George Bush's $10 billion giveaway to Barrick Gold

by Mark Sonnenblick

In 1985-86, Barrick Gold Corp. paid two other mining companies $63 million for a small working Nevada mine, called Goldstrike. Within a few years, it was found to contain 24.6 million ounces of gold, worth about $10 billion. Goldstrike was on federal property. Under existing legislation, designed in 1872 to populate and bring development to the West, miners could operate on federal land for free, once they had filed a claim. They could obtain full legal title to the land at $5 an acre, upon completion of a long and expensive process called ``patenting.''

In 1992, however, pressure was building for a new mining law to require that those given federal properties pay a royalty, a certain percentage of what they mine each year. As expected, when the Clinton administration took office in 1993, it sought a 12.5% royalty. At that rate, the 25 major mine claims then in the process of being privatized, would eventually yield an estimated $10.75 billion to the U.S. Treasury.
Mining companies caused a major jam-up at the Bureau of Land Management, as they rushed to obtain patents before Congress applied royalties. By 1992, the long waiting line at the BLM Nevada office made it doubtful that many mines would get over the critical hurdle in the patent process in time. It would normally take several years for a mine of Goldstrike's size and complexity to complete the process, a BLM source commented, and the average during the previous four-year period was 10.3 months. But, Barrick made it in only 4.8 months.

Barrick filed its applications for 1,144 acres of land in March and April 1992. That summer, a pilot program for ``expedited processing'' of Nevada patents was instituted by BLM chief Delos Cy Jamison, a Republican who had been appointed to that post by President George Bush in 1989. Jamison concocted this speed-up procedure with the BLM Nevada state director, without informing his own staff. ``Bells went off in my head when I heard about it,'' a former BLM staffer told {EIR.}
Philip M. Hocker, president of the Mineral Policy Center, an environmentalist outfit, testified to a Congressional subcommittee on March 11, 1993: ``Under a new and unpublicized `pilot project,' the BLM allowed Barrick to hire outside mineral examiners to perform the evaluation of `discovery' on Barrick's mining claims. The specialists who determined whether these claims should be patented for $5 per acre received payment for their work directly from the company which wanted a `yes' answer. This is a flagrant conflict of interest, which BLM is not only allowing, but encouraging. Barrick is the only company to complete this process so far.''
Only Barrick got expedited treatment. Its patenting was rushed through in record speed; the BLM district manager approved the report of the outside consultant hired by Barrick the day after it was filed, in February 1993. Other companies remained stuck in the BLM backlog.

- `The gold heist of the century' -
As soon as he took office, Interior Secretary Bruce Babbitt called the Barrick deal ``the gold heist of the century.'' He swore he would make sure the taxpayers received something for federal gold. He slapped a de facto moratorium on new patents, by abolishing the expedited process and requiring that he personally approve each patent.
Babbitt's office held up Barrick's patent, on the dubious grounds that its pumping would harm an endangered species. In August 1993, Barrick sued in U.S. District Court in Nevada. The verdict in favor of Barrick came through in March 1994. Babbitt immediately granted the patent, made a big show of indignation, and abandoned all pretense of ending mining giveaways.
The approved biography of Peter Munk explains a bit of what happened: ``For much of 1993, [Munk] spent a lot of time in the District of Columbia ... lobbying. At that stage Brian Mulroney, Canada's former prime minister, had just joined the Barrick board and he immediately went down to Washington to establish contact with key senators, using his close relationship with George Bush to good advantage.''
Once Barrick had clear title to Goldstrike, Barrick lobbyists worked with Hocker and other environmentalists for ``reform'' legislation that would impose royalties on companies which had not cleared the patent hurdle (on Sept. 29, 1994, royalty legislation was killed in a House-Senate conference). And, with unrestricted property rights over the $10 billion Goldstrike, Barrick Gold had the collateral for the explosive worldwide expansion it suddenly began, months after the patent was granted.

The preceding article is a rough version of the article that appeared in The Executive Intelligence Review. It is made available here with the permission of The Executive Intelligence Review. Any use of, or quotations from, this article must attribute them to The Executive Intelligence Review.

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Theodore Myles