Government Turned Its Back on Deno Gold Violations

On January 26, 2011, Deno Gold Mining CJSC announced the dismissal of   Executive Director Robert Faletta. This decision taken by Dundee Precious Metals (DPM), the Canadian parent company operating the Kapan mine, came after Hetq published a series of articles substantiating a number of violations at Deno Gold.

After the press coverage, Rick Howes, Dundee’s Executive Vice President and Chief Operating Officer, paid a four day visit to Kapan and met with representatives of various Armenian civic organizations. Mr. Howes assured the reps that the actions of Faletta weren’t in synch with the policies of the company. A few days later, as proof of his words, the owners of Deno Gold announced their decision to dismiss both Faletta and his wife who had been serving as head of the plant’s safety division. I should remind readers that starting back in 2005 Deno Gold has failed to pay workers for overtime, night shifts and hazardous work. As a result, the company has been paying less in social taxes to the Armenian government. Income tax payments have also decreased. So have VAT payments and various environmental tariffs. According to a 2009 agreement reached with the RA government, the company was obligated to pay back wages to workers within one year starting from July 1, 2009. This never happened. To date, the company has paid 15 out of the 17 individuals who took the company to court. The other two has so far refused to accept the compensation amount offered by the company. According to our information, internal adjustments are taking place at the company and the owners promise they will review the back wage issue afterwards. Deno Gold data reports that a total of 428 individuals were laid-off from work during 2008-2010 and that only seventeen have sought redress in the courts.

The rest are waiting for the company to make good on its promises. It cannot be ruled out that the company will once again place this issue on the backburner. It appears that company management is already convinced that the Armenian government is not at all interested in the defense of workers’ rights. The silence of the government to date has verified this assumption and has yet to demand that the workers be paid what is owed them. This indifference is all the more baffling since the Canadian company has publicly stated that Faletta’s actions ran counter to the philosophy of DPM; so much so it seems that they decided to sack him. In a previous article we exposed the fact that the government was well aware that Deno hadn’t been paying workers but did nothing to rectify the problem. On a government level, it is the State Labor Inspectorate that is supposed to settle the matter; an institution set up to defend the rights of workers and to settle disputes between employers and employees. However, to date, the role and significance of this body remains a mystery. When we asked Armen Smpatyan, Deputy Head of the Inspectorate, to explain the agency’s seeming lack of desire at public outreach and information dissemination, he responded, “We place an emphasis on labor and not the propagandizing of labor. We have a website that provides information in a transparent manner. Our outreach is quite extensive. We provide an accounting every year to the ministry which is published.”  (As English language editor, I couldn’t access this site; neither it’s Armenian or English versions from the overall RA Government website – HG) Naturally, I wanted to direct this question to the Head of the Inspectorate, Hakob Manukyan, but he had delegated all press issues to his deputy.

The reason isn’t because Deputy Head Smpatyan is more informed as to the workings of the Inspectorate. In fact, Mr. Smpatyan couldn’t answer any of my questions and advised me to direct all my inquiries to the very top – to the Minister of Labor and Social Affairs. No one can ever remember State Labor Inspectorate Head Hakob Manukyan ever presenting a public accounting of the agency’s work during the two years he has directed it. The law, however, requires that he do so. Maybe Mr. Manukyan is not aware of his legal obligations or just maybe it’s his professional modesty that keeps him in the shadows.

We tried to get an understanding of the Inspectorate’s transparent operation from its official website. Aside from a few communiqués stating not much of anything, the site was useless. There wasn’t even information regarding complaints filed by citizens or their settlement status. The sad state of the agency’s website and its modus operandi in generally, merely serve to prove that the Inspectorate, rather than being created to defend employees’ rights under the law, is engaged in seeking loopholes to the law that can be conveniently used when necessary. In any event, it is clear that inspections carried out by the agency are not motivated by any desire to defend workers’ rights. Everywhere, there is talk of people being employed without proper work contracts and of not being paid.

The Inspectorate, in fact, revealed such violations even at Deno Gold, but sizing up the agency’s work performance, such violations didn’t seem to be of any concern. Work-related accidents aren’t mere coincidences, especially in the mining sector. Employees at Deno Gold say that miners are paid crumbs for the hazardous work they perform; when the workers don’t even know if they will make it through their shift alive. These fears aren’t misplaced. Just recently, on February 8, the latest in a series of accidents occurred. Armen Yeghiazaryan, a 33 year-old miner was killed at Deno Gold’s Shahumyan mine in Kapan The miner had worked there for over seven years in very hazardous conditions. And get this; the company hadn’t even paid him properly for night work.

The Inspectorate was also aware that more than 200 people were working at Deno without proper contracts and that each of them, on any given day, could meet a similar fate. It is incumbent on the Inspectorate to see that such things do not occur. Sadly, in Armenia, we are faced with a policy whereby violations are given legal protection. Last year, a bill to make modifications to the Labor Code was introduced in the parliament. One of the changes would allow for employment based on “verbal agreements”.

Did those who drafted such a bill ever ponder how a worker could hope to defend his or her rights in any state body based on such a non-written agreement? Let’s say a worker is disabled on the job and tries to petition the government for social benefits – the scenario is laughable. Or else just imagine the State Pension Agency taking the word of an employee filing for a pension who has no written record of ever being employed. How could they ever hope to prove what their work record is to get a fair and just pension?