Tell Commerce Group to Drop the Lawsuit Against El Salvador

Over the past few months, AFGJ has devoted a great deal of time to our work opposing the Korea-US (KORUS) Free Trade Agreement (FTA). We believe that the following alert should help illustrate why such action is necessary. Thanks to FTAs, such as DR-CAFTA in this case, foreign investors are afforded “protections” that allow them to bring lawsuits against countries for “loss of profits”. Basically, this allows foreign corporations to dismantle any effective labor or environmental legislation in the name of profit. Such a provision is included in KORUS, and will likely find its way into the Panama and Colombia trade agreements that the administration has indicated it would like to push through if KORUS successfully passes with Congressional approval. We urge you to participate in the call-in day below.

(The alert included below was originally circulated by our friends at Midwest Coalition against Lethal Mineral Mining.)

ALERT:
On January 13 the International Centre for the Settlement of Investment Disputes (ICSID) of the World Bank will announce their decision about whether the lawsuit brought by the Commerce Group will proceed to the next phase. Unfortunately, the majority of ICSID cases pass the first round of hearings, and there is not much hope leading us to think that the Commerce Group case will be any different.

On JANUARY 14, 2011: Let’s send a clear message to the Commerce Group: Withdraw your shameful lawsuit against El Salvador!

On Wednesday, December 29, 2010, four members (Steve Watrous, Al Gedicks, Babette Grunow and Dan Kasun) of the Midwest Coalition Against Lethal Mining (MCALM) met with John Machulak, an attorney with Machulak, Robertson & Sodos, and brother of Commerce Group’s Chairman and CEO Edward Machulak to ask him to withdraw the $100 million lawsuit against El Salvador. He refused.

As Dan Kasun observed, “It appeared obvious that the comments by John Machulak throughout the meeting either attempted to minimize culpability or prove willfully ignorant of the obvious environmental and health impact of the Commerce Group’s mining operations.”

At the conclusion of the meeting, we promised that if they did not withdraw the lawsuit brought against El Salvador under the foreign investor “protections” of the U.S.-Dominican Republic-Central America Free Trade Agreement (DR-CAFTA) that we would continue our campaign of public education and political pressure.

We need you to stand in solidarity with El Salvador’s struggle against corporate extortion, neocolonialism and environmental racism.

Please call the Commerce Group’s Milwaukee office phone (414) 462-5310 on Friday, January 14, 2011 and tell them to drop the lawsuit against the government of El Salvador.

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.

**Press Release: More Information**

Milwaukee Company draws international opposition for pursuing controversial lawsuit against El Salvador

WASHINGTON, D.C. – On Thursday, a World Bank tribunal decided to allow a Milwaukee gold mining company’s controversial $100 million lawsuit against the government of El Salvador to move forward. Commerce Group Corporation is pursuing its suit under the U.S.-Dominican Republic-Central America Free Trade Agreement (DR-CAFTA); critics of the trade pact say that the decision reveals a grave lack of environmental protections in current U.S. policy.

In 2006, El Salvador revoked Commerce Group’s mining permits for failure to comply with the country’s mining law, including failure to meet the requirements for an environmental permit. A 2006 study of the local waterways surrounding the San Sebastian river revealed elevated levels of cyanide and heavy metals, for example, an aluminum level 1800 times higher than even the World Bank’s own recommended limit.

In retaliation, Commerce Group filed a 2009 suit before the International Centre for the Settlement of Investment Disputes (ICSID) of the World Bank, demanding $100 million in compensation from the Salvadoran government, including for alleged “lost profits.” However, according to SEC filings, Commerce Group had already ceased mining activity in El Salvador years earlier in December 1999, after decades of legal and financial troubles, including bankruptcy.

Over seventy human rights, environmental and religious organizations, including the Maryknoll Center for Global Concerns and Mining Watch Canada, have called on Commerce Group to withdraw its lawsuit and clean up the damage.

Representatives of the Midwest Coalition Against Lethal Mining (MCALM) brought these demands to a recent meeting with Commerce Group’s legal counsel, John Machulak, brother of company president, Ed Machulak. However, “It appeared obvious that the comments by John (Machulak) throughout the meeting either attempted to either minimize culpability or prove willfully ignorant of the obvious environmental and health impact of the Commerce Group’s mining operations,” according to Dan Kasun, who has traveled to El Salvador with his church, St. Elizabeth Ann Seton in New Berlin, WI.

“It’s pretty outrageous that the government of El Salvador is under attack for protecting the health and safety of its people,” said Al Gedicks, professor of sociology at University of Wisconsin LaCrosse, and author of Resource Rebels, who also attended the meeting. “If anything, it is Commerce Group who should be paying for the toxic legacy they have left behind.”

Nationally, public policy organizations including Public Citizen, Oxfam, the Sierra Club and Friends of the Earth, have stressed the dangers of far-reaching investor rights in CAFTA and other NAFTA-style trade agreements, which allow foreign companies to challenge national regulations through private arbitration. “The investment rules in our trade agreements must be reformed in order to rein in the excessive powers currently granted to foreign corporations to attack our hard-won environmental and labor standards in anti-democratic tribunals,” said Rachel Ackoff of the Sierra Club’s Responsible Trade Program.

On January 13th, ICSID rejected the Salvadoran government’s preliminary objections to the suit, which could have led to the dismissal of Commerce Group’s claim. The case moves forward to a hearing on jurisdiction.