UK lawmakers consider probe into transparency of mining firmsPublished by MAC on 2013-05-28
Source: Statement, Reuters
London Mining Network welcomes announcement of parliamentary enquiry into extractives companies
London Mining Network statement
21 May 2013
Reacting to news that Parliament will this week consider whether to probe the transparency of oil and mining firms listed in London, Richard Solly, the Co-ordinator of London Mining Network, said:
"London Mining Network welcomes the announcement by Adrian Bailey MP, Chair of Parliament's Committee for Business, Innovation and Skills, that he will propose an inquiry into issues including governance and anticorruption protection at mining and oil companies.
"Such an enquiry would be topical because of investigations into London-listed mining companies Bumi and ENRC by the Serious Fraud Office but would not be limited to looking into those two companies. It is also important that the enquiry not be limited to issues of governance and corruption: it should also take into account the environmental and human rights records of mining and oil companies.
"London Mining Network has long been calling for stricter regulation of mining companies listed on the London Stock Exchange (LSE) or trading on the LSE's Alternative Investment Market (AIM). Early last year we published a report including case studies of mining companies with appalling records of poor governance, criminality, environmental destruction and abuse of workers' rights, Indigenous Peoples' rights and human rights in general. These examples, including Bumi, were of companies controlled from overseas which had listed in London since 2003. It showed beyond doubt that the UK Government's ‘light touch' approach was failing people directly affected by these companies' operations. Recent crises at Bumi and ENRC show that such an approach also affects investors - which is what has made the authorities sit up and take notice.
"London's share markets are financing some of the worst mining practices in the world. The fact that a good many mining companies are in the FTSE 100 (including Bumi and ENRC) means that many pension funds and other investment bodies automatically pump their clients' money into them, involving millions of people in Britain in their destructive practices. We hope that the parliamentary inquiry will take a broad approach and make recommendations which will at last rein in this abusive industry."
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UK-Listed Mining Companies & the Case for Stricter Oversight: http://londonminingnetwork.org/2012/09/report-calls-for-stricter-regulation-of-uk-mining-companies-2/
UK lawmakers consider probe into transparency of mining firms
By Clara Ferreira-Marques
19 May 2013
LONDON - Britain's parliament will this week consider whether to probe the transparency of oil and mining firms listed in London, an issue highlighted by corruption probes at emerging market miners which lawmakers fear have dented the stock market's reputation.
The chairman of parliament's Committee for Business, Innovation and Skills said on Sunday he would this week propose an inquiry into issues including governance and anticorruption protection at mining and oil companies.
The probe could start before the end of the parliamentary session in July. The committee will, though, have to decide the specific terms of the inquiry.
Parliamentarian Adrian Bailey said those set to give evidence are expected to include executives from Kazakh miner ENRC (ENRC.L) and Indonesia-focused miner Bumi (BUMIP.L), both facing corruption probes that have hit already beleaguered shares. The banks that advised the two could also be called.
He said the committee had already been considering a look at the extractive industries but the current turmoil around ENRC - now facing a buyout bid from its founders that would take it private after just over five years - had given the inquiry "added significance".
"We will be looking at the issue of transparency in general. It is not an inquiry looking into just ENRC and Bumi," Bailey said, adding that the concerns raised by those two miners would, however, be central.
"We have not yet defined the focus of the inquiry, or indeed decided whether we are going ahead."
Parliamentary committees often bring political pressure to bear on companies by publishing reports and calling witnesses to evidence sessions. While their reports have no legislative weight, findings are aimed at influencing government policy.
Given the spotlight on London's reputation in recent months, the inquiry is widely expected to go ahead and could, among other things, look at the benefit of having major extractive companies listed in London.
It would also look at whether Britain should sign up to the Extractive Industries Transparency Initiative (EITI) as well as examining mining and oil companies' roles in communities and their environmental efforts.
The EITI, supported by the World Bank, was set up to improve transparency and accountability in countries rich in mineral resources.
Troubles at ENRC, the largest of the companies in question, have made it the focus of headlines and a fierce debate around foreign resources companies with majority owners. Boardroom battles and corruption probes have helped drag its share down more than 50 percent since the start of last year alone.
Indonesia-focused miner Bumi has been another listing troubled from the start. Corruption probes and a damaging shareholder battle between the founders - Indonesia's powerful Bakrie family and financier Nat Rothschild - have added to low coal prices, dragging the shares down almost 80 percent since its listing.
But Bumi and ENRC are only two of a clutch of foreign-owned resource companies that have listed in London in the past decade, transforming the once UK-focused bluechip FTSE index.
Scandals at both have overshadowed some of the successful listings, prompting questions over governance, the number of shares that should be required to be freely available for purchase and the role of willing bankers. The UK Listings Authority has proposed tighter entry rules, hoping to create a higher hurdle for companies wanting to access the London market.
The revised rules, on which it consulted with the market last year, could be published in the coming weeks.
(Additional reporting by Kylie MacLellan; editing by Keiron Henderson)