Meet the New Boss

James [00.00.03] In June 2010, an email landed in Dairo Rua’s inbox. Dairo was getting a lot of emails those days. He was the leader of the miners’ union at Frontino Gold Mines, the company that for 150-years had run the massive underground mines the town of Segovia was built around. And at that moment, Dairo and the union were fighting to stop Frontino being sold off to a foreign multinational.

Dairo Rua [00.00.30] Me ha llegado a mi correo electrónico una amenaza donde nos decían que teníamos que renunciar e irnos del pueblo si no nos declaran objetivo militar.

James [00.00.38] The email said that he and the other leaders should stop opposing the sale of Frontino, resign from the union, and leave Segovia, Dairo told us. If they did not, it said, they would be declared “military targets”.

The union leaders were used to receiving threats. Ever since they’d started pushing back on the sale and instead trying to claim the company for the Frontino workers and pensioners, they had been getting phone calls, emails, and texts with the same general tone and message.

And those were just the latest chapter in a decades-long fight over Frontino, its mines, and Segovia’s gold. These were not idle threats. Over the years in Segovia, some 47 members of the miners’ union have been killed, according to the union’s own records. But as strange as it may seem, the threats and the murders can sometimes desensitize people who are closest to them, inure them to the risks. And although this one was more direct, more explicit, it was nothing new. 

So, they carried on. 

They continued to call on political leaders, other unions, and social movements at home and abroad to support their campaign. They got the support of big-league politicians, who organized a debate in congress, and they filed a last-minute legal injunction to try to stop the sale going through.

Dairo Rua [00.02.01] Atentaron contra uno de nuestros compañeros, John Jairo Zapata Marulanda, que le pegaron cinco impactos de bala desconocidos.

James [00.02.08] But then, gunmen shot one of the leaders five times as he was giving a workshop. He survived, but has never fully recovered.

To this day, no one knows for sure who gave the order. Powerful politicians, local business elites, wealthy private investors, and shadowy figures linked to the paramilitaries all had stakes in the sale of Frontino.

Dairo Rua [00.02.32] No, no, no te sabría decir con certeza. Lo único cierto es que las amenazas eran claras, Que  teníamos que renunciar y no seguir oponiendo a la liquidación y venta de las minas.

James [00.02.45] For his part, Dairo didn’t want to put a name on who was behind the attempted hit or the threats. The only thing that is certain, he said, is that the message was clear – they had to stop opposing the sale of Frontino Gold Mines.

From InSight Crime, this is The Shadow of El Dorado, a series about the intricate web of corruption, violence, and complicity behind the gold trade in Segovia. And the story of how this once-thriving Colombian mining town became a mafia stronghold. 

I’m James Bargent

Mat [00.03.20] And I’m Mat Charles

In this episode, we’ll be looking at when global capitalism came to town. This is episode 4: Meet the New Boss. 

James [00.03.40] We met Dairo in a library in Medellin, where he now lives after he was forced to flee Segovia because of the constant death threats.

Dairo Rua [00.03.48] Yo nací en el año 1971 en Segovia, Antioquia. Soy hijo de campesinos.

James [00.03.55] Dairo’s story is classic Segovia. He told us how he was born in 1971 to a family of peasant farmers living in the rural part of the municipality. They had a small plot of land, where they grew plantains, raised cattle, and panned for gold every now and again. When he was a young man, he left to study in a small town near Segovia. 

Then in 1991 he got a job where most Segovian men of his age got a job – Frontino Gold Mines. 

Dairo was elected president of the Segovia chapter of the miners’ union in 2009, making him responsible for representing around 1,500 Frontino miners. And he walked straight into a battle over the future of Segovia. 

James [00.04.41] At that time, Frontino was a wreck. It had been invaded by mine robbers known as machuqueros, its machinery was in disrepair, exploration of new fronts had withered away, and its main mines were being worked by rudimentary operations run by shadowy sub-contractors. 

Segovia had also divided into two bitterly opposed camps with very different ideas over what should be done about it. On one side was the sale camp, which included the government, the company administrators, and a section of the workers and pensioners tired of the whole tortured affair, or looking for a personal payoff. They wanted to sell off the Frontino assets, then use the money to form a pension fund and pay off worker contracts. 

Dairo and the union, along with most of the Frontino workers and pensioners, were firmly on the other side: The ‘Frontino is ours’ side. 

