December 14, 2013 by Barbara With
As Gogebic Taconite (GTac) President Bill Williams is being sought for alleged crimes against the environment committed while he was overseeing the Cobre Las Cruces (CLC) mine in Seville, Spain, WCMC has obtained documents that highlight the severity of those charges.
Together with other publicly available evidence, these documents reveal disturbing similarities between CLC operations in Spain and GTac’s behavior in Wisconsin, and raise serious questions about the motives of Bill Williams and his boss, the playboy coal magnate Chris Cline.
The CLC story begins in 1994. Leucadia National Corp., a multibillion dollar holding company, was alerted about a copper mine for sale in Spain by Frank Joklik, the former president of Kennecott Utah Copper Corporation, owned by one of the world’s largest mining companies Rio Tinto. Leucadia hired Joklik as president and CEO of MK Gold in 1995, despite his poor track record at Kennecott, where he concealed the dangers of a mine-waste pond in Salt Lake County, Utah.
The Kennecott Cover-Up
Back in 1988, Kennecott engineers warned then-president Joklik of the dangers of a weak embankment holding back billions of tons of soupy mine waste that would bury an entire residential sub-division in the event of failure. Joklik requested a legal review, which came back not only concurring with the engineers’ assessment of the risks, but also warning that the officers might be criminally liable if the embankment failed.
Joklik fired the lawyer and began a systematic purging of the public records. Kennecott also quietly started buying up homes in the area as state regulators agreed to keep the information under wraps. Joklik was caught in 1997, when an internal investigation was begun by Ray D. Gardner, then Kennecott’s chief legal officer. By this time, Joklik was long gone from Kennecott, but then-President Andrew Harding did not try to explain the situation. ”All I can do,” he said, “is apologize for the history.”
Joklik would also later be forced to step down as the Chairman of the 2002 Olympic Winter Games Organizing Committee after he was caught as a player in a bribery scandal that revealed payments had been made to the US Olympic committee to stage the games in Park City.
Securing CLC Permits
According to Leucadia, Cobre Las Cruces was not an easy mine to get permitted, but Joklik got the job done, using deceit and perhaps bribery– the two tools he perfected back in his Utah days. In October 2003, a permit was granted. According to Leucadia’s 2007 Annual Report the mine was sold in August 2005 to Inmet, a subsidiary of Leucadia:
It took six years and millions of dollars for us to get most of the major permits necessary to develop the mine. In August of 2005, just prior to beginning construction, we sold a 70% interest in Cobre Las Cruces to Inmet Mining Corporation in exchange for 5.6 million of Inmet’s common shares then worth $78 million (11.6% of Inmet’s outstanding), and we retained a 30% interest in the to-be-developed mine.
CLC’s “New Technology”: The Bait
According to the “Proposed Drainage Re-injection Permit Suspension” dated April 3, 2008, [spanish] [english] the permit granted on October 30, 2003 was based on a complex and unique hydrogeological and management model of a drainage and injection system (SDR) described in a July 15, 2002 document submitted by Leucadia to Guadalquivir Water Authority (CHG). The permit was issued only after Leucadia promised that the new and untested technology would preserve the public waters affected by mining activities.
Ecologistas en Acción (Ecologists in Action) had warned the CHG repeatedly about of the unachievable promises of the SDR system, and testified before the courts about the technical impossibility of proper operation of the SDR. In April 2007, they filed a complaint with the CHG citing the complete failure of SDR and claiming that CLC had exceeded the number of holding ponds they were permitted, and that many were filled with contaminated water.
A New Plan is Presented: The Switch
According to the Permit Suspension document, in a report dated February 27, 2008 by the head of the groundwater section of the Guadalquivir Water Authority (CHG), on July 8, 2005, CLC presented new plans to CHG that were different from the ones that were authorized in the permit. However, in August 2005, Leucadia sold 70% interest in the mine to Inmet, one of their own subsidiaries. Construction began under the new owners on September 16, 2005 based on these new, unauthorized plans. (Coincidentally, Leucadia issued a proxy statement/prospectus on July 8, 2005 for the merger of Leucadia, MK Resources and Inmet, the same day they presented their new plans.)
Bill Williams started work as Director of CLC in January 2006, and on July 7, 2006, Cobre Las Cruces began illegally extracting clean water and re-injecting wastewater back into the aquifer without the inspection certificate for the project.
Many More Violations
The failure to obtain proper authorization for the plan changes, however, was just one of the violations of the permit conditions that led to its suspension. According to the Permit Suspension, CLC was non-compliant in several areas, including but not limited to: the failure to provide reports specified in the Monitoring and Control Program, lack of communication from CLC about extracted and injected water volumes, and non-compliance with forecasted amounts of extracted and injected water.
