But who will have the last laugh?
By Richard Solly, Co-ordinator, London Mining Network
See also Foil Vedanta’s AGM report, coverage by Reuters and the Ecologist, an analysis of Vedanta’s reasons for delisting, and the archive of news articles and comment on Vedanta on the Mines and Communities website.
The 1 October 2018 AGM of Vedanta Resources PLC was surely one of the most bizarre corporate events in recent history. We thought it was to be the last AGM of the company before it delisted (that is, withdrew its shares from sale) from the London Stock Exchange. But it delisted in the morning, so that by the time we gathered at the Lincoln Centre in London at 3pm it was no longer an actively Publicly Listed Company. Vociferously criticised Executive Chairman Anil Agarwal had got his way. He did not even bother turning up to his own company AGM to gloat – he was attending some more important event in India. Present at the top table were Executive Vice Chairman Navin Agarwal, Company Secretary Deepak Kumar, Chief Financial Officer Arun Kumar, new Chief Executive Officer Srinivasan Venkatakrishnan and Independent Non-Executive Directors Ravi Rajagopal, Katya Zotova, Geoffrey Green and Ed Story.
2. Delisting of the company was supposedly done simply to simplify its structure. But the announcement of the company’s intention came soon after a massive demonstration outside the Indian High Commission in London in response to the Tuticorin massacre in May, and has the benefit of making sure that annoying dissident shareholders cannot hold the company to account at Annual General Meetings in London.
3. Company Secretary Deepak Kumar began the meeting by saying that the company’s shares had been cancelled from trading on the London Stock Exchange that morning. He said that the company was nonetheless still a publicly listed company and required to hold an AGM. A General Meeting would be held straight after the AGM to approve the proposed registration as a private company. He said that Company Executive Chairman Anil Agarwal was in India for an event regarding the company’s hydrocarbon involvements. The meeting would be chaired by Navin Agarwal, Executive Vice Chairman. Senior Independent Director Deepak Parekh was also unable to attend.
4. Navin Agarwal then began his speech. He said that the company was saddened by the tragic loss of life at Tuticorn, had helped the affected families and would help them as much as it could. He called for a moment of silence in memory of the dead, after which he said that the Tuticorin smelter had played a big role in the economic development of the region. He welcomed to Srinivasan Venkatakrishnan as the company’s new Chief Executive Officer. Mr Venkatakrishnan had previously served as CEO of AngloGold Ashanti. (He did not mention the continuous criticism to which AngloGold Ashanti has been subjected in recent years over its operations in Colombia, Democratic Republic of Congo, Ghana, South Africa and Tanzania.)
5. He said that Vedanta had reached record-breaking levels of production. Revenues had increased by a third. The total dividend of 65 cents represented the highest dividend paid since the company’s listing on the London Stock Exchange in 2003.
6. He said that Vedanta had invested in growth. It was the only diversified mining company in India. Consumption of metals per capita in India remains 70% below the global average and India is importing 20% of its minerals so Vedanta is well placed to supply the growing market. The year saw nine fatalities, and health and safety is a high priority for the company. Contributions had been made to education, healthcare, nutrition, livelihoods and sports. Forty million dollars had been spent on social programmes. The company had inaugurated India’s primary cancer centre and hundreds of women’s and children’s centres. Large numbers had benefited from Vedanta’s social responsibility work. Today thus marks the end of a highly successful listing in London. Institutional investors can continue to invest in the company via Vedanta Limited in India and via its American Depository Receipts in New York.
7. Vedanta’s understanding of its contribution to humanity always impresses me. I am surprised that, by its final London AGM, it had not yet announced that it had brought about the General Resurrection of the Dead. It always seems to be the best and the greatest. It reminds me of a neighbour of my mother’s family when she was a small girl: whatever anybody had, this neighbour was sure to say that she had a bigger one, a better one, or two of them. The company’s response to accusations of ill-practice, including from eye witnesses – indeed, often from eye witnesses who have filmed evidence of what they allege – is similarly impressive. It usually simply denies what is alleged – either denying that it happened, or denying that it had anything to do with it. For some reason, an image comes into my mind of a lad I knew when I was in the boy scouts over forty years ago: you could actually see him stealing things, he would see that you had seen him, and then he would deny that he had done it. Extraordinary. Nothing to do with Vedanta, of course.
