Vedanta on the ropes as scandals build and shares fallPublished by MAC on 2014-03-02
Source: PTI, Mining.com, Nordic Page, NDTV
We recently reported on Vedanta's troubles in Zambia (see: Vedanta's Zambia unit seeks to shift liabilities to state). But these are not the only problems it's recently faced.
The London-listed company has been accused of making payments to Indian political parties which are illegal, since it's based in the UK
Having already divested from Vedanta in 2007, the Norwegian Pension Fund has now also excluded Sesa Goa on the grounds that it's a newly-formed subsidiary, and was not subject to theearlier divestment.
Vedanta's supremo Anil Agarwal has been making sizeable purchases of the company's stock. Whether this is an attempt to stem the flow of capital out of the company as its share price falls, or a bid to turn the company private.
That would almost certainly cut off some funding, but enable him to avoid much of the embarassing regulatory scrutiny that keeps coming his way.
PIL alleging foreign fundings to Cong, BJP: HC reserves order
Press Trust of India
28 February 2014
New Delhi - The Delhi High Court today reserved its order on a PIL seeking a court-monitored probe against Congress and BJP for allegedly receiving fundings from Indian subsidiaries of UK-based Vedanta Resources in violation of various laws.
"We reserve the order," the bench comprising justices Pradeep Nandrajog and Jayant Nath said after hearing arguments on behalf an NGO, which had filed the PIL, the Centre and both the political parties.
Prashant Bhushan, appearing for NGO Association for Democratic Reforms, referred to the provisions of the Foreign Contribution (Regulation) Act (FCRA) and the Companies Act and said, "It is an open and shut case, wherein the facts are admitted that both the parties have accepted donations from Indian subsidiaries of the United Kingdom-based Vedanta Resources PLC."
The provisions of the FCRA are "very clear" on this aspect that no Indian firm, whose holding company is incorporated in a foreign country, can donate to a political party here, he said.
He alleged Sterlite, Sesa Goa and Madras Aluminum, all Indian subsidiaries of Vedanta, gave donations to Congress and BJP in violation of the FCRA Act and the Companies Act.
He opposed the plea of both the political parties that Anil Agarwal, an Indian, holds more than 50 per cent stakes in the parent UK-based Vedanta Resources and hence, no Indian laws were violated.
Additional Solicitor General L Nageswara Rao, appearing for the Centre, opposed Bhushan's plea saying the donations came from companies listed in India and moreover, the firms have operations here.
Referring to the legal provisions, the ASG said if a firm has a business here then it would be "construed as an Indian" firm for all the legal purposes relating to the Companies Act.
Congress and BJP had taken a similar stand that no laws have been violated by them as an Indian held majority stakes in a foreign company, whose Indian subsidiaries gave donations to them.
Norway reconsiders its mining investments
28 February 2014
Norway, the country that owes much of its wealth to oil, is reconsidering its investments in the mining industry due to environmental concerns.
Through its $840 billion sovereign fund, known as the Government Pension Fund Global (GPFG), the nation has cut gold and coal investments and "will review the entire mining sector this year," Reuters reported on Friday.
The fund's CEO Yngva Slyngstad was quick to clarify that it did not mean the country was "selling out of the sector."
"We are concentrating our investments on the companies that we think are continuing this activity in a more sustainable way," Slyngstad said, as reported by Reuters.
GPFG owns about 1% of all global stocks and is the biggest of its kind in the world. Last month the fund made headlines because it theoretically made every Norwegian a millionaire due to a rise in oil prices.
The Scandinavian kingdom also revealed on Friday that 2013 was its second-best year, posting a return of 15.9%.
In addition to selling its interest in 27 mining companies last year, GPFG has moved away from some European stocks in favour of emerging markets in Asia and South America, Bloomberg reported.
Last month the fund announced the exclusion of Sesa Sterlite, a subsidiary of India's Vedanta Resources, from its portfolio due to "unacceptable risk of environmental damage and serious violations of human rights."
Sesa Sterlite produces silver, copper, iron ore and a variety of other commodities across Asia ad Africa.
According to Reuters, the fund has set up a "set up a panel to examine whether the fund should quit oil, gas and coal firms over their environmental impact."
