JAKARTA, Indonesia (AP) – The world’s largest gold mining producer and its top U.S. executive in Indonesia go on trial today for allegedly dumping toxins into a bay and sickening villagers.

Analysts say the case against Newmont Mining Corp. will test the cash-strapped government’s ability to attract foreign investment while cracking down on environmental crimes.

The Denver-based company and Richard Ness, president director of its local subsidiary, Newmont Minahasa Raya, insist they will be cleared of charges that they intentionally or negligently engaged in acts that resulted in pollution.

They say a police report showing high levels of mercury and arsenic in the Buyat Bay on Sulawesi island is flawed.

“We have not done anything wrong,” said Ness, 55, who faces a 10-year prison sentence if convicted. “I am very confident … we will be exonerated.”

Newmont faces a string of pollution accusations growing out of the company’s operations on five continents.

But it is the first time the world’s largest gold miner has faced criminal charges for environmental problems and one of the few times Indonesia has dared take a multinational company to court.

Newmont began operations in Sulawesi in 1996, and stopped mining two years ago after extracting all the gold it could. But it continued processing ore until Aug. 31, 2004, when the mine was permanently shut.

The trial in the North Sulawesi capital of Manado, 1,300 miles northeast of Jakarta, could take several weeks.

It will be, for the most part, a battle over conflicting test results.

The World Health Organization and an initial Environment Ministry report found the Buyat Bay to be unpolluted, and a government study released in May found that traces of heavy metals in villagers living close to the mine were within normal levels.

But the prosecution, which says Newmont dumped 5.5 million tons of pollutants into the water, will present a police report showing the levels of mercury and arsenic are well beyond national standards.

Prosecutors also will count on emotional testimony from villagers, dozens of whom claim that Newmont’s pollution caused them to develop tumors and headaches and the bay’s fishing stock to plummet.

“We have enough proof,” chief prosecutor Robert Ilat said.

Newmont, which could be fined up to $78,000, says any health problems faced by villagers in the area was due to poor hygiene and diet, as well as mercury pollution from the thousands of illegal miners that work the hillsides along the bay.

Newmont will argue that the police investigation was illegal, saying it prevented Newmont from submitting evidence and jailed five other Newmont executives for a month last year without charges. It will also contend the case should be heard in civil, not criminal court.

It also will challenge the case against Ness, saying there is nothing in the environmental law that allows him to be charged. They say he played no part in the decision to dump the waste in the bay – since he only joined the company in 1998, two years after the mine opened.

Mining analysts say a guilty verdict could scare off multinational companies already anxious over the country’s legal uncertainties, rising costs and excessive red tape.

Environmentalists say the trial offers the government – which for decades was coddled investors – an opportunity to hold a foreign firm accountable.

Raja Siregar, of Indonesia’s largest environmental group WALHI, applauded the government’s decision to bring the case to trial, saying it sent the right signal to investors.

“If companies follow environment requirements and are concerned about the environment they won’t have to worry,” he said. “But if they don’t, they will face a problem in a future.”

The government has also filed a $133.6 million civil suit in connection with Newmont’s Sulawesi mine, but that case is pending.

The gold mining giant has filed several suits of its own aimed at silencing it critics.

It received a boost Tuesday when judges ordered Indonesian activist Rinolda Jamaludin to pay the company $750,000, accusing him of spreading false allegations about Newmont’s mining activities.

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