New Orleans (Associated Ppress) – A shareholder resolution asking that Freeport-McMoRan Copper & Gold Inc. stop payment to the Indonesian military has been filed by the New York City comptroller's office.
That office manages retirement funds holding $28.8 million in Freeport stock. Freeport operates one of the world's largest mines in Indonesia.
Company executives are drafting a response to send to the Securities and Exchange Commission before the SEC's deadline in early January, said Freeport spokesman Bill Collier.
The company has been criticized by human-rights activists in the past for its relationship with the military, which provides security around the mine.
In the mid-1990s, the Indonesian military was accused of atrocities against dozens of tribal people living near the mine. Freeport said it is simply a foreign contractor and has no control over the military.
The comptroller's office manages retirement funds for police, firefighters, teachers and city employees in New York.
SEC rules allow shareholders to file proposals asking companies to adjust business practices. If approved by the SEC, the proposals are given to shareholders for a vote. Even if a majority of shareholders vote for the changes, the company's directors make the final decision.
The current resolution has its roots in the August 2002 murder of two American teachers employed by a school for Freeport workers, said Pat Doherty, an administrative manager for the New York comptroller.
The teachers were ambushed on a road. The US Embassy in Jakarta called the attack "an outrageous act of terrorism," but an initial investigation by Indonesian police suggested that soldiers might have been involved. A joint police-military investigation was inconclusive.
The FBI is attempting to conduct its own investigation. Earlier this year, the US Senate blocked $400,000 in military training money for Indonesia.
In its 2002 disclosure to the SEC, Freeport said it had paid the military for "government-provided security, involving over 2,000 government security personnel." Those payments totaled $5.6 million in 2002 and $4.7 million in 2001, the company said.
The company also said that over a period of several years, it had built housing, offices and other facilities for the military at a cost of about $35 million.
The comptroller's resolution asks for a stop of the payments until the Indonesian government cooperates with the FBI and prosecutes the killers of the teachers.
Doherty also said his agency is concerned that Freeport, which has a contract with the Indonesian government, could feel coerced to make the payments. Doherty said that raises the question of whether the company is in violation of a federal law forbidding US companies from paying bribes to foreign governments.