CHICAGO (CBS.MW) -- In a case with implications for investigative journalism in

the Internet age, a Canadian mining company has successfully used British libel

law to shut down part of a U.S.-based Web site.

The case, which pits Barrick Gold, Barrick Goldstrike Mines and their chairman,

Peter Munk, against Guardian Newspapers Ltd., was settled Tuesday with Barrick

and Munk winning an apology and monetary damages from the Guardian -- as well as

the deletion of a story from a U.S.-based Web site.

At issue was a piece written by American Greg Palast, a freelance reporter,

regular columnist for the Guardian's Sunday Observer and occasional contributor

to the BBC's flagship nightly television news program.

"The Best Democracy Money Can Buy," which appeared on Nov. 26 of last year,

focused on large corporate and individual donations to the Republican Party and

the presidential campaign of George W. Bush.

In it, Palast wrote about a 8,000 contribution made by Barrick to the GOP;

allegations about Munk's having helped Iran-contra figure and Saudi arms dealer

Adnan Khashoggi win a pardon from then-President George H.W. Bush; Barrick's

1992 takeover of U.S. government property estimated to contain billion in

gold for ,000; and George H.W. Bush's job on Barrick's payroll in which the

ex-president supposedly interceded with two Third World dictators on the

company's behalf.

The part that upset Barrick the most, however, was Palast's reference to

allegations made by Amnesty International and reports by Tanzanian newspapers

that a company subsidiary in the East African nation carried out the

"extrajudicial killings" of 50 independent miners by burying them alive when

they refused to vacate a company concession.

Barrick flatly denies any culpability in the Tanzania murders (and in fact did

not own the subsidiary at the time of the alleged massacre) and maintains that

it was in total accordance with all applicable U.S. laws regarding both its

campaign contributions and takeover of the Nevada property.

Suit filed in London

The company sued for libel in plaintiff-friendly Great Britain earlier this

year, charging that the article caused it and Munk "great embarrassment and

distress" and that their reputations were "extremely seriously damaged" as a

result. The company asked for monetary damages and an injunction to prevent any

further dissemination of the article by the Guardian, "its directors, employees,

agents or otherwise ..."

In settlement papers in the High Court of Justice in London, the Guardian stated

that there was no "intention to make any allegations of corruption or illegality

in relationship between President Bush" and Barrick; that Barrick was not

involved in the alleged deaths of miners in Tanzania; and that Barrick acted in

accordance with U.S. law in the Nevada mine takeover and in its political

contributions.

The Guardian also offered "sincere apologies ... for any offence caused"; agreed

to pay "a substantial sum" in damages and legal fees; and said it has deleted

the article from its own electronic archives.

Barrick said in the filing it is satisfied that the "vindication of their

reputation ... has been achieved" and that it will not pursue the litigation

further.

Spokesman Vince Borg reiterated that the newspaper "has acknowledged [the story]

was libelous" and said that the company will donate the damages to a "worthy

cause."

Palast, who repeatedly offered to correct or clarify the story if Barrick could

prove its falsity, maintains an electronic archive of his work on his U.S.-based

Web site, http://www.GregPalast.com. As a result of the settlement, he has

essentially been forced to delete all references to Barrick in his online story,

since keeping it up could expose the Guardian to additional aggravated damages.

"I am not at war with Barrick," Palast told CBS.MarketWatch.com. "I just would

like the truth to come out. But I can't risk my paper's treasury with U.S.

publication.

"What is sad is the use of British libel laws to ride on the electrons across

the Atlantic to shut down a U.S. electronic publication," he added.

U.S. expert weighs in

It is also troubling to some U.S. First Amendment experts.

Floyd Abrams is a partner at Cahill Gordon & Reindel and an attorney who won the

Pentagon papers case for The New York Times. The celebrated press-freedom

attorney pointed out that U.S. publications routinely delete or alter stories in

foreign editions for fear of running afoul of local libel laws.

"U.S. law provides many more additional protections than exist or ever existed

in the United Kingdom," he said. Unlike in the United States, where plaintiffs

typically have to show not only that a story is false but that it was published

with the knowledge that it was false, in England "the person who brings the suit

doesn't have to prove anything" and the burden of proof is on the defendant.

While U.S. courts have in the past refused to enforce British libel judgments,

the U.S. impact of the settlement "is certainly something to keep an eye on, and

it should worry people," Abrams added.

Another major difference between U.S. and British law is that "truth is not an

absolute defense" in the United Kingdom, said Sandy Davidson, a professor of

communications law in the University of Missouri's journalism and law schools.

In other words, a story can be correct in all of its facts, but if a court finds

it to be defamatory, the defendant can be held liable.

Davidson noted that foreign entities in the past have had some success at

getting U.S. Internet service providers to voluntarily shut down U.S.-based Web

sites.

But, she added, any "court-mandated shutdown would run directly into problems of

transnational jurisdiction" and the question "of what kind of power a U.K. court

might or might not have over a U.S. citizen."

Story still available

Palast's original story has been widely reproduced both in the United States and

overseas. The full, uncut version remains online on numerous U.S. Web sites

including www.onlinejournal.com. If Barrick wants to get it pulled from those

sites, it will have to do so through far-less-sympathetic U.S. courts.

As far as Online Journal is concerned, the piece isn't going anywhere.

"Unless it will cost Greg his livelihood, you may assume the article will stay,"

said editor/publisher Bev Conover. "As tattered as it has become, this is still

America and we still do have First Amendment rights. Someone has to stand up to

the bullies."

Borg said the issue of whether Barrick will go after media outlets continuing to

run Palast's story "or any other libelous statements" is "a speculative

question; we haven't decided that at this time."

And as to why the company sued only in Britain, Borg said, "the article was

filed there, the Observer [the Guardian-owned Sunday paper in which Palast's

work was published] is based there, and that was where the jurisdiction was

determined to be. It doesn't come down to a question of libel law in one

jurisdiction, it comes down to a question of truth or libel."

In terms of market cap, Barrick is the world's most valuable gold-mining

company. It trades in Toronto, New York, London, Paris and Switzerland. The

company will jump from No. 4 to No. 2 in production levels if its recently

announced acquisition of Homestake Mining (HM: news, chart, profile) goes

through, as expected, in the fourth quarter of this year.

On Wednesday, Barrick shares closed down 13 cents to .76.

Online at:

http://cbs.marketwatch.com/news/story.asp?siteID=mktw&guid=%7BEB28FEB3%2DF4F6%2D4E47%2DB7CB%2DFAB4B1FC84F9%7D

Award-winning investigative reporter Greg Palast writes, Inside Corporate

America, fortnightly in the Observer (London), Sunday paper of Britain's

Guardian.

At http://www.GregPalast.com you can read and subscribe to Greg Palast's

columns.