London Calling - February 26 2004Published by MAC on 2004-02-26
London Calling! February 26 2004
London Calling returns to base finding Indias still not far away
London Calling recalls that, some years ago, Oxfam UK convened a debate on the virtues and vices of engaging with mining and oil companies in pursuit of development goals. Those ranged in favour of corporate involvement included a mix of NGOs and consultants. Those firmly against, not surprisingly, included Partizans, Down to Earth and PIPLINKS three of the editors of the MAC website. The only agreed outcome was that participants wouldnt forge any new link with an extractive company before informing others concerned about its operations. The undertaking was breached almost as soon as the ink was dry. (Actually no summary document ever surfaced).
Oxfam seems since to have considerably cooled towards corporate engagement. But not Oxfam-Community Aid Abroad (CAA), the Oxfamily Australian member. Last February CAAs Corporate Community Leadership Programme (sic) toured a group from BHPBilliton around the Indian state of Orissa, seeking to persuade them of the need to recognise peoples rights. Let the agency justify this in its own words:
[W]e took 14 employees of BHPBilliton on a unique journey to Orissa, India. The participants were selected from various departments of the mining giant and taken to visit both large-scale infrastructure projects including mines and small-scale, people-centered development projects run by our local partners. The aim was for participants to see the impacts each type of project had on the livelihoods, health and rights of local people, and to develop an understanding of the importance of BHPBilliton taking a rights based community development approach to its dealings with communities.
The private sector plays an increasingly important role in developing countries. The Corporate Community Leadership Program is one of a number of recent initiatives we have launched with the aim of making human development central to the agendas of companies with operations in the developing world. This program worked with BHPBilliton to improve the company's capacity to work with communities in a way that enhances the rights and livelihoods of communities affected by its operations.
Evaluation of the pilot project was positive from both our partners in India and company participants. Augustine Ulatil from our Bangalore office calls the program an effective means to influence the corporates for a change of heart.
One company participant said: My perceptions of community development changed as the program highlighted the importance of properly engaging the people and their communities in community development. Basic human rights are at the heart of this process and for me the Corporate Community Leadership Program was the first time that this was demonstrated at the practical level.
What meaningless verbiage! The idea that a profit-making entity of the size and hubris of BHP Billiton could take a community rights approach to any project is the height of naivety. As for its having a corporate change of heart thats as realistic as expecting a frog to change into a princess with the mere swish of a wand.
If the Oxfam-CAA programme drove just one of BHPBillitons staff away from the company it might (just) have done some service. However, theres no evidence this occurred. Meanwhile, the companys presence in Orissa, far from being welcomed by many local groups, has stirred up confusion and contumely - with some activists accusing others of collaborating with the enemy even though this didnt happen. True, the Big Australian cant be blamed for that, but Oxfam-CAA at least should have known that in India (especially Orissa) the presence of uninvited outsiders - let alone a gaggle of businessmen - can stir up a mass of suspicions; adding to, rather than subtracting from feelings of insecurity. (Surely this was one of the lessons to be learned from outside NGO intervention in the Utkal controversy which erupted four years ago in the same region).
Even by its own terms, the leadership programme dive-bombed disastrously. Soon after the BHPBilliton team returned home, one of its top employees, along with Sterlite and JP Morgan representatives, visited Orissas Chief Minister, begging him to open peoples lands even further to foreign mining penetration.
Vedanta shining out of Sterlites fundamentals
Anil Agarwals Indian flagship, Sterlite Industries is (as avid readers of this column will know) now effectively ensconced in the belly of the new British-based beast, Vedanta (see previous London Calling Special). The name literally means the end of knowledge an enigmatic description, unless youre aware of its significance among fundamentalist Hindus. End of knowledge or not, Vedanta in London certainly seems blissfully ignorant of the havoc already wreaked by its homunculus within India (see Tribal Villages Bulldozed as the Shadow of Vedanta).
The company has just announced a new rights issue, designed to grease even further its aggression tactics against Adivasi and Dalit (harijan) communites located in the bauxite-alumina province of eastern Orissa.
In late Febrary the Financial Times ran a story claiming Vedantas Indian offshoots performed strongly over the last quarter of 2003. Mind you the paper also quoted a view from unnamed analysts that Vedantas sales figures were pretty useless in judging its true financial position. But the worlds leading financial daily curiously failed to pick up a story from the Indian press just two days earlier.
This cited a report on Vedanta by Morgan Stanley which rounded on the company for a number of reasons, including the fact that Sterlites acquistion of Hindustan Zinc is the subject of a public interest challenge in Indias Supreme Court and various political risk factors. As a result of Morgan Stanleys misgivings, the share price of Vedanta fell by 11 points, and the company suspended its proposed new rights issue.
So what?, one can imagine Gilberston and Agarwal shrugging, as the chairman/CEO, and founder of Vedanta, chewed these facts at their London offices. Lets go on the offensive, announce an even bigger expansion in India than initially planned, boost Vedantas grip over Sterlite to 75% and offer to exchange outstanding Sterlite shares for Vedanta ones. Well then grab the rest of Balco we dont own, and acquire NALCO - the countrys largest aluminium player. All this, despite the outraged responses to Sterlites earlier privatisation ploys.
To adapt the catch-phrase employed by the countrys ruling right wing BJP in its run-up to the general elections: India and Vedanta - are Shining!
Smoke and mirrors, more like.
From steel to steal
While talking of heavy metal NRIs (Non-Resident Indians), its time we also paid tribute to British-based Lakshmi Mittal who now controls the worlds second largest steel making company (the eponymous LNM). In mid February, along with Indian partner Ispat, he bid for a 51% stake in BH Steel (not to be confused with BHP), Bosnias major steel company. LNM is also hoping soon to acquire the Polish steel maker, PHS.