8. When Navin Agarwal announced the beginning of the formal business of the meeting, mining researcher Roger Moody raised a point of order. He said that it was regrettable that Anil Agarwal was not present. Roger said he hoped he was not trying to escape from his responsibilities, including answering questions. He said that after having delisted from the London Stock Exchange as the company had done that morning, it was surely the case that anything that transpired at the AGM could be dismissed by the company and there would be no further forum to hold it to account. “Are we not here by fraud?” he asked.
9. Samarendra Das, from Foil Vedanta, asked whether minutes of the AGM would be given to the Financial Conduct Authority (FCA) now that the company had delisted.
10. Company Secretary Deepak Kumar said that minutes would not be given to the FCA, as it would no longer be required, but that the company may or may not make an announcement to the market.
11. Questions were then invited from the floor. Roger Moody said that his question had been out but not answered. “All of us are here are acting a role in a play which has already been decided,” he said. “The old Vedanta is no more and the new Vedanta will only emerge after the EGM [Extraordinary General Meeting] and this AGM is not constituted in a manner that enables it to address the questions we want to raise. It enables Volcan and Anil Agarwal to escape from the consequences of actions taken by the company over many years and which nobody in the company has answered in reports or in the media or in any other way. The company’s reports constitute fraudulent statements and are not worth the paper they are written on. This meeting is scripted in advance and leaves us as bit players. I will not abandon [the struggle against] this company in any form in which it chooses to exist and in any place is chooses to operate.” Roger then stated that, given the fraudulent nature of the meeting, he would not participate in it, and he left.
12. Rosanna Mackenzie, representing ShareAction, said: “My question concerns your activities in the Zambian Copperbelt region under your KCM subsidiary. KCM has a historic record of systemic negligence around issues of safety and sustainability. Since 2006, local communities have been affected by serious and on-going pollution of water streams and rivers caused by KCM operations. After more than 2000 of those citizens went to court, the High Court and Supreme Court of Zambia both ruled KCM guilty of negligence and “gross recklessness”. A Supreme Court judge stated that “that Vedanta had treated Chingola residents as “guinea pigs”, showing “no remorse” and would have been punished with severe criminal sanctions” in its country of origin.” Vedanta is reporting it had dealt with these issues. We are pleased to hear about the $22 million, ten-year project to improve the quality of discharged water in your Zambian operations as mentioned in your annual report. What reporting has been put in place to inform shareholders about measures to improve the quality of discharged water – and when will this information be released to the shareholders? Could you also provide an update of what efforts are being made to clean up previous water pollution?”
13. CEO Srinivasan Venkatakrishnan replied that the Konkola mine is old and “comes with legacy issues.” It had been operating for over 70 years and Vedanta had been addressing these issues but it takes time. KCM is working with the government and community on this. Before Vedanta acquired the smelter it was only capturing 50% of emissions and now with the new smelter it captures 99%. Water discharges are now much improved and the company is working to initiate a recirculating system, diverting streams which flow into the tailings pond. This will cost around 30 million dollars. The company is making good progress and is working to make it a zero discharge site. It has installed bore holes to provide good quality drinking water for local communities and schools.
14. Phil Turner, Head of Health Safety Environment and Sustainability, added that the cleanup is a legacy issue. Since Vedanta took over, control points have been built and a catchment constructed to stop future discharge from the tailings dam. Statutory agencies are happy with progress. The intent is to bring both discharge streams to zero discharge. Programmes have been in place for around 12 months and the intention is to have discharge closed off by the end of this year or certainly by the end of next year. “Then we need to look at what to do with spills over the last 70 years,” he said. “The KCM team is looking at ways these can be resolved. They are looking at turning it into viable agricultural land.”
15. The next question concerned the Talwandi Sabo Power Plant. Kavita Bhanot, writer, said that at the 2017 AGM the company had described it as ‘the greenest thermal power plant in North India’, committed to zero harm, zero waste and zero discharge. She said that at that AGM she had pointed out that farmers were compensated less than the market rate, since fertile land was claimed to be barren; labourers had died in the construction of the plant; ash from the plant is a big problem, settling on houses, crops, cattle and water bodies, causing respiratory problems, itching, burning eyes, rashes and headaches; and that in the long term, pollution in the air, land and water is contributing to increasing cancer rates. “In addition,” she noted, “having heard from the villagers about regular flooding in recent years, which was earlier unheard of, we discovered that sand dunes, which have been defences against floods, were recklessly bulldozed during the construction of the plant, leaving local villagers to face the consequences.