Dairo Rua [00.05.38] Fijamos nuestra postura pública de que nosotros no estamos de acuerdo con que liquidaran la empresa y la vendieran porque la empresa Frontino Gold Mines o los bienes de la empresa Frontino Gold Mines pertenecían a los trabajadores y los jubilados

James [00.05.52] As Dairo explained, and as we have explored previously, their argument was that Frontino had already been liquidated in the late 70s, and that as part of the terms of that liquidation, its assets were supposed to have been transferred to the company’s creditors – the workers and the pensioners. This argument was based on a document from 1979 – the Act of New York.

James [00.06.18] It was an argument that had been accepted by numerous Colombian courts. But the upshot was, despite being told by four different judges that they’d won and that the company belonged to them, in the end, the Constitutional Court declared the rulings void. The workers and pensioners lost, and Frontino was liquidated and put up for auction.

Proposals came in from interested parties in Colombia, Chile, Peru, Mexico, Canada, and the US. But by the time the deadline for prequalification for the auction came around, not a single company was left. 

They were left facing an auction with no bidders. That was when the government of President Álvaro Uribe got involved, reaching out to some old friends.

Interviewer [00.07.04] Could you tell me a little bit about Frank Giustra before and after meeting President Clinton?

Frank Giustra [00.07.09] The biggest change in my life since meeting him was that I decided to dedicate more of my time to philanthropy and less to business. And I still love business, trust me. I love the business world. I love making money. But also, I love growing things, you know?  

James [00.07.28] The sale of Frontino would involve insider trading of economic and political power. And a convergence of Colombian and global elites, the genesis of which can be traced to a chance meeting between the billionaire Canadian businessman Frank Giustra and Colombian President Álvaro Uribe. A meeting that was set up by former US president Bill Clinton.

Frank Giustra [00.07.54] Having spent a lot of time with him, he just inspired me, he is just an amazing human being.

James [00.08.00] Giustra – a white-haired, fair-skinned, mining and entertainment mogul – owns numerous companies, including Lionsgate Entertainment and a slew of natural resources businesses.  

He is also a prominent philanthropist. And in 2005, he lent Clinton one of his private jets on the condition Clinton let him fly with him. Soon afterwards, Giustra donated $31 million to the Clinton Foundation. Two years later, the pair launched the Clinton-Giustra Sustainable Growth Initiative, which was bankrolled by $100 million of Giustra’s cash and a pledge to donate half of all his future profits from investments in the mining industry. 

Bill Clinton [00.08.40] Well we´re beginning in Colombia because, first of all there is a need there. As you know the country has suffered for many years because of the conflicts generated by the narco-traffickers and the guerrillas and the paramilitaries, and because the government wants us to come. We are following the same rule here, we follow with the H-project and with our development initiative.

James [00.09.01] It was during these first whirlwind, bromance months that Clinton introduced Giustra to then-President Uribe. Uribe was a friend and ally of Clinton, whose government had begun the flow of billions of dollars in military aide that would go on to bankroll Uribe’s war against leftist guerrillas.

Bill Clinton [00.09.19] We won’t go anywhere we’re not welcome. We want to be invited.

James [00.09.23] Giustra had several more meetings with Uribe and soon after he began to pour funds into ever more investments in Colombia, financing oil companies, coal companies, logging companies and infrastructure projects. In many of these ventures, he worked closely with a small core of investors. Above all, one man: Serafino Iacono, a Venezuela-born tycoon who is a personal friend of Uribe and a major donor to his political campaigns.

So, in 2010, when the Uribe government found itself bereft of possible buyers for Frontino, it turned to Giustra and Iacono’s cabal of investors. 

They put in a bid through Zandor Capital, a newly formed corporate entity registered in the fiscal paradise of Panama. In return for the Frontino assets, Zandor offered to pay approximately 200 million dollars to pay off the pension debt. And on March 29, 2010, their offer was accepted.

That was when Dairo and the union launched their last ditch political and legal efforts to halt the deal going through. Weeks later came the email telling them to stop opposing the sale of Frontino to Zandor. And then came the attempted hit on his colleague. 

Following the attack, the union leaders were whisked away on a helicopter to Medellín for their own protection. 

The deal was finalized in August 2010, just over a month after the hitman had pumped five bullets into the union leader. While Dairo and the others were hiding in Medellín, the network of investors and business partners working with Frank Giustra and Iacono, were preparing to move their business to Segovia. 

With the sale of Frontino, Segovians were promised the capitalist dream that the developed world dangles in front of the developing: foreign investment that converts into local prosperity and stability. What they got was the empty shell that often lies behind that dream: a maze of holding companies and indecipherable share trading on one end, and a tangle of outsourcing and subcontracting arrangements on the other. 

The old patriarchal model of a de facto company town had been swapped for its modern equivalent – aggressive and dynamic shareholder capitalism. But in the end, the result was the same: cheap blood gold, wrenched from a poor corner of a developing nation, for use in the most sophisticated technology on the planet or as adornments for the rich and famous. 

