Sourcing

Gemfields Agrees to Pay $7.6M to Settle Mozambique Lawsuit

SourcingJan 30, 2019

Gemfields Agrees to Pay $7.6M to Settle Mozambique Lawsuit

The no-admission-of-liability settlement includes the establishment of a system for grievances at Montepuez and creation of community projects.

A shot of Gemfields’ Montepuez ruby mining site in Mozambique
London—Gemfields has agreed, on a no-admission-of-liability basis, to the settlement of all claims of human rights abuses in Mozambique brought against it by U.K. law firm Leigh Day.

Leigh Day filed suit against the colored gemstone mining company last April, representing a group of Mozambicans living near Montepuez Ruby Mining (MRM) Limitada’s mining concession who alleged they or their relatives were the victims of human rights abuses at or around the mine. Gemfields is a majority stakeholder in the mine.

The claims in the lawsuit included allegations of being “shot, beaten, subjected to humiliating treatment and sexual abuse, unlawfully detained, and/or forced to carry out menial labor.”

Gemfields has maintained throughout that it is not liable for what happened at the site but has recognized that in the past “instances of violence have occurred on the MRM license area, both before and after Gemfields’ arrival in Montepuez.”

It has agreed to pay GBP 5.8 million (about $7.6 million) to settle the case. The money will be distributed among the group and to cover legal costs. (The GBP 5.8 million is split as follows: GBP 4 million will go toward damages for claimants, while the remaining GBP 1.8 million will cover lawyers costs and expenses of the case, which includes paying for medical experts and reports, Mozambican law experts, travel and accommodation, court fees and more.)

Gemfields said in a statement issued Tuesday that the settlement is in the best interest of its stakeholders while it also avoids “tainting” MRM’s relationship with the local community through long and expensive litigation. It also noted that had it succeeded at trial, none of its own, likely substantial, legal costs would have been recoverable from claimants or from Leigh Day.

Gemfields CEO Sean Gilbertson said: “Gemfields and MRM routinely seek ongoing improvement in practices, policies and procedures. We are confident that we have and will continue to set new benchmarks in our sector, particularly in relation to transparency, health and safety, environmental management, training, community affairs, human rights practices, payment of taxes and reporting of production and financial performance.

“We regard this settlement, together with the new community support mechanisms, as a critical step in allowing us to continue to develop our world-class operations at Montepuez in harmony with the local communities.”

In addition to the settlement amount, Gemfields said it would commit at least GBP 500,000 (about $657,000) to provide long-term sustainable benefits, including skills training, to foster growth and employment for the local Ntoro/Namucho community.

The company also has agreed to establish an independent Operational Grievance Mechanism (OGM) to ensure that anyone can bring forward complaints about the mine.

The colored gemstone miner said an independent panel—following the United Nations Guiding Principles on Business and Human Rights—will consider the evidence and determine compensation where applicable.

Leigh Day, which now represents 273 Mozambicans, said in a statement that it acknowledges that Gemfields has taken the claimants’ allegations seriously and has been “proactive and constructive in addressing the wider issues raised by local communities through this case.”

Daniel Leader, partner at Leigh Day, said in the statement: “The settlement announced today provides significant redress to our clients and importantly puts in place a credible and independent mechanism for providing remedy to those we have been unable to represent.

“These incidents should never have happened. However, we commend Gemfields for engaging constructively to resolve this case promptly and for putting in place an independent grievance mechanism.”

Leigh Day attorney Matthew Renshaw told National Jeweler the additional aspects of the settlement—the OGM and community projects—beyond the sum were unusual in such a case and said it is a “credit to Gemfields” that it was open to them.

Under the terms of the settlement and provided Gemfields fulfills its commitment to establish the OGM, Leigh Day will not bring or support any further claims in relation to these Montepuez allegations.

Renshaw said the law firm aims to distribute the funds to the claimants in Mozambique within the next few months.

Editor’s note: This story was updated post-publication to note how the final settlement sum will be divided.
Brecken Branstratoris the senior editor, gemstones at National Jeweler, covering sourcing, pricing and other developments in the colored stone sector.

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