We call in on Vedanta at its AGM to find it hoisted by its own petardsPublished by MAC on 2005-08-07
We call in on Vedanta at its AGM to find it hoisted by its own petards
London Calling August 7 2005
Vedanta's second London annual general meeting (AGM) almost foundered on August 3rd, after executive chairman, Anil Agarwal, dismally failed to pacify irate shareholders with his constant repetition of the mantras: 'We have the best standards', 'We will employ world class agencies' and ' We are helping the people.'
Such interminable repetition, and consistent refusal to answer direct questions, boiled over an hour into the meeting when Agarwal was asked from which site the company's Lanjigarh refinery would source its bauxite 'if and when' it's refused permission to mine the adjacent Nyamgiri hills. 'We are confident we will get all the permits we require', he replied. But if you don't?, persisted the shareholder - five times in succession. Finally, a non-executive Vedanta director rose from the floor to rescue his boss: the company, he said, has an agreement with the government of Orissa to provide whatever bauxite it may require.
The AGM got off on a bad footing from the outset, when the company secretary 'explained' that, since there were bound to be lots of questions about Vedanta's operations, space would be provided afterwards for a discussion. It was a manifest attempt to preclude debate over the Company's Report and Accounts. A shareholder shot to his feet, declaring that this would go against accepted corporate practice. Agarwal hastily relented. 'We're here for you!' he declared. 'Our main concern is the interests of our shareholders'. ('That's you and your family!' one shareholder was heard to comment).
Questions about the company's operations in Tamil Nadu, Chhattisgarh, Orissa, and Zambia followed in quick and thick succession. Preserving throughout the smile of a Cheshire cat and the cool of a well-heeled guru, Agarwal's tried to placate his opponents by sometimes agreeing with what they said.
After eye-witness descriptions were provided, by another shareholder, of the company's pollution of a river in northern Zambia, its sequestration of arable land and the unacceptable levels of sulphur dioxide emissions at its Nkana smelter, the chairman replied, 'You are quite right' And yes, the company did inherit an agreement with the Zambian government which protected it from prosecution for environmental and health and safety violations. But, of course, it was doing its best to go beyond the minimum and was bringing a new sulphur dioxide plant on stream.
Graphic evidence had already been presented in the independent counter-report, 'Ravages Through India', circulated to shareholders at the AGM and made available to Agarwal twenty four hours before. Most interventions from the floor relied on material in that report.
Chhattisgarh and Tamil Nadu
What, then, was Vedanta's response to findings by a subcommittee of the Supreme Court of India - reprinted in the report - that the Tuticorin copper smelter in Tamil Nadu had been expanded illegally during the past year? Agarwal: 'This is the best smelter in India, and the best in the world!' Would the chairman care to comment on evidence in the report - backed up by photos - that it doesn't place waste rock from its bauxite mines in Chhattisgarh and Tamil Nadu into special containment areas? And that its Mainpat mineworkers have no basic health facilities and electricity? Ignoring the first allegation, Agarwal turned to the second: 'We have built a colony at this mine which has the best houses.' He didn't explain that this colony is reserved for company staff, not the contract workers who do the dirty and dangerous work on a £1 a day.
Just how will the company address the plight of those families, illegally ejected from their land for the new Bodai-Daldali mine in Chhattisgarh? Even Agarwal's pal, the state chief minister, had recently deplored their treatment and demanded proper compensation. The chairman was mute. He also ignored serious allegations, submitted to the Indian Peoples Tribunal last month, that communities close to its Mettur aluminium operations in Tamil Nadu were suffering from a wide range of occupational disease.
Half the question time centred on the refinery which Vedanta is constructing at Lanjigarh in Orissa. Yet another Supreme Court committee has found the company, along with the state government, guilty of violations of forestry protection legislation. 'We have never broken the law,' said Agarwal - a claim blown out of the water when a shareholder pointed out that, just a few days earlier, Vedanta had been fined for chopping down trees in that very area. (See story below).
Further angry probing drove Mr Agarwal into a corner where his defence verged on mendacity. 'Lanigarh is the poorest area in India. There have been deaths from starvation there. We are helping save peoples lives.
Everyone is in favour of the project.' It took the impassioned intervention of a social anthropologist from Orissa to torpedo the claim.' Thousands of people are opposed to the project,' he affirmed 'and many have already suffered loss of their livelihoods'.
London Calling has attended many mining company AGMs, naively believing we'd already witnessed the full gamut of untruths, obfuscation and obduracy, characteristic of such meetings. We were wrong. None of the dozen or so substantial accusations, levelled at Vedanta on August 3rd were addressed.
'We believe in transparency!' claims Anil Agarwal, perhaps cognisant of that notorious dictum of Josef Goebbels: 'The more you repeat a lie, the more people will come to believe it.'
Beyond Our Ken
Ken Gooding - former mining editor of the Financial Times and now a 'fifth columnist' with the Mining Journal (MJ) was cited in 'Ravages through India' as one of the few journalists ready to take Agarwal to task.
Coincidentally (?) this is just what he did in last week's MJ (August 5) under the provocative title 'And then there were none' That phrase provides the punch line for an old English rhyme about ten disappearing little Indians. Except that, in this instance, it's the Indians who are in the ascendancy, while the British are falling like ninepins.
'Anil Agaral is tearing down the last vestige of the window dressing put up by the investment bank, JP Morgan, to make Vedanta Resources look more like a suitable candidate for listing on the London Stock Exchange'. rages Gooding. He goes on to point out that, before JP Morgan agreed to endorse the December 2003 float, the bank insisted on directors being appointed to Vedanta's board who wouldn't be Agarwal cronies. With the abrupt departure of Peter Sydney Smith as finance director, just over a week ago, there's now the prospect that his replacement will be yet another Agarwal groupie.
Sydney Smith joins former chair Michael Fowle, and high-profile Frenchman , Jean-Pierre Rodier, in the retreat from Agarwal's camp. We've already pointed out that, as head of Vedanta's HSE committee, Rodier must have been alarmed at its lack of good corporate governance and practice Now Gooding confirms that the mild-mannered Fowle was 'eased out to enable Agarwal to become executive chairman,' earlier this year.
Gooding obviously regrets that these shenanigans haven't dented Vedanta's share price. On the contrary, it's currently riding high - perversely increasing after the outrageous behaviour of Agarwal at the AGM European investors obviously follow Queen Victoria's famous obiter dicta, when informed of the misdeeds of one of her citizens.
'He may do what he likes so long as he doesn't do it in the streets and frighten the horses!'
[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.]