In the past GPFG has dropped its shares in Barrick Gold, Rio Tinto, Madras Aluminium Company, Freeport McMoRan Copper & Gold, and Norilsk Nickel among many others.
Norway Government Pension Fund Global Excludes Three Companies for Ethical Reasons
The Ministry of Finance has decided to exclude the companies Sesa Sterlite, Africa Israel Investments and Danya Cebus from the Government Pension Fund Global (GPFG).
The Nordic Page
30 January 2014
On the 13th of September 2013, the Ministry of Finance received a recommendation from the Council of Ethics to exclude the company Sesa Sterlite from the GPFG. The recommendation builds on an earlier recommendation to exclude the company Vedanta Resources Ltd. (Vedanta ) and two of its subsidiaries, which operate in India. The Ministry followed the Council's recommendation to exclude Vedanta and its two subsidiaries in 2007.
Sesa Sterlite is a newly established subsidiary of Vedanta. The Council's assessment is that the relevant operations in India, which are currently run through the company Sesa Sterlite, present an unacceptable risk of environmental damage and serious violations of human rights. The Council has regularly updated its assessment of Vedanta and the basis for exclusion is still considered to be present. The Ministry of Finance, in accordance with the Council's recommendation, has decided to exclude Sesa Sterlite from the Fund's investment universe, as well as to maintain the exclusion of Vedanta.
On the 1st of November 2013, the Ministry of Finance received a recommendation from the Council of Ethics to exclude the companies Africa Israel Investments and Danya Cebus from the Fund due to contribution to serious violations of individual rights in war or conflict through the construction of settlements in East Jerusalem. The companies were excluded during the period August 2010 to August 2013 on the basis of similar activities. The Ministry of Finance has decided to follow the Council's recommendation.
The Ministry's final decision on whether or not to divest from a company is made on the basis of the Council's recommendation. The Ministry has not made an independent assessment of every aspect of the Council's recommendation but is satisfied that the recommendation document establishes with reasonable certainty that an investment in the company represents an unacceptable risk of violating the Ethical Guidelines.
Changes to the exemption on government bondsIt follows from the mandate from the Ministry of Finance to Norges Bank that the GPFG in exceptional cases may be barred from investing in fixed income instruments issued by governments or government-linked issuers. The GPFG is not a foreign policy instrument, and it is only in exceptional cases with large-scale international sanctions or restrictive measures, that such restrictions apply to investments in government bonds.
The government bond exemption previously applied only to bonds issued by Myanmar. As international sanctions and restrictive measures change over time, it is appropriate to regularly assess which states are faced with the most extensive sanctions or measures and therefore may be affected by the exemption. The Ministry of Finance, in consultation with the Ministry of Foreign Affairs, has made such an assessment and concluded that the exemption should no longer apply to Myanmar, but that North Korea, Syria and Iran should now be covered by the exemption. The Ministry of Finance has informed Norges Bank and the Council of Ethics of its decision. So far as the Ministry is aware, none of the countries issue government bonds today.
About Government Pension Fund Global
The Government Pension Fund - Global (Norwegian: Statens pensjonsfond - Utland, SPU) is a fund into which the surplus wealth produced by Norwegian petroleum income is deposited. The fund changed name in January 2006 from its previous name, The Petroleum Fund of Norway.
The fund is commonly referred to as The Oil Fund (Norwegian: Oljefondet). As of the valuation in June 2011, it was the largest pension fund in the world, although it is not actually a pension fund as it derives its financial backing from oil profits and not pension contributions. As of September 30th 2013 its total value is NOK 5.11 trillion ($828.66 billion), holding one percent of global equity markets.
The purpose of the petroleum fund is to invest parts of the large surplus generated by the Norwegian petroleum sector, generated mainly from taxes of companies, but also payment for license to explore as well as the State's Direct Financial Interest and dividends from partly state-owned Statoil. Current revenue from the petroleum sector is estimated to be at its peak period and to decline over the next decades.
The Petroleum Fund was established in 1990 after a decision by the country's legislature to counter the effects of the forthcoming decline in income and to smooth out the disruptive effects of highly fluctuating oil prices.
The Petroleum Fund's Advisory Council on Ethics, established 19 November 2004 by royal decree, observes the activities of the fund according to ethical guidelines.
