Tahoe Resources: Licence Suspended for Escobal Mine, Guatemala, for failure to consult indigenous communities. HSBC and other banks continue to provide funds despite clear violation of international norms and standards by the company.

In February 2017, the Dirty Profits report documented numerous violations by Tahoe Resource Inc at their Escobal mine in Guatemala. Including evidence that since Tahoe Resources acquired the Escobal silver project in southeastern Guatemala in 2010, it has given rise to local opposition, as well as systematic repression, violence and criminalization against community members concerned about the human and environmental impacts of mining. The company has also demonstrated a lack of transparency with shareholders over these matters.

On Wednesday July 5, the Guatemalan Supreme Court of Justice announced that it has temporarily suspended two of Tahoe Resources’ mining licences ((  http://www.reuters.com/article/guatemala-mining-idUSL1N1JX1SM))  until a suit against the Ministry of Energy and Mines is resolved for discrimination and lack of prior consultation with Indigenous Xinka communities in the area of the company’s Escobal silver mine. Ron Clayton, President and CEO of Tahoe Resources Inc., commented: “We are extremely disappointed in the Court’s ruling suspending the license because we believe that there are no indigenous communities affected by Escobal’s operations.” NGOs in the region have long highlighted the opposition of both members of the Xinka and affected non-indigenous communities to Tahoe’s mining operations ((  https://miningwatch.ca/news/2017/7/7/tahoe-licenses-suspended-lack-consultation-indigenous-communities-while-company-denies)).

MiningWatch Canada reports that the Xinka Parliament and Xinka community members have consistently participated in community events and peaceful protests in opposition to the presence of mining in the region. As a result, like many others in the area, they have suffered violence and repression. In March 2013, four Indigenous Xinka leaders, including the then president of the Xinka Parliament, Roberto Gonzales, were abducted while returning from observing a community plebiscite in El Volcancito, in the municipality of San Rafael Las Flores. One of those abducted, Exaltación Marcos Ucelo, was found dead the next day. The United Nations High Commissioner on Human Rights has cited this as a killing of a human rights activist.

A lack of consent obtained by the mining company would violate the rights of indigenous people, who have a right under ILO 169 (which has been ratified by Guatemala) ((  http://www.ilo.org/wcmsp5/groups/public/@ed_norm/@normes/documents/publication/wcms_205225.pdf)) to consultation and consent ((  http://www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:12100:0::NO:12100:P12100_INSTRUMENT_ID:312314:NO)). However, the company notes they have complied with this regulation- despite simultaneously rejecting the claim that there are any indigenous communities in the affected region ((  http://www.prnewswire.com/news-releases/guatemalan-lower-court-issues-ruling-on-tahoes-mining-license-300483716.html)). The UN Declaration on Rights of Indigenous Peoples also applies and gives communities the right to protect their land, to be consulted on matters that affect them, and to give their consent. The lack of Free, Prior and Informed Consent is also a violation under IFC Performance Standard 7.

The Dirty Profits 5 report detailed investors in Tahoe Resources, in particular HSBC who was the most involved European investor, and called for divestment due to the clear violation of norms and standards by the company.  It showed that both the Norwegian Government Pension Fund and the Dutch Pension fund PGB ((  http://www.pensioenfondspgb.nl/nl-nl/Documents/Beleggingen/20171303_PGB-Exclusion-List-Q2-2017-Companies_website.pdf)) have excluded Tahoe Resources on the grounds of human rights violations in Guatemala ((  http://www.facing-finance.org/files/2017/03/DP5_final.pdf)).

There have been consistent and long lasting protests by communities against the mine and the company’s lack of response to these has also brought about a recent class action lawsuit on behalf of shareholders against Tahoe Resources.“The complaint alleges that, throughout the Class Period, the defendants failed to disclose that: (1) Tahoe’s exploitation license of the Escobal mine assets was in violation of the indigenous people’s rights to be consulted; (2) Tahoe was not in compliance with governmental law and regulations; and (3) as a result of the foregoing, the defendants’ statements about Tahoe’s business, operations, and prospects, were false and misleading and/or lacked a reasonable basis.” ((  http://www.prnewswire.com/news-releases/shareholder-class-action-filed-against-tahoe-resources-inc-securities–taho-tho-300486512.html)).

However, despite full knowledge of these violations, in July 2017 a $300M revolving credit facility was provided to Tahoe Resources, arranged by HSBC holdings plc, with participants Scotiabank, Bank of Montreal, Royal Bank of Canada, and Credit Suisse. HSBC was also the arranger of both a loan and equity provision in 2015. HSBC is a participant of the UN Global Compact, for which Principle 1 states that businesses should undertake due diligence to avoid infringing on human rights.  The Office of the United Nations High Commissioner for Human Rights (OHCHR) has also reaffirmed in a recent paper that banks can contribute to adverse human rights impacts through their finance, and that banks have the responsibility to remediate human rights impacts when they identify they have contributed to them ((  https://www.banktrack.org/news/un_office_publishes_extensive_human_rights_guidance_for_banks)).  As HSBC has been an active arranger of loans and equities over two years and shows no visible signs of pressuring Tahoe Resources to improve their human rights performance, HSBC is therefore over time also failing to take reasonable steps to prevent human rights violations.

More information on the violations by Tahoe Resources Inc can be found in the Dirty Profits 5 report. German banks too, are shareholders in Tahoe Resources including Deutsche Bank, Commerzbank and Unicredit.