisively rejected the 
prosecution's basic premise in bringing criminal charges.  A crowd 
of over 400 people, split between pro and anti-Newmont protestors, 
demonstrated noisily outside the courthouse.  The GOI has the right 
to file a notice of appeal of the verdict within seven days. 
Prosecutors gave no public indication, however, of their proposed 
next steps.  The Embassy issued a press release saying "this 
positive resolution will undoubtedly have a beneficial effect on 
Indonesian and foreign investor confidence."  The American Chamber 
of Commerce issued a statement saying it was "encouraged" by the 
acquittal.  End summary. 
 
 
No Evidence of Pollution, Permits in Order 
-------------------------------------------- 
 
¶2. (SBU) American citizen Richard Ness and U.S. mining firm Newmont 
were declared not guilty on all counts of environmental pollution by 
a five judge panel in Manado, North Sulawesi on April 24.  The 
verdict is the culmination of more than two years of criminal 
investigations and legal proceedings surrounding Newmont's 
Indonesian gold mining subsidiary Newmont Minahasa Raya (NMR). 
Richard Ness, an American citizen and President of NMR, had been 
facing three years in jail and a $55,000 fine if found guilty.  NMR 
had been facing a $110,000 fine.  As with virtually every previous 
session of the court, Embassy observers attended to monitor the case 
and show high level USG interest.  The Economic Counselor and the 
Information Officer were present for the rendering of the verdict. 
 
¶3.  (U) The Chief Judge began the hearing with a long discussion of 
the subsidiary principle in Indonesian mining and environmental law, 
which says that criminal law is used only as a last result after 
regulatory action, civil litigation, and international arbitration 
have failed.  The judge immediately rejected the argument that 
environmental damage to Buyat Bay was especially grave, which was 
the initial standard for proceeding directly to criminal case.  He 
cited ample evidence to the contrary from several independent labs. 
NMR legal experts told us this was an important indicator of how the 
verdict would unfold.  Judge Damanik did say the GOI would have been 
well within its rights to proceed directly to a criminal prosecution 
if the dispute was generating public unrest or creating fear among 
the alleged victims.  He immediately swatted away that possibility 
by saying that the fear generated in this case resulted from a 
concerted public relations campaign rather than any real public 
health emergency.  The chief judge then concluded that the GOI had 
not met the basic threshold for voiding subsidiarity. 
 
¶4. (U) The panel said it agreed that Newmont Minahasa Raya (NMR) was 
not warned, much less sanctioned over the initial pollution charges. 
 He also said it was clear that NMR made good faith efforts to 
comply with the GOI law and met or exceeded GOI regulatory and legal 
requirements.  He added that the body of evidence presented during 
the trial indicated Buyat Bay was not polluted.  The judge made 
mention of NMR's $30 million goodwill agreement signed last year as 
evidence of Newmont's good faith efforts to resolve the dispute, 
further undercutting the GOI's decision to resort to criminal 
sanctions.  Finally he made reference to NMR's Contract of Work 
(COW) with the GOI that specifically calls for arbitration or 
mediation in the case of alleged environmental damage. 
 
¶5. (U) The judges found that the tailings from the mine did not 
constitute the legal definition of hazardous waste as the GOI had 
charged.  The judges also found that NMR had done a proper, 
thorough, and comprehensive environmental impact assessment, which 
was approved by the GOI.  Regarding the GOI's assertion that NMR 
lacked the proper permits for mining, the judges found that the GOI 
had been deficient in taking administrative action to approve the 
final permits and never informed NMR to cease mining in the absence 
of a definitive GOI permit determination.  The judges concluded, 
therefore, that approval from then Environment Minister Sony Keraf 
was a permit. 
 
Prosecution May Appeal Within 7 Days 
------------------------------------ 
 
JAKARTA 00001148  002 OF 002 
 
 
 
¶6. (U) In summation, the chief judge said that taking into account 
no evidence of pollution existed, that NMR had a valid permit to 
mine, and that NMR had made a commitment under the goodwill 
agreement to monitor the health of the bay and villagers for ten 
years, they absolved NMR of all charges.  The chief judge concluded 
by saying both Ness and NMR have the right to have their good name 
restored.  We have seen no reaction yet from the GOI on whether they 
will appeal the decision.  Under Indonesian law they have seven days 
to file a notice of intent to appeal and a further seven days to 
file the paperwork.  If the GOI does appeal, the trial will revert 
to Jakarta and be taken up immediately by the Supreme Court. 
 
¶7. (SBU) Following the hearing and using previously approved 
Department text, the embassy released the following statement:  "We 
are pleased with today's decision in Manado to acquit Mr. Richard 
Ness and Newmont Mining Corporation's Indonesian affiliate, PT. 
Newmont Minahasa Raya, on charges of causing environmental damage to 
Buyat Bay. This positive resolution will undoubtedly have a 
beneficial effect on Indonesian and foreign investor confidence." 
 
¶8. (SBU) The Jakarta-based American Chamber of Commerce also 
released the following statement: "AmCham Indonesia is encouraged by 
the acquittal of PT Newmont Minahasa Raya and Mr. Richard Ness, its 
President Director, of all charges in the Buyat Bay Pollution case. 
We are sure that Mr. Ness and his family are relieved that this 
ordeal is finally over.  The Indonesian judges in Manado should be 
respected for the integrity of their decision, which was based on 
the factual evidence presented.  This case has received widespread 
attention from the press in the United States and around the world 
and has had a negative impact on foreign investment in Indonesia. 
We hope that this decision will reassure the investment community of 
the Government's commitment to legal certainty and the rule of law 
of Indonesia." 
 
¶9. (SBU) Comment: We are the first attest to the great personal 
trauma visited on Rick Ness and his family, as well as the financial 
damage to Newmont, by this lengthy and controversial case.  That 
said, in our view it turned out as well as could be expected.  We 
are heartened by the performance of Chief Judge Damanik, who was 
impressive in his strong focus on the facts of the case, despite 
hundreds of chanting demonstrators today.  Given the frequent 
expressions of concern about the judiciary here, we are glad to see 
in this instance that a panel of jurists listened intently and made 
their decisions based on the facts in accordance with the rule of 
law.  We have been most impressed with Chief Judge Damanik's 
integrity and impartiality throughout the 21 months of the trial. 
Depending on how the GOI moves forward, the ruling should resolve 
the largest single cloud hanging over Indonesia's investment 
climate, particularly over the mining sector. End comment 
 
HEFFERN