LAO GOVERNMENT SEIZES SAPPHIRE MINING COMPANY, RADIO FREE ASIA REPORTS

WASHINGTON D.C. - The Lao service of Radio Free Asia (RFA) reports that the Lao government has seized the assets of a large mining company owned by Western investors and has jailed the chief representative of a security firm associated with the company. In several exclusive reports, RFA described the Lao government takeover of the company, Gem Mining Lao PDR Co., Ltd., or GML, which began mining for sapphires in Bokeo province in northwestern Laos in 1995. The registered owners are Julie Bruns, a New Zealand citizen, and Somkhit Vilavong, a U.S. citizen. Somkhit Vilavong is believed to be still in Laos, but his partners say they have been unable to reach him. Formerly of Webster, N.Y., Somkhit currently lives in Savannakhet, in southern Laos. Bruns, Somkhit, and Bernie Jeppesen, a Danish citizen and Bruns' husband, had been prohibited from leaving Laos. But Bruns, the company's chief financial officer, and Jeppesen, fled to Bangkok in late May. More than 450 Laotian employees of GML lost their jobs. The Lao government subsequently jailed Kerry Danes, the general manager of Securicor Lao, the firm which provided security for GML, and his wife Kay Danes. Securicor is a subsidiary of Jardine Matheson Holding Ltd. The Danes are Australian citizens. According to Jeppesen, Danes' problem was his association with Gem Mining. "When we started showing them we were becoming successful, then of course the government stepped in, with the backing of a lot of unsavory characters from Bangkok," said Jeppesen in a telephone interview. "I'm not talking about Thais. I'm talking about Australians, Englishmen, Americans - a bunch of gangsters." The Lao government has made no public statements concerning the case but has taken steps to nationalize the assets of GML on the grounds that company officers misappropriated funds. GML denies these charges and asserts that the Lao government has acted in violation of the foreign investment law of Laos and other commercial regulations, principles, and practices. Sources close to the company say GML is now preparing to sue the Lao government through the U.S. court system. A spokesman for the Lao embassy in Washington said he could not comment on the case. GML's troubles with the Lao government began more than a year ago after the Lao government ignored a concession agreement with the company and handed over a large part of a new mining area to a Korean firm. At one stage, more than 500 unauthorized Laotian miners were digging and tunneling for sapphires only one kilometer from GML's first processing plant. In December, 1999, the Lao government ordered GML to suspend exports of all raw and semi-finished sapphire products. Radio Free Asia is a private corporation that was established in 1996 to provide news and information to listeners in China, Tibet, Vietnam, Burma, North Korea, Laos and Cambodia. It is funded by grants from Congress. RFA's mission is to be a forum for a variety of opinions and voices from within Asian nations whose people do not have full freedom of expression. Listener confidence in the quality and credibility of its broadcasts is RFA's highest priority. RFA is a journalistically independent organization whose autonomy is key to providing objective domestic news and information.