Notes on the Vedanta AGM held at the Lincoln Centre, Lincoln’s Inn Fields, London, Tuesday 28 August 2012.
Chairman Anil Agarwal said that it had been a ‘transformational year’ and that the company had achieved a ‘robust performance’. There had, however, been 22 fatalities during the year and the company ‘regrets’ worker deaths. He committed the company to ‘zero harm’. He said that safety was the top priority for him and the whole group. He also said that ‘sustainable development is at the core of what we do.’ He said, ‘We believe in working in partnership with local NGOs, with a focus on health, sustainable development, providing care. Sustainability is a key priority’. He claimed to have helped 3.1 million people across 1,000 villages with their community development programmes. He was pleased about the company’s acquisition of Cairn India.
CEO Mehendra S Mehta said that Vedanta is present across Africa, Australia and India. He said it had been a successful year of profitable performance. The group simplification will unlock significant value for shareholders. The company has made ‘cost efficiencies’ and is ‘making progress on sustainability’ towards ‘reaching international sustainability standards.’ He repeated the call for ‘zero harm’. He said that the company is not happy with its current safety performance. He said that 8700 medical tests had been performed on employees; that 17 million trees had been planted (‘biodiversity initiative’); that 3.1 million people had received benefits; that the company was working with 149 NGOs and other agencies; and that it contributes US$4.4 billion to government exchequers.
Roger Moody muttered that Vedanta is going backwards on sustainability.
Mehta boasted about the company’s provision of hospitals (although researchers have found that at least some of these hospitals either do not exist or are not operating).
Mehta said that Vedanta needs permission from the UK Listing Authority to make various acquisitions in India and Vedanta has no current plans to buy more companies.
Independent Director Naresh Chandra said that resources must be exploited but their use must be fine-tuned, especially for local people. The company has to make sure that some benefit goes to local people. This is the role of government. A portion of the profit has to be shared with the local community.
Anil Agarwal opened the meeting to questions, asking that shareholders ask only one question at a time. The first questions were asked by a Singapore investor, who asked three questions, none of which had to do with human rights matters. Anil Agarwal thanked him for his ‘excellent questions’ and spent plenty of time answering them.
Stephanie Maier of Aviva investors expressed concern at the company’s breach of OECD guidelines. She said there is clear mismanagement of sustainability matters. Vedanta is now underperforming financially and Aviva thinks it is because of this mismanagement of sustainability issues. She said Aviva notes progress made but concerns remain. Board level leadership is of paramount importance. Remuneration should be linked to performance. The company needs an explicit policy on Indigenous Peoples and the use of security guards in line with the Voluntary Principles on Security and Human Rights. Sustainability issues continue to impact on share price.
Bianca Jagger said that her contacts in Orissa are worried about the expansion of the red mud waste pond at Lanjigarh. She said she had visited Orissa in 2010. She talked about the expansion of the red mud pond and the physical abuse of protesters, including the beating of women, by police.
Peter Frankental of Amnesty International UK said that the company’s opponents in Orissa are being harassed by company officials and police. He asked at what level of the company this activity had been sanctioned. He said that NGO workers and journalists had also been harassed. People interrogated by the police had been told that their information had come from the company and that the purpose of the interrogation is to stop them talking to people in local villages. Vedanta is making malicious complaints against individuals. He asked what the company will do about this.
Chairman Anil Agarwal gave no response to Amnesty’s accusations. Independent Director Naresh Chandra accused Amnesty of acting as judge and jury. One shareholder the asked about the size of the dividend and said that human rights were not relevant to the business of the meeting.
Another shareholder asked about political donations. Naresh Chandra said that the company donates to both Congress and the BJP and that such donations are important to support democracy in India.
Alison Kennedy of Standard Life investors noted that Standard Life holds nine million shares in Vedanta and that it would vote against the new employee share ownership plan. This plan is contrary to good practice, she said, because the award conditions for board members were not set out. She said that Standard Life had abstained from voting on the composition of the appointments committee. She said that it is necessary to appoint new directors who are demonstrably independent of the controlling shareholders, and they should have experience of companies that adhere to UK standards of corporate governance. None of the new directors has experience of the extractives industry and there are no women on the board.
Anil Agarwal said that it was good that his family control the company as they will take care not to damage its share value. On the matter of women directors, the company said that it would try to appoint some.
