Budapest Sun
Denial on Tisza talks

Duncan Welch

Sep. 14, 2000

Esmeralda, the Australian part-owner of the gold mine that spilled cyanide into the Tisza river in January, has denied reports it had talks with the Hungarian Government to discuss an out of court settlement.

Éva Montsko, spokesman for the Government commissioner responsible for dealing with the aftermath of the cyanide accident, said the firm had "sent a representative and several owners for talks to find out if Hungary would bend towards a solution out of court".

But Esmeralda representatives have denied this. Kim Strickland of Hall Chadwick, Esmeralda's accountants, said: "Esmeralda has not gone seeking a settlement."

However, some liability has already been admitted and compensation planned.

A press release from Esmeralda details how, "The company will be offering compensation to all those landowners within the 14-hectare area which was flooded with contaminated water as a direct result of the spill. Negotiations have already commenced with the affected parties."

Strickland said an attorney representing the Australian company had visited Hungary to acquire additional information regarding the compensation claim made by Hungary, but added, "We are in no position to seek a settlement."

In July, Hungary announced it would be suing for Ft29.3 billion ($100 million) and indicated it was not convinced continued mining was safe.

Gábor Borokai, Hungarian cabinet spokesman, said: "The office of the Government commissioner for the Tisza River will repeat its claim for Ft29.3 billion ($100 million) at a bankruptcy hearing for Esmeralda of Australia."

Diplomatic negotiations with Romania (a 50% owner of the gold mine) are underway and if the outcome is negative, the Hungarian Government said it would file a lawsuit within a year.

The Australian company was quick to point out that a variety of events may have caused the ecological destruction and that the mine was not necessarily the whole cause, a point EU researchers disagreed upon.

Brett Montgomery, Esmeralda Chairman, said in a statement issued when the spill was first reported: "These claims cause me considerable skepticism.

"It is most unlikely, given the volume of water and the distance traveled, that the cyanide levels would be high enough to cause such poisoning. In fact, it is quite possible that a number of unrelated events could be responsible," said Montgomery.

However, a report issued by an EU environmental investigation group stated that "technical, operational and design errors" were at the heart of the spill and severe weather conditions were only part of the problem.

Loyola de Palacio, European Commission Vice President, said, "There is a clear principle in the EU that, in general, who contaminates will pay for the restitution, although full restitution here is impossible."

According to János Gönczy, Hungarian Government Tisza Commissioner, Hungary is now "a creditor of Esmeralda".

"This means that Hungary has got a voting right but I have not yet any concrete information about what this is exactly worth," he said.

"As a creditor, Hungary may now conclude a co-operation agreement with Esmeralda, which would not mean that it would abandon its claim for damages.

"We may achieve something at the Australian banks which financed an environmentally hazardous plant."

Original article