16. “What have you done about all this in the last year?” she continued. “In particular, about the thousands of Dalits and Bahujans, who lost their livelihoods, who didn’t get any compensation, and who are suffering due to the pollution. For example, this is what locals told us earlier this year:
• ‘My name is Sajeed Kaur and I’m 60 years old. There is smoke, my eyes water, there’s pain in my chest and stomach. No medicines are given to us here, we go to the market in the city, in Mansa, or Talwandi, to buy medicines. I have trouble breathing. I get breathless. There is a burning smell at night, the smell of coal. My grandson works in the plant. His leg hurts. My son has chest pain. Illnesses have increased because of the power plant, there’s constant smoke.’
• ‘My name is Makbal Singh, my village is Beniwal. Since the thermal plant has come up here, it has become hotter, we see pollution, and ash falls, sometimes so much falls that the ground turns white. The leaves turn white, they are covered, so they don’t get any sunlight, then they start falling. There is pollution in all of Punjab, but there is more here. There’s no point in making a complaint.’
• ‘My name is Satpal Singh, I’m from this area, and belong to a dalit family. Ever since Vedanta’s TSPL has set up its electricity plant in the area, peasants who had land in the area, got compensation, but those who are landless peasants, they got nothing. There are around 5000 landless peasants here. Those who live in the villages Peron, Baniwal, Tandi, Raipur, Talwandi Aglia and many other nearby villagers are affected by the pollution.’
• ‘Right now, I can see smoke coming from the big chimney. Fly ash is falling. When fly ash comes it becomes difficult to breathe, the whole body suffers from illnesses, little children are having difficulty breathing, adults are getting ill. The shocking thing is that there are no medical facilities so people can get proper treatment. Dalits in the area have not been able to get any work or facilities. The air and water are getting polluted. The whole area is getting polluted – there is no proper solution from the government or the company. People are fighting, dying of illnesses. Neither has the government paid any attention, nor has the industry made any arrangements.'”
17. Chairman Navin Agarwal replied that the power plant had won awards for excellence in research and development and excellence in fly ash management. Samarendra Das pointed out that the company had been fined for poor handling of fly ash. Company CEO Srinivasan Venkatakrishnan said that the facility was one of the most advanced plants in Punjab. He said it was a zero discharge plant with all the latest systems for handling fly ash and dust suppression. The company has a licence for five years, which, he said, it would not have been given if it had not been keeping regulations. There had been improvement of fly ash treatment since 2016. He said that the company uses ash in land reclamation, road building, construction and brick-making. Air quality monitoring had shown good air quality. The company was on the way to zero harm, zero waste and zero discharge. The Pollution Control Board had given the company an award for handling of fly ash.
18. Samarendra Das asked for a copy of the power plant’s Environmental Impact Assessment, and the board agreed.
19. Another shareholder asked about allegations of the company’s involvement in the Tuticorin (Thoothukudi) massacre. He said: “Fingers are pointing at the company. You talk about CSR and sustainability but what you do in the field does not look like you really mean it.” He asked why it was that the company was alleged to be involved in the massacre.
20. CEO Srinivasan Venkatakrishnan said that the killings were very unfortunate. “It causes us pain and sorrow,” he said. “The Chairman has indicated support for impacted families. The company had no role in the alleged massacre. Our facts are not always out in the public domain. The Tuticorin smelter one of the finest in the world. Seventy-five million dollars have been invested in recent years to improve its environmental performance and it is now on a level with the world’s best smelter in Hamburg. It has won awards from various bodies including from the British Council. It is monitored online by the State Pollution Control Board. It is a zero discharge smelter. The smelter has been a real transition in the area, a major engine of growth. It supplies acid for fertilisers as well as copper. I am from the area and I know this.” He continued that the company’s corporate social responsibility work in the area had transformed the lives of 250,000 people in Tuticorin including 19,000 women and girls being educated in dozens of schools. Vedanta was co-operating with the inquiry being undertaken by the Green Tribunal. The company was engaging with members of the community. He concluded, “I understand that four or five years ago a similar issue cropped up, there was a full investigation and nothing was found against the company.”