There were also sudden and unexplained changes to CLC’s plans which exceeded the maximum period of the permit, which had been strictly set at 20 years. At one point, CLC changed the span of their activities from 20 to 25 years, and then to 37, without making mention of or providing any justification for the change:
On February 14 of 2008 CLC anticipated a definitive duration for the SDR Drainage and Injection System of 31 years and says that it will file a request to address the situation that has arisen. It is significant that the problem of going 11 years beyond the term that was authorized (going from 20 to 31) by more that 50%, is defined as the need to “address the situation that has arisen.”
The results of these unauthorized operations was the contamination of the local aquifer with arsenic-tainted water, including flooding the wells at the nearby Matahijas farm, a risk that had not been prepared for or anticipated:
The upwelling detected in the specific surveying at the Matahijas farm, is not only non-compliant with the third specific permit condition, but also puts into question the viability of the system, as the viability is based in the reintegration to the aquifer of the extracted water volumes. More so, the upwelling at the Matahijas farm was not contemplated in the hydrogeological model, despite it occurring a few months after the beginning of the injection activities and at a time of the year when rain is not particularly abundant.
The CHG report determined that CLC failed to meet virtually all of the permit conditions and calls into question the very foundation of the project. It concludes that the spirit and letter of permit were ignored, and that CLC failed to get authorization and did not satisfy the majority of the conditions imposed by the permit. The hydrogeological model was not able to produce the promised results, and the company had no plan to meet the demands of the permit.
Three weeks after the Permit Suspension report was issued, and almost ten years to the day of the Aznalcollar Disaster, CLC mining walls collapsed. CLC’s permit was revoked in May 2008.
Williams gave a deposition on September 7, 2010 to answer questions about his role in CLC’s numerous permit violations, and shortly afterwards left Spain for his new job with GTac in Wisconsin.
Williams Continues Deception in Wisconsin
According to GTac’s now-defunct website, Williams “managed all facets of the Cobre Las Cruces mining operation …” Williams misled the public by failing to disclose the circumstances of CLC when he came to do business in Wisconsin, and lied when he claimed that CLC was a successful model of an environmentally friendly mine.
In July 2011, at a presentation at the Deep Water Grill in Ashland, he referred to Cobre Las Cruces as a successful example of mining (see video below). While he was representing his new, yet-to-be-revealed technology that he claimed would save the Bad River Watershed from any negative impacts of a 22-mile open-pit mountaintop removal mine, he was fully aware of the infractions and failures at Cobre Las Cruces and the impending lawsuit. As of December 2013, plans for this new technology remain a mystery.
To date, Williams has failed all three of his appeals in Spain to avoid charges resulting from his role in CLC criminal violations. According to Ecologistas en Acción, as soon as the court receives the complaints from both Ecologistas en Acción and the prosecutors a trial date will be set.
GTac’s behavior, including its answers to the questions posed by the DNR last summer regarding their bulk sampling plan, parallels the behavior of Cobre Las Cruces in Spain. As in Spain, Williams, along with GTac’s mining engineer Tim Myers and lobbyist Bob Seitz have repeatedly lied about GTac’s actions and intentions. They have openly denied verifiable scientific evidence and tried to discredit the experts’ warnings of environmental hazards. GTac has bought off legislators in order to pass a mining law that was written by the company itself.
The Wisconsin Bait and Switch
On November 20, 2010, not long after Williams delivered his deposition in the CLC case, Leucadia sold its 30% share of CLC to Inmet for $480,000,000: $150 million cash and 5,442,413 newly issued common shares of Inmet valued at $330 million. At the same time, scientists in Spain were bearing down on who was legally responsible for the arsenic contamination in the groundwater in Seville that resulted from this game of bait and switch.
Back in Wisconsin, GTac was incorporated on January 21, 2011 as a limited liability corporation and Bill Williams was installed to begin the bait and switch scam again.
In Spain, Frank Joklik worked to get permits, based on misleading information for an environmentally questionable mine, and sold the project for a hefty profit. Williams now appears to have been hired by Chris Cline to take on the role that Joklik had in Spain: secure the permits needed to sell off the mine to a new company.
In Wisconsin, Williams is working to get permits for a mine that is not only environmentally questionable but more than likely financially unsound. Who will play the role of Inmet as the mark in this game is not certain, although Natural Resource Partners is a strong candidate. Regardless, it is possible, if not likely, that the only thing Chris Cline, Bill Williams, Bob Seitz and the rest of the GTac gang plan to mine are the pockets of investors.
This, after all, is the real tradition of mining in Wisconsin.
After lying about their participation in writing the mining law, continually misrepresenting facts and data to the public, hiring an unpermitted paramilitary militia to operate on their drill sites, and blatantly buying off legislators to pass laws to favor their racket, Bill Williams and GTac should not be allowed to operate in the state.
Bill Williams is expected to be served as soon as the trial date is set.
Below: Bill Williams lying about Cobre Las Cruces at Deep Water Grill in Ashland, WI July 2011