Ascendant’s Downfall

By , February 6, 2008

Ascendant’s Downfall

Carlos Zorrilla

The government of Ecuador recently annulled the main concessions to Ascendant Copper Corporation’s Junin project; the company’s most valuable resource. The reasons for Ascendant’s title revocation has nothing to do with unpaid mining patents, the main reason the government revoked many of the 585 other mining concessions in Ecuador. And, it’s likely that thousands of other concessions will also soon be revoked.

Investors shouldn’t complain that they weren’t warned about Ascendant’s downfall; they should have seen it coming years ago.

During the past three and one half years, or ever since Ascendant made landfall in the Intag area, there have been numerous warnings about irregularities, violence, and illegal deals and activities, linked to the company’s Junin copper-molybdenum project. These red flags were published on the Internet and elsewhere during all this time. In addition, DECOIN, one of the many local organizations opposing the project, repeatedly warned the public about possible misleading information put out by the company regarding not only the legality of the concessions, but also contesting fundamental things like the size of Junin’s copper deposit and the nature and extent of the local opposition.

From the very beginning DECOIN denounced publicly the probable illegal nature of the Junin concessions acquired by Ascendant, and the fact that the acquisition violated the community’s constitutional right to be previously consulted. It now turns out that this lack of consultation may be at the heart of Ascendant’s downfall in Ecuador.

When the company started claiming the Junin copper deposit was four times greater than what a Japanese five-year exploration program inferred was there, we denounced it here in Ecuador, and in Canada to different Securities Exchange Commissions (which have failed miserably in protecting Canadian investors). The irregularities we noticed led us to denounce in Canada and on the web, that the work by Micon International, the company that came up with the inflated copper reserve estimate, violated Canadian legislation. In 2007 Micon itself finally announced that, due to improper handling and “termite damage” sustained by the Japanese mineral samples, they were unable to confirm their own earlier higher estimate of the copper deposit. Our organization made sure the BC Securities Commission took note of this serious inconsistency. Yet, not long afterwards, one of Ascendant’s officers, termite damage notwithstanding, publicly announced in a press release that they were sitting on one of the world’s biggest copper deposit.

One of the things our organization went out of its way to denounce was the company’s unrealistic portrayal of the obstacles its Junin project faced on the ground, and especially the character of the local resistance. The company, on the other hand, kept insisting that the opposition came principally, or only, from one organization (DECOIN), and that it was composed of a very small group of “radicals”, or ecoterrorists. However, if anything stands out in the resistance to this project, it’s the amount, determination and diversity of the forces opposed to the Junin project, which includes all local governments, and most communities.

The Failed Environmental Impact Study. In yet another instance of misinformation, when, in late in 2006, the government rejected the company’s Environmental Impact Study, Ascendant reacted by telling its investors that they were “studying” the observations made by the government to their study. That’s a very far cry from being handed an outright rejection.

What Exploration? In its 2006 year-end report, the company claimed it had spent over 3.4 million dollars in exploration activities in Junin. However, no exploration has taken place since 1996; something our organization pointed out in one of our many blogs, and something we made sure the BC Securities Commission knew about. The question remains unanswered: just what did the company spend all that money on? “Security” seems to have been one of those black holes a lot of money went into, and we believe that the ensuing consequences of the misuse of security forces were a major contributing factor to, not only the company’s downfall, but perhaps the downfall of a lot of other Canadian Junior mining companies in Ecuadors, who lost their concessions along with Ascendant’s in January of this year.

The company security plan involved hiring the international firm of Honor and Laurel, a company registered in Colombia, but not Ecuador, thus illegally working in the country. One of Honor and Laurel’s founders comes from British military intelligence background, which has been fertile ground for spawning mercenary armies. The company’s security plan also saw the hiring of several other security firms to supposedly protect employees in the Intag area, but which the locals correctly interpreted as tools for intimidation.