According to its ethical guidelines, the Norwegian pension fund cannot invest money in companies that directly or indirectly contribute to killing, torture, deprivation of freedom, or other violations of human rights in conflict situations or wars. Contrary to popular belief, the fund is allowed to invest in a number of arms-producing companies, as only some kind of weapons such as nuclear arms, are banned by the ethical guidelines as investment objects.
Norway's $810 biilion oil fund excludes Sesa Sterlite
Economic Times of India (PTI)
31 January 2014
OSLO/NEW DELHI: Norwegian government has asked its sovereign wealth fund not to invest in Sesa Sterlite and two Israeli firms citing ethical issues.
Government Pension Fund Global (GPFG), estimated to be worth over USD 800 billion, is one of the world's largest sovereign wealth funds.
Norwegian Finance Ministry, in a statement today said, it has been decided to exclude three companies - Sesa Sterlite, Africa Israel Investments and Danya Cebus from the Government Pension Fund Global (GPFG) radar.
"Sesa Sterlite is a newly established subsidiary of Vedanta. The Council's assessment is that the relevant operations in India, which are currently run through the company Sesa Sterlite, present an unacceptable risk of environmental damage and serious violations of human rights," the statement said.
Officials of Sesa Sterlite could not be reached for comments.
The Council of Ethics has regularly updated its assessment of Vedanta and the basis for exclusion is still considered to be present.
In accordance with the Council's recommendation, the Finance Ministry has decided to exclude Sesa Sterlite from the Fund's investment universe as well as to maintain the exclusion of Vedanta, it added.
"The recommendation builds on an earlier recommendation to exclude the company Vedanta Resources Ltd (Vedanta) and two of its subsidiaries, which operate in India. The Ministry followed the Council's recommendation to exclude Vedanta and its two subsidiaries in 2007," the statement noted.
Similarly, the Council had recommended exclusion of Africa Israel Investments and Danya Cebus from the Fund due to contribution to serious violations of individual rights in war or conflict through the construction of settlements in East Jerusalem.
"The companies were excluded during the period August 2010 to August 2013 on the basis of similar activities," the Ministry said.
According to the statement, the Ministry has not made an independent assessment of every aspect of the Council's recommendation but is satisfied that the recommendation document establishes with reasonable certainty that an investment in the company represents an unacceptable risk of violating the ethical guidelines.
Anil Agarwal Raising Stake In Vedanta
26 February 2014
Vedanta Resources Plc's founder and largest shareholder, Anil Agarwal, has steadily built up his stake in the London-listed mining and oil and gas firm this year, recent filings from the company show.
The scrap metal-dealer-turned-billionaire has made multiple stock purchases in January and February, raising his stake in the company to 68.46 percent as of February 20 from 66.93 percent at the start of the year.
The latest regulatory filing, published on Wednesday, showed that Agarwal purchased 210,000 shares at 851.48 pence per share on February 20 through his investment vehicle, Volcan Investments Ltd.
Vedanta's stock closed at 842 pence on Wednesday on the London Stock Exchange.
The company, grappling with regulatory hurdles and low commodity prices, was one of three miners to be demoted from the FTSE-100 index last year. Its stock has lost nearly a third of its value in the last 12 months.
Liberum analyst Ben Davis said that the latest purchases by Agarwal might be an attempt to signal to investors that Vedanta's stock has been oversold.
While promoters buying shares in their companies to shore up their stock price is nothing new, the frequency of Agarwal's purchases has prompted trader chatter that he may be looking to make an offer to take the firm private.
Neither Vedanta nor Volcan Investments were available for comment when contacted by Reuters.
Taking the company private would severely restrict Vedanta's access to public funds. It would also clash with Agarwal's ambition of growing the company to compete with the likes of Rio Tinto and BHP Billiton.
UK listing requirements mandate that at least 25 percent of a company's stock be available for trading.
The next biggest shareholders in Vedanta are Standard Life Investments Ltd, with a 7.85 percent stake, and BlackRock Investment Management (UK) Ltd with a stake of over 4 percent.
GIC Private Ltd, Capital World Investors and Credit Suisse Asset Management each have a stake of more than 2 percent in the company, according to Thomson Reuters data.
Independent directors at Essar Energy, the other Indian resources company in the FTSE-250 index, this week shot down a bid from its largest shareholder and founders, India's billionaire Ruia brothers, saying the offer undervalued the company.