Another shareholder called for a truly independent board and said that although he was unaware of the detail of the possible connections between them, several board members have the same family name.
Anil Agarwal responded that this was not significant and that many people in England are called David or John but that this did not imply a connection between them.
Samarendra Das of Foil Vedanta criticised the company for calling the Dongria Kondh Indigenous People “backward” on page 26 of its annual report. Naresh Chandra apologised for the use of the term and said that he understood Samarendra’s sentiments, but then asserted that it is an accepted term because the United Nations and the International Labour Organization use it and because India’s own Constitution includes mention of ‘Other Backward Castes’. He said that no offence was intended. Another shareholder accused the company of racism.
Samarendra then asked why members of the Board kept referring to Vedanta as an Indian company when it is listed in London. He said that a report by Trusted Resources, a consultancy firm that was commissioned by the City of London to look into the problems of dealing with FTSE-100 companies, had stated that both Vedanta and Essar had faced criticism on corporate governance grounds in India, and a foreign listing is seen as one way to signal to investors that the company does maintain high standards.
Samarendra also asked why the Chairman thought that the former Confederation of British Industry Richard Lambert had written in the Financial Times that Vedanta’s whole purpose in listing on the LSE was to attain a cloak of respectability, allowing it access to a pool of capital.
Samarendra also asked why the company spoke of the need to produce more aluminium for domestic consumption while simultaneously exporting aluminium to South Korea, Japan and elsewhere. Mukesh Kumar answered this question vaguely, saying that the company has no control over policy on exports.
Samarendra objected to the fact that the company’s security personnel had tried to prevent him entering the AGM. Anil Agarwal said, “I am sorry. It will never happen again.”
Representatives of the Goan community in the UK attacked the company for the pollution caused by its mines in Goa and demanded an investigation and the where necessary mine closure.
Jo Woodman of Survival International said that the Dongria people in the Niyamgiri hills complain that the only time the company talks to them is when they are being beaten. The Dongira’s rights as an Indigenous People are being violated. She said that any future project affecting Niyamgiri would be subject by the Lenders’ Requirement to apply the Equator Principles and the IFC performance standards. This includes PF7, which states that the Free Prior Informed Consent (FPIC) of Indigenous Peoples must be obtained. She asked the Board to confirm that there would be no mining activities without FPIC? She also asked them to confirm that the mining will be conducted by SWOBMC, which is 74% owned by Vedanta subsidiary Sterlite.
Naresh Chandra said that the company would not commit to recognising the Dongria as Indigenous because the Indian Government does not use this term. He said, ‘The law of the land has to be respected. We are not that person. It is the government that has to decide. Go and fight with them… ‘We will never break the law. Not one blade of grass has been moved by us. It is the duly elected government that decides what can be mined. Vedanta has no sovereign power in Orissa. It is not our jurisdiction.’
Sreedar Ramamurthi of Mines Minerals and People accused the company of complicity in human rights abuses. Naresh Chandra said that if Sreedhar had evidence he should let the company have it and they would investigate. Sreedhar pointed out that the National Human Rights Commission had investigated already and had been severely critical of the company.
Roger Moody of Nostromo Research accused Vedanta subsidiary BALCO of using child labour at its Bodai Daldali mine despite the fact that Vedanta had repeatedly promised to investigate the issue and not to use child labour. Roger presented photographic evidence of child labour and dangerous working conditions at the mine, with bare-footed women workers carrying baskets of ore on their heads over waste rock piles in the mine. He said that Vedanta had promised to investigate child labour every year since 2007 without doing so. Naresh Chandra (or was it Agarwal?) said that the company would investigate the allegations but that it was not clear where the photograph presented was taken or when so this did not count as evidence. He said that the proper place to raise child labour issues is in India with local management.
Simon Chambers asked how Vedanta would deal with the Buxi report which holds them responsible for the Korba chimney disaster in which at least 42 workers were killed. He asked why Anil Agarwal has not accepted a court summons over the Korba disaster. The board refused to respond.
Samarendra Das asked the company to provide details of the invesitgation, as the information is not available in any of their reports. He asked how they could say that all the victims’ families are being looked after when Samarendra himself knew that families had a number of concerns. The meeting ended without a clear resolution of this matter.
Notes on the Vedanta AGM held at the Lincoln Centre, Lincoln’s Inn Fields, London, Tuesday 28 August 2012.