Rosemont accused of hiding bankruptcy link from state

2012-03-30T00:00:00Z 2014-07-15T17:50:53Z Rosemont accused of hiding bankruptcy link from stateTony Davis Arizona Daily Star Arizona Daily Star
March 30, 2012 12:00 am  • 

A leading opponent of the proposed Rosemont Mine filed a complaint Thursday alleging that the project's developer has violated state law requiring disclosure of a past bankruptcy involving top officers.

The group Save the Scenic Santa Ritas accused Rosemont Copper of illegally failing to disclose that a current and former director - Richard Warke and Donald Clark, respectively - were officers of a company that was involved in a high-profile Canadian bankruptcy in 1995.

The group complained to the Arizona Corporation Commission that Rosemont Copper is engaged in a "pattern of deception" dating back seven years.

"If Rosemont Copper is hiding a corporate bankruptcy from regulators and the public, what else are they hiding?" Vince Rabago, an attorney representing the group, said at a news conference Thursday.

Rosemont Copper President and CEO Rod Pace said the company doesn't believe that Arizona law requires this kind of disclosure. Rosemont Copper's parent company, Augusta Resource Corp., has disclosed the information to Canadian authorities, he said. Augusta is based in Vancouver, B.C.

"We have nothing to hide. We would put that on there if we thought we needed to put it on there," Pace said in an interview, referring to a Corporation Commission disclosure form seeking information about past bankruptcies.

In an earlier written statement, Pace accused the group of "falling back on trumped up accusations against Rosemont Copper in a feeble attempt to slow the approval of this model environmental and major economic project for Southern Arizona."

Rebecca Wilder, a Corporation Commission spokeswoman, said the agency typically investigates complaints but that she can't comment on this one because it hasn't been officially received.

In December, Save the Scenic Santa Ritas filed a much broader complaint accusing Augusta of violating U.S. and Canadian securities laws by failing to disclose a personal bankruptcy of Warke's; a corporate bankruptcy involving Warke and Clark; an insider-trading settlement involving Warke; and corporate cease-and-desist orders involving both.

Warke is Augusta's chairman and Clark is a board member.

Pace dismissed that complaint as mudslinging, while not responding to it in detail. U.S. and British Columbia securities officials have not responded publicly to the complaints.

The new complaint said that Rosemont Copper - and Augusta before Rosemont Copper formed in 2007 - has answered "no" seven years on an Arizona Corporation Commission disclosure form to the question of whether any Rosemont officer, director, trustee or incorporator had more than a 20 percent interest in another company that had been placed in bankruptcy.

The complaint said Canadian records show that Warke and Clark were officers of West Coast Plywood Co. Ltd., which went into bankruptcy in July 1995.

Besides calling into question Rosemont Copper's incorporation and credibility, the failures to disclose, if done knowingly, are potential felonies, the complaint said.

State incorporation law makes a reference to bankruptcy disclosures that strongly suggests but doesn't say explicitly that the disclosure is required (see box on Page A13). Environmentalist attorney Rabago acknowledged it is not "artfully worded." But Rabago said the ACC form makes the disclosure requirement clear.

"There's no way that someone could read that form and say 'I'm not required,' " Rabago said.

Pace said the company is generally very open, adding, "Our research and studies to show the many years of preparation about the Rosemont Copper project are all available on our website. The financial and legal preparations to develop and build this $1 billion project meet all legal and fiscal regulations. This is a frivolous complaint."

THE LAW

Arizona law says a company's articles of incorporation must include:

"A brief statement disclosing whether any persons who at the time of its delivery are officers, directors, trustees, incorporators and persons controlling or holding over twenty percent of the issued and outstanding common shares or twenty percent of any other proprietary, beneficial or membership interest in the corporation and who have served in any such capacity or held a twenty percent interest in any other corporation on the bankruptcy or receivership of the other corporation."

Contact reporter Tony Davis at tdavis@azstarnet.com or 806-7746.

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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