21. Film-maker Simon Chambers asked, “Why did the Tamil Nadu Pollution Control Board close the smelter down? Why did thousands of people take to the streets and block the factory for over a hundred days because they said they were being polluted and suffering severe health problems? You are whitewashing!”
22. Navin Agarwal strongly denied this. He said there was no whitewashing, that there was an investigation. He said that any country would shut down such a plant during such an investigation.
23. Srinivasan Venkatakrishnan said that whatever the reason the villagers had protested over health issues, the data Vedanta had suggested that the smelter had played no role in the pollution. “There are fertiliser plants in the area which may contribute to pollution. All our data point in the opposite direction from the smelter.”
24. Joining the meeting by phone was the CEO of the business. He said that the plant had been operating since 2013 and there had been no complaints from nearby villagers. “We thought it surprising that this kind of uprising happened,” he said. “In February 2018 there were some minor complaints about our expansion, which we took care of. What has happened is that local NGOs and foreign NGOs have taken this as an excuse and hijacked the entire situation and engineered protests. Whatsapp messages were sent, inciting people in an incendiary manner, polluting people’s minds.”
25. Samarendra Das cut in: “What he said about incendiary remarks: he himself told people publicly that I was responsible. He is liable for defamation on this. Are you aware of the piece in Vikatan that was published in July 30th that says in Tamil that I was responsible for the riots in Thoothukudi?”
26. Navin Agarwal said that the situation was that, as far as the company was concerned, the plant was one of the best in the world, and the company had “measured all the parameters”.
27. Samendra Das asked,”Am I responsible for all the killings? We need an answer from him!”
28. Navin Agarwal replied, “We have said that there is no intention to blame an individual.”
29. The plant’s CEO said, “A lot of incendiary messages have been going around and this has incited the whole population.”
30. Samarendra said that the CEO had himself incited people through his use of social media.
31. Samarendra then presented the report ‘Vedanta’s Billions: Regulatory failure, environment and human rights’ which Foil Vedanta had released a few days before the AGM. He said: “This report documents Vedanta’s fifteen year corporate history as a London-listed company:
fifteen years of illegalities, non-payments a constant modus operandi, a similar pattern of abuse wherever you operate: Zambia, Tuticorin, Orissa, Goa. Niyamgiri was your flagship project when you listed in London and you said you had all necesary permits, which was a lie. You had not received FPIC [Free Prior Informed Consent of the adivasi inhabitants]. You did not take on board that the Dongria Kondhs had not given permission to mine and you still fail to note this. We asked the FCA [Financial Conduct Authority] about the lack of mention of the 2014 disaster. MP John McDonnell [now Shadow Chancellor of the Exchequer] came and asked a question in person about Goa illegal mining and you replied to him, but when the FCA asked you to provide details we found that one of your senior board members was involved in the FCA. Who was this? How much do you really take fifteen years of due diligence? We ask the UK government to investigate.
32. Navin Agarwal replied, “We are the only company in India which prints a tax transparency report.”
33. “No doubt,” replied Samarendra.
34. “We provide six billion dollars to the Indian government,” continued Navin Agarwal. “You think we would save a few dollars?”
35. Samarendra retorted, “You transfer entities from A to B to save a few dollars. The Supreme Court has stopped your mining and is trying to get our money back.”
36. Naveen Singhal, Vedanta’s CEO of Iron Ore, said that the Shah commission was not against Vedanta but had investigated all the mines in Goa and closed all the mines and then reopened them a couple of years later. “We are fully compliant with all the regulations,” he said.
37. Simon Chambers interjected, “You know this is not true. You know that it was illegal between 2007 and 2011 Why are you not telling the truth?”
38. Samarendra asked, “Who had the conflict of interest with the FCA?”
39. Independent Non-Executive Director Geoffrey Green said that he had been on Vedanta’s board since 2012 and that in that time there had not been anyone on the Board from the FCA, but that he was the Non-Executive Chairman of the Financial Reporting Review Panel, one of the main subsidiary bodies of the Financial Reporting Council, rather than the FCA, and that this may be