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Freeport Says ‘Meal Money’ Payments Are Legal

A subsidiary of Arizona-based Freeport-McMoRan Copper & Gold Inc. has paid ‘meal money’ directly to Indonesian police who are guarding the company’s giant mine during a strike.

The Jakarta Post said national police chief Gen. Timur Pradopo admitted his personnel had received ‘meal money’ to guard the company’s gold and copper mine in Grasberg, West Papua.

The paper said:

During negotiations between the company and its labor union over minimum salaries, [Gen. Pradopo’s] statement has sparked criticisms that these contributions have encouraged the police to side with the company’s interests as they attempt to maintain the region’s security.

Freeport said government-provided security at the mine cost $8 million in 2008, $10 million in 2009, and $14 million in 2010, according to the Jakarta Post story.

The paper reported that a New York City comptroller said Freeport might have violated the ‘Foreign Corrupt Practices Act, which forbids American companies from bribing foreign officials.’

And as reported yesterday by the Wall Street Journal, the United Steelworkers union asked the DOJ to investigate Freeport. Citing the Jakarta Post story, the union said the payments to the police violate the FCPA.

Workers at Freeport’s Grasberg mine went on strike in September. In April, two Freeport employees were apparently shot and killed in their car on the road leading to the mine. The company increased security around the mine after reaching a deal with Indonesian law enforcement authorities.

A militant group – the Free Papua Movement — is trying to overthrow the Papua government. The group opposes Freeport’s operations at the Grasberg mine.

Freeport said Tuesday that ‘milling operations have been temporarily suspended pending repairs to concentrate pipelines damaged as a result of civil unrest which has occurred during the course of the strike.’

A spokeperson for PT Freeport Indonesia said funds given to security personnel guarding project sites in Papua are allowed under the Voluntary Principles on Security and Human Rights, a set of guidelines created by the United States and Britain in 2000 for the extractive industry dealing with security issues.

“[Freeport] uses the voluntary principles as guidelines to disburse the security funds,” Freeport Indonesia spokesman Ramdani Sirait told the Jakarta Post on Tuesday. He said the ‘meal money’ wasn’t intended to bribe any government officials.

Freeport-McMoRan Copper & Gold Inc. trades on the NYSE under the symbol FCX.

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