One of the outcomes of the company’s security investments resulted in a paramilitary-like attack against defenseless community members, involving dozens of hired, heavily-armed thugs dressed in private security outfits, who tried to shoot and tear-gas their way past a community roadblock. The whole thing was filmed and photographed in high quality digital media and broadcasted to the world. This so angered the – at the time- industry-friendly government, that it immediately issued the first of many stop-work orders against Ascendant. The abuses by the security thugs were so outrageous that they were denounced internationally by several Human Rights organizations, including CEDHU, Latin America’s most prestigious Human Rights organization. Amnesty International also became involved in investigating and denouncing other instances of intimidations against local opponents to the company’s project, including: a judicial set up to try to imprison one of DECOIN’s member; plus numerous death threats, and an attempted lynching. Global Witness also investigated the intimidating tactics. In other words, the issue became an international one, so that it is nearly impossible for investors not to have heard of the grave incidents linked to the company. Ascendant, on its part, continued to make light of the confrontations like the paramilitary attack, at first saying the thugs were “agricultural consultants”. The company has never apologized to the communities, or to the persons injured or shot in the attack.

Land Trafficking. The investigation by the government’s anti-corruption commission into illegal land trafficking, which eventually led to Ascendant losing 17 of its properties in the Junin area in October of 2007, is another example of gross negligence and underreporting by the company. The purchase of land was a strategic part of the company’s plan to gain access to their concessions and depopulate the area. The company, as far as we can determine, never reported this significant material fact to neither its shareholders, nor to Canadian regulatory authorities.

These are not, by far, all the examples of what we consider to be gross corporate irresponsibility committed by the company (for more examples And, it’s not like the information was that difficult to find on the Internet. For example, the electronic magazine, Upside Down World, as well as Counter Punch, Z-magazine, The Dominion, plus the Ottawa Citizen are just some of the many print and electronic publications that have reported on the issues mentioned above.

This does raise the very troubling question as to just how many red flags need to be raised in order for regulatory institutions in Canada to step in, investigate and stop this kind of corporate mayhem. Apparently, in Canada, all these flags were not enough.

And, though the long and disturbing nightmare seems to be finally over in Intag with Ascendant’s departure from this beautiful land, a disturbing aspect still lingers in the air, like a pestilence. And that is, what forces keep governmental regulatory institutions in Canada from preventing this kind of outrageous corporate behavior? And, what can be done to prevent the same thing from happening all over again, either here or somewhere else around the world? The lack of governmental involvement affects not only communities on the ground, but also Canadian investors, who each year lose billions of dollars to unethical corporations (in Ascendant’s case, the shares have lost over 90% of their initial value).

Since 2005, the British Columbian Securities Exchange has received several of our denunciations and official complaints regarding Ascendant Copper Corporation’s irresponsible behavior. We’ve also traveled to Canada and denounced it to the Parliament’s Commission on Foreign Affairs and International Trade. Yet, after more than two years, all we’ve received from the Securities Commissions is empty form letters saying they are investigating and that they are unable release any information. Meanwhile, Canadian mining companies keep going back to the unregulated Great Canadian Stock Exchange Giveaway to fill their bottomless pockets, so they can continue to fund widespread social and environmental havoc overseas.

But the Toronto Stock Exchange is not the only source of funding for companies the likes of Ascendant. Another is “strategic” partnership with so-called reputable companies- companies that remain on the sideline as others do their dirty work for them. In 2006 Rio Tinto Zinc signed a deal with Ascendant knowing of the very serious environmental issues, and manifold social conflicts and legal challenges facing the project and the company. After the paramilitary attacks, and other outrageous denunciations of grave human rights abuses taking place at Ascendant’s JUNIN concessions, Rio Tinto, who considers itself to be a socially responsible corporation, did not terminate the contract with Ascendant; perfectly highlighting the hypocrisy behind the social responsible corporate world.

We are certain that Ascendant Copper Corporation is gone for good from the Intag area and that they’ve lost the Junin mining project. But unless major changes take place where, and how the companies get their funding, we won’t rest.


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