London Calling! April 30 2005

London Calling! April 30 2005

London Calling from India updates the Vedanta story

While the UK media remains stunningly silent (and complaisantly ignorant) about the sordid activities of its newest global mining outfit, influential Indians have finally got around to recognising the charisma (if you're the Economic Times) or perniciousness (if you're just about everybody else) of one of their richest NRI's - non-resident Indians.

In fact Anil Agarwal is not only one of the most loaded men in Britain, coming among the top dozen Asians in a recent Sunday Times survey. He's also one of the ten most ill-gotten gainers on his home territory. That's a unique distinction earned for owning not only the majority of London-based Vedanta, but also Sterlite Industries with its three key Indian-based earners in zinc, copper and bauxite-aluminium. (Albeit that these are themselves controlled by Vedanta back in the UK).

An April 3rd Economic Times interview with Agarwal on his Indian stomping ground of Bombay (Mumbai) was as obsequious a puff-piece as they come, even daring to attribute quasi-Vedic qualities to the man whose operations are a travesty of the fundamental texts of Hinduism. Ironically, just ten days later the same newspaper was forced to recognise that at least some in the great Vedanta corporate family, are far from convinced that Mr Agarwal follows the Vedas when it comes to sharing his worldly wealth. These dissidents are the minority shareholders (20%) in Malco, Vedanta's bauxite-to-aluminium subsidiary in Tamil Nadu who baulked at Agarwal's attempts to buy them out at a floor price well below the stock's true value. The outraged shareholders have complained to SEBI (Stock Exchange Board of India) about Vedanta's behaviour. As of now, Agarwal and his cronies are unable to de-list Malco from Indian stock exchanges, thus stopping them from shipping yet another asset out of the land of the Vedas into the hands of Vedanta.

Goodbye to all that

Such wheeling and dealing is par for Agarwal's thirty-year running course so far. It seems the man is unable to follow a straight path; preferring instead to plough his own furrow (garishly signposted "profit at any price"), whatever casualties fall along the way.

Whether Michael Fowle and Jean-Pierre Rodier exactly fit the description of Vedanta victims (unlike thousands of workers and Indigenous people) is arguable. They had a fairly munificent ride at Vedanta when respectively chair and director until they both suddenly resigned in March, within a week or so of each other. Neither the Englishman nor the Frenchman have published reasons for their departures. Nonetheless one can't help speculating that they might have made mild reference to Agarwal's failings in the area of corporate responsibility, only to be met with his notorious intolerance of criticism. At last year's annual general meeting of Vedanta in London, Fowle had admitted that he shouldn't have been both chair of the company and its audit committee. Nor could he more than weakly defend the company's failure to produce a Health, Safety and Environment report.

To our knowledge there still isn't such a report (nor has any been posted on Sterlite's website in India) - fifteen months after the company was launched. Jean-Paul Rodier, a distinguished man of metals associated, among others, with the French aluminium giant Pechiney, was brought in by Agarwal to polish up the aura of Vedanta/Sterlite's tarnished reputation in this area. Read into his resignation what you will.

In any event, having got rid of his two token Europeans on the board, Agarwal could now appoint himself executive chairman of Vedanta. Not only does this yet again, run counter to good governance rules for UK-listed companies; Agarwal also issued a bald statement acknowledging the violation but excusing it as "good for the company".

Economy with the truth

No doubt Agarwal would also argue it was good for Vedanta when, last week, the company issued a disingenuous statement claiming it had been given the go-ahead to expand its appalling copper smelting operations at Tuticorin, in southern Tamil Nadu. As readers may remember, these were the subject of a damning report by India's Supreme Court Hazardous Waste Monitoring Committee only eight months ago, pointing to gross violations of environmental norms.

In fact, while the Ministry of Environment and Forests (MoEF) does appear to have given clearance, it's up to the state's pollution control board to convert this into a licence to operate - which it hasn't done. And it never should. But the way some companies, including Vedanta, operate in India, follows a classic course. First you construct your plant, regardless of what permissions have or haven't been obtained. Then you get - or buy - politicians on board. If and when you meet community resistance, you hope your project is so far down the line that no rule maker or enforcer in their right mind would dare dismantle it and thus jeopardise your sub contracts, your workforce, and the interests of all those sycophants and hangers on who've hoped pave your way.

Exactly this ploy has been engineered by Vedanta in an attempt to intimidate the Supreme Court against ordering it to dismantle its alumina refinery which its fast-tracking (steam-rollering more like) on Indigenous territory in Orissa. This is despite clear evidence, available for months, that the project has proceeded without gaining necessary clearances, and in the teeth of India's constitutional guarantees of the rights of its original peoples.

On April 28th, just before the Supreme Court packs up for the summer, we should learn whether the highest legal authority, in the world's second most populous country, dares stand up against the man who declares that one day Vedanta will rank with BHPBilliton and Rio Tinto in the mining stakes.

[Sources: Economic Times (India) on Agarwal the Vedic merchant (April 2 2005); on Malco's outraged minority shareholders (14/4/2005); on Agarwal making himself exec chairman (25/3/2005); on alleged Tuticorin clearance (21/4/2005)]