London Calling! August 7 2003
Published by MAC on 2003-08-07London Calling! August 7 2003
Three Bobs and a Remuneration
Robert the Brute
The Zimbabwean branch of Transparency International has hit a brick wall, confesses its chairperson, John Makumbe - and in more than one sense. Robert Mugabe is allegedly parcelling out the country’s natural resource assets to his pals, in such a fashion that their add-on value might quickly disappear. Unless Mugabe does so first. He has made Zanu-PF confrere, Philip Chiyangwa, the second biggest shareholder in the country’s largest cement manufacturer, Circle Cement. He’s passed a controlling stake in Zimbabwe’s largest steel producer, Macsteel, to a senior aide. And Oliver Chidawu, another Mugabe call-boy, is now part of a consortium holding a majority stake in Bindura Nickel.
It was Bindura Nickel which, under the tutelage of Anglo American, was accused during the colonialist Smith regime of complicity with Rio Tinto in a huge transfer pricing scam.
London Calling last September pointed out that Mugabe was letting the multinational miners off lightly while scapegoating white farmers (not to mention numerous black citizens) for the murderous poverty into which his megalomania had plunged Zimbabwe.
We asked then “exactly what these self-proclaimed anti-colonialists (Mugabe and Nambia’s Sam Nujoma) have done to counter their countries’ most insidious and persistent settler 'possession' - namely of their mineral resources… Shortly after taking the reins of power from Ian Smith’s white UDI regime 23 years ago, Robert Mugabe delivered an historic speech. In it he declared that Anglo American and Rio Tinto (then RTZ) had ‘milked’ the country of its wealth, inter alia employing ruthless ‘transfer pricing’ practices. During the period of illegal white rule and in the face of international sanctions, the British company considerably expanded its asset base in Rhodesia, offering shares to whites only.”
We were perversely prescient. For now Mugabe claims he is indeed enforcing “black empowerment” in the minerals sector, by demanding that the companies sell at least 20% of their equity to non-white Zimbabweans. Except, he’s doing it in exactly the opposite fashion to South Africa’s government: without any form of negotiation, independent verification, or public tender based on equal opportunity.
The life (and loot) of Brian
Brian Gilbertson has become the highest paid British chief executive. Well, ex-CEO: he was ousted from BHP Billiton earlier this year. Though his basic salary was “only” a few quid short of £ 800,000 in 2002, his total gains climbed to a whopping £9.1 million. And that’s before he’s due to walk off with an additional £16 million from his former employers. Talk about gilded handshake - this is more like a Golden Shower.
Meanwhile Paul Anderson (who earlier lost his job to Gilbertson) got a leaving present from the world’s biggest mining company, worth nearly seven million smackers. Another BHP Billiton director, Ron McNeilly, received £1.2 million as he kissed his associates goodbye.
Such pay offs are now the subject of virulent shareholder condemnation on both sides of the Atlantic. They look even more grotesque when set against the current liquidity crisis of many pension funds. Or the fact that ordinary workers couldn’t expect to match such figures, even if they laboured round the clock for several lifetimes.
Indeed, London Calling has calculated that an average BHP Billiton miner would need to slave for no less than ONE THOUSAND FOUR HUNDRED AND SIXTEEN YEARS (1, 416 years), before his gross income rivalled that of his former boss.
Six other British companies last year also rewarded six or more of their directors with more than a million, including BP and Rio Tinto.
Justifications for this obscenity include BHP Billiton’s claim that CEOs do a good job of cutting overall costs, and allegations of the peculiar risks inherent in natural resource extraction. But, in effect, mining moguls are being rewarded for poor results (BHP Billiton’s last reported nine months were particularly shabby); while bunging dosh at men who’ve been sacked, rather than resigned, seems as dire a dereliction of fiduciary duty as you can get.
Robert Wilson of Rio Tinto (another company whose latest results
won’t exactly make shareholders dance around the room) has defended his company’s pay outs on the ground that directors face increasing personal liability for corporate misdeeds.
Let’s hope the courts recognise this, if and when they call Rio Tinto directors to account for the company’s operations in West Papua, Bougainville or Namibia (For more detail of which please see Richard Meeran’s articles, exclusively posted on this site).
Robert the Bruiser
Talking of Rio Tinto and Bob Wilson (as we often do), why would the world’s most diversified mining outfit want to get back into bed with the notorious Robert Friedland? Certainly the two go back quite a way to 1995 when Rio Tinto negotiated the sale of a chunk of Lihir stock to Friedland’s Vengold.
Now the British company is said to be the front bidder (with Phelps Dodge not far behind) in the likely sale of Friedland’s highly prospective Oyu Tolgoi minerals project in Inner Mongolia No secret why Rio is interested: of late it’s been crying “China ! China!” all the way to the HSBC bank (itself a prime investor in Friedland’s Ivanhoe mining company) .
Nor is there much mystery surrounding Friedland’s play: he doubtless sees another Voisey’s Bay-type coup in the offing. This, you may recall, concerned a huge nickel-copper-cobalt deposit “discovered” in Labrador by Friedland’s Diamond Field Resources, sold on at great personal profit to Bob and a cost of $4.3 billion to Inco, the Canadian company, then the world’s biggest nickel miner. The project still languishes and may never come on stream.
Rio Tinto won’t be too worried that it may be scalped in similar fashion: if anyone can out-manoeuvre “Toxic Bob” Friedland, its Wily Bob Wilson and his cohorts. But what should concern the folks at St James Square is the prospect of another entanglement with a company whose complicity with human rights atrocities in Burma mirrors that of Freeport in West Papua, when Rio Tinto bailed out the US company in 1995.
Okay, so Rio wouldn’t be buying directly into Burma. But it would be crossing Friedland’s palm with the silver he requires to expand his Monywa operations and exploit the huge copper deposit at Letpadaung.
Nobody prizing human rights should put one further penny into the coffers of Mr Friedland. Even the Bush administration agrees (the devil may still have one or two good tunes). At the end of last month, the US enacted the Burma Freedom and Democracy Act in an attempt to prevent any further investment in that tortured land. Arguing that a buy-out of Oyu Tolgoi has nothing to do with promoting Friedland’s dishonourable Burma play just won’t wash.
No more would you offer fags to a chain smoker if you wished them to kick the filthy habit.
Sources: (Transparency International report): Independent July 25 2003; see also London Calling September 2 2002; (Guardian survey on boardroom pay): the Guardian July 31 2003; (Rio Tinto results for six months to June 30th) : Mining Journal August 1 203; (Rio Tinto Friedland play): Mineweb, July 29 2003; (Friedland, Voisey’s Bay and Burma ploys): Nostromo Research “Grave Diggers: A report on mining in Burma”, CAPRN et al, Vancouver, 2000