Lakshmi may not be as controversial as Anil ought to be, but he hasnt escaped censure. In 2001 LNM snapped up the Ispat Sided steel works in Romania, after pipping the Frances Usinor to the post. It did so with the kind assistance of the British embassy in Bucharest. Of course, this had nothing to do with Mittals promise of a £125,000 donation to Crony Blairs Labour party funds. After all, this is the western government for which the fight against corruption and in support of transparency has become a sacred mantra.
Unfortunately ones faith in these policies is sorely tested when considering the shenanigans of Blairs Department for International Development (DFID), as it prosecutes other less-publicised, and more insidious, strategies on behalf of British industry.
That redoubtable foe of corporates, George Monbiot, took a swing at the Department on January 6, just before leaving for the World Social Forum in Bombay. In an article published by the Guardian, Monbiot asked why Britains agency for overseas development handed out £7.5 million in foreign aid last year to rightwing think tank, the Adam Smith Institute (which boasts it was the first to concocted the strategy of privatisation and sell it to the Thatcher regime). By contrast, DFID granted far less largesse to two of the worlds neediest countries, Liberia and Somalia.
Monbiot encapsulates DFIDs policy as spending money on projects that hand public goods to corporations, and claims its made the Indian state of Andhra Pradesh a laboratory for the kind of mass privatisation that the department is seeking to encourage all over the world
Its a pity Monbiot doesnt seem to have such a tight handle on this wrecking strategy as applied to the neighbouring state of Orissa Indias most desperate in terms of ill health and child mortality - where the DFID and the World Bank seek to influence policy at all levels. (Is it just a coincidence that the offices of the Adam Smith Institute sit just across the road from the DFID building in Orissas capital city, Bubaneshwar?).
Its not just India which seems to be declining, rather than shining, in regards to its duties to the poor and oppressed. Monbiot points out that DFID has spent a mere £700,000 improving nutrition in Zambia, while shelling out a whopping £56 million to privatise the countrys ill-fated copper mines - particularly Konkola Deeps which Anglo American spectacularly abandoned shortly after it got its leg-over from DFID and the British CDC.
Another Blair acolyte is the trade and industry secretary, Patricia Hewitt. Long a fan of extractive industry, it was she who presented Rio Tintos Robert Wilson with the First magazine Award for Responsible capitalism in November 2002. Last year, this is what Ms Hewitt told the Social Enterprise Conference held in London (and we kid you not):
We in Government dont run social enterprises. There is only so much a Government can do through top down measures. Real power and real change comes from bottom up pressure. And the evolution of the voluntary sector since the 70s is a wonderful example of bottom up pressure.
Social Enterprises up and down the country are performing better with more entrepreneurialism and innovation than ever before...we have the potential to unleash the voluntary sector onto the third dimension. Bringing together voluntary sector expertise and private sector entrepreneurialism. Nurturing a whole new generation of social reformers and philanthropists.
The not for profit, charitable and limited company form never really fitted social enterprises. Our consultation showed how not for profit companies and charitable forms were too expensive, yet philanthropists wouldnt invest in normal companies because they wanted a lock on assets and profits. And they wouldnt invest in not for profit structures because they were puzzled by their complexity!
With such balderdash on her brain, its little wonder Hewitt is following where BHPBilliton and Rio Tinto have lately been leading into China. As she prepares to welcome the regimes premier to Britain later this year, where she will try to induce Chinese companies to register on the LSE, Ms Hewitt is also urging British investors to jump on the China bandwagon (sic). The Blair British government has set up a number of working groups to assist domestic companies in securing Chinese contracts such as those for a huge east-west gas pipeline. Another working group devoted to mining could be in the offing.
Not a word from Ms Hewitt about Chinas gross violations of civil liberties, not least against trade unionists in the extractive industries; nor of the governments continued persecution of political dissidents.
Is it churlish to remind Patricia Hewitt that, back in the seventies she was leader of the National Council for Civil Liberties (now Liberty), one of those wonderful examples of bottom-up pressure about which she waxes so eloquently today? Or do we excuse her on the grounds that NCCL was concerned about home-grown human rights, not those of foreigners?
The Straw that doesnt break the corporate back
Its not only Hewitt whos afflicted by memory-loss, in the face of big business. British foreign minister, Jack Straw, last month shocked those who thought the British government was cracking down hard on bribery and corruption by domestic firms abroad. In a private 2003 briefing to diplomats, just unearthed by the Financial Times, hes promised offending companies they wont after all be prosecuted, despite legislation in place to do precisely that.
Whilst small extorted payments are strictly illegal we do not envisage circumstances in which there would be a prosecution Straw has assured the minnows. But nor does he envisage prosecuting the sharks, either. As Susan Hawley of the British-based Corner House, protested: Its shocking theres such stark advice.
Shocking indeed, but hardly surprising in an administration which loudly proclaims various humanist credentials, while trashing them on the quiet.
[Sources: Corporate Leadership programme: Oxfam-CAA website: BHPBilliton pushing for mining in Orissa: Statesman News Service, Calcutta, 6/6/2004; Vedantas aggressive plans for India: Business Standard, India, 24/2/2004; Morgan Stanley downgrades Vedanta: The Hindu, 27/1/2004; Vedanta quarterly report: FT 29/1/2004 Mittal, Romania, Blair and Bosnia: The Business (London) 22-23/2/2004; Monbiot in the Guardian 6/1/2004; Hewitt on Social Enterprise: DTI website 26/3/2003; on Chinese exchequers: FT 8/1/2004; Man of Straw: FT 19/2/2004]
[London Calling is published by Nostromo Research, London. The opinions expressed do not necessarily reflect those of any other individual, organisation or editors of the MAC web site. Reproduction is encouraged with full acknowledgment]