Zandor Capital soon became Gran Colombia Gold Corp thanks to a complicated series of mergers and acquisitions. That process saw the Frontino assets bounce around between three supposedly distinct companies. But behind them was a group of core investors and executives who personified how, instead of the capitalist dream, Gran Colombia was really more of an oligarchic joint venture.

Giustra’s initial investment at the time of the sale is not public information, but by 2016, when it crossed Canada’s threshold for reporting requirements, he had secured a 25 percent stake in the company. He has also been listed as strategic advisor to the board in the company’s various incarnations. 

His wingman, Serafino Iacono was listed as the Gran Colombia executive co-chairman, and he has been on the company’s board of directors ever since.

Serafino Iacono [00.12.53] Segovia is very much developed, we operate three of 23 mines in a concession, that is truly a private property, a rarity in Colombia. We own the mineral rights and the lands, so we don’t pay any royalties.

James [00.13.08] Then, there was Maria Consuelo Araujo.

Interviewer [00.13.11] So let’s talk about your role as Chief Executive Officer for Gran Colombia Gold. What’s new and exciting at the company?

Maria Consuelo Araujo [00.13.18] Well, everything is exciting. It’s a vibrant sector, growing, everything is to be done. And what we want to develop is the way that responsible mining can be done.

James [00.13.31] Araujo did not have much of a history in mining. She was, however, one of Uribe’s closest political allies. In fact, she had been Foreign Minister in his administration. Until, that is, she was forced to resign when her father, two brothers, and a cousin found themselves neck deep in scandal because of their alleged ties to paramilitary groups.

Maria Consuelo Araujo [00.13.54]: People are concerned about safety, about risk in our country. And when you compare the numbers, when you compare the indicators, you see that Colombia is a very safe country and the only risk you have, is wanting to stay.

James [00.14.08] Araujo continued working at the company until 2015. By then, her political rehabilitation complete, she joined the cabinet of the mayor of Colombia’s capital city, Bogotá.

Other Uribe allies joined the board as well. For instance, his campaign manager during his presidential run, was a director on the company board for two years. 

And then, there was Hernán Martínez Torres. 

Hernán Martínez Torres [00.14.34] La verdad, las politicas establecidas por el gobierno del presidente Uribe han sido suficientemente fuertes y de muy alta receptividad por la sociedad Colombiana. 

James [00.14.44] You can hear him here selling Canadian investors on the business-friendly nature of the Uribe government. 

Hernán Martínez Torres [00.14.53] Están proponiendo para las próximas elecciones, estan manteniendo el mismo discurso político

James [00.14.57] Martínez had been the Uribe administration’s Minister for Mining and Energy and had played an active role in the whole Frontino process. He left his post on August 7th, 2010, two weeks before the deal was finalized. Then, on June 10th, 2011, he was named to the Gran Colombia board of directors.  According to the company’s 2021 annual report, Martínez Torres was still a director on the board and owned shares in the company. But he passed away in December 2023.

Mat [00.15.35] We contacted as many people as we could find to try to get the other side of the story of the sale of Frontino. To ask them about the simmering violence and murky deals, and to find out why, among other things, did all these Uribe administration officials become part of the upper echelon of the new company. Among them were Frontino administrators during the liquidation, members of the advisory board on the sale, the presidential advisors on Frontino, rival unionists, and representatives of the pro-sale workers and pensioners. None of them responded to our inquiries. 

But Gran Colombia Gold was more accommodating.

James [00.16.19] We went to their office in the posh Medellín neighborhood of El Poblado. The offices were bright and modern, and a press officer flitted around us as we met José Noguera, who has been Vice President for Corporate Affairs since 2012. 

José Noguera [00.16.33] Mi nombre es José Ignacio Noguera, soy el vicepresidente de asuntos corporativos de Gran Colombia Gold

James [00.16.39] Jose was amiable, and personable.  He told us how when Gran Colombia arrived in Segovia, they found a mess.

José Noguera [00.16.33] No, nos encontraron muchas cosas, entre ellas trabajo infantil, prostitución infantil, lavado de dinero, operación de bandas criminales en el área, minería ilegal.

James [00.17.01] Segovia was plagued by all manner of social ills, he said: child labour, prostitution, militias, money laundering, and illegal mining. The mines themselves were invaded by hundreds of machuqueros – the gangs of mine robbers – and operations had been run into the ground.

José Noguera [00.17.19] En el año 2010 invitan a Gran Colombia Gold a que participe dentro de la licitación para la compra de los activos de esa compañía.

James [00.17.29] The Gran Colombia people were invited in to all this by the government to revive a process that was failing and failing badly, he explained. The deal was struck with one thing in mind – paying off the debts to workers and pensioners, that was what the 200 million dollars was for.

José Noguera [00.17.48] Es importante tener en cuenta que el proceso de liquidación de Frontino fue un proceso que manejó el gobierno de Colombia, la Superintendencia de Sociedades, no Gran Colombia. Gran Colombia Gold fue sencillamente el comprador

James [00.18.00] The Frontino struggle and everything it involved – not only the workers’ claims to ownership of the company but also the paramilitary violence – really that had nothing to do with them, he said. Those were issues for the government. 

But José’s demeanor changed when we started asking tougher questions. When we ask about the threats against the union during the sale negotiations and the attempted murder of one of the union leaders, he gave me short shrift.

José Noguera [00.18.29] No tengo conocimiento, pero la recomendación es lo mismo. Tienen que presentar las denuncias ante la autoridad.

 James [00.18.35] “I don’t know anything about that case,” he said, “but my advice to them is to report anything like that to the authorities”. What about the granting of top jobs to current and former government ministers like Araujo and Martinez, we asked. There’s no denying the company’s involvement in those decisions, was that not a conflict of interest?

José Noguera [00.18.55] Gran Colombia Gold, como una empresa canadiense que cotiza en bolsa, actúa bajo altos principios y estándares de ética e integridad. 

James [00.19.04] Jose replied that the company has the highest ethical standards, and besides, Araujo wasn’t actually in government when they gave her the job.

James [00.19.12] Pero el ministro Martínez estaba en el gobierno durante esa negociación y  después pasó a la empresa.  

James [00.19.20] When we pushed back on Martinez, who was minister of mining until just months before the sale, Jose got snappy 

José Noguera [00.19.27] Eso. Pero si no hay acusaciones con respecto a conflictos de intereses, no te podría dar.

James [00.19.32] They have received no complaints about conflicts of interest on the matter, he said. That is that.

Newscast[00.19.40] Ex empleados de la liquidada Frontino Gold Mines continúan sus protestas en las principales calles de Segovia.

Mat [00.19.46] Gran Colombia arrived pledging stability and employment after a decade of near constant turmoil. But within months, those promises seemed hollow. Hundreds of workers had lost their jobs, the town was shut down in a general strike, and the miners began battling police on the streets.

Newscast [00.20.04] Pues antes de ser liquidada la Frontino manejaba 1400 empleados.

Mat [00.20.09] Working in the Frontino mines at the time were Jorge Sepúlveda and Carlos Durango, aka Pelo Mula or Donkey Hair. We met the brothers in episode one at Las Brisas mine. We caught up with them at the mine to ask what it was like.

Jorge Sepúlveda [00.20.24] Luego pasé a trabajar con estrategias y minas dentro de la misma empresa.

Mat [00.20.29] After the sale, Jorge started working with the Gran Colombia sub-contractors, then landed himself a position as a direct employee. But he lasted just two months, he said, before he was fired with no warning.

Jorge Sepúlveda [00.20.42] Lo último que me dijeron a mí fue que renunciara al sindicato voluntariamente.

Mat [00.20.48] The management called him in, he said, and they told him if he wanted to keep his job he had to resign from the union. And Jorge did, he resigned, but within a month, he’d lost his job anyway. Many others told us similar stories.

Jorge Sepúlveda [00.21.02] Pues una de las razones fue esa. Porque siempre nos decían que para ellos tener la hoja, la hoja de vida limpia era no estar, no ser sindicalistas.

Mat [00.21.14] The company management always said that having a clean record meant not being a unionist, Jorge told us.

Jorge’s brother, Pelo Mula, also didn’t last long. 

Carlos Durango [00.21.25] Y ahora llega, llega Gran Colombia con una estrategia de mina y nos cogen. ¿Y qué pasó? Ya lo cogieron quincenales.

Mat [00.21.34] When the company slashed his and other workers’ pay and benefits, they downed tools and went on strike, he said. The company responded by firing them.

Carlos Durango [00.21.43] Trabajé con Julio Erazo con Masora

Mat [00.21.47] Pelo Mula, though, was soon back working underground, this time for the contractor who today runs most of Gran Colombia’s mines. His name: Julio Erazo. the same demobilized paramilitary we heard from last episode, who had once worked side by side with Macaco. The new era of Gran Colombia looked very similar to what had come before it.

Pelo Mula would walk away from that job as well. Not over pay disputes or union activity, but out of fear for his life.

The next round of the mining wars had begun. 

That’s next time on the Shadow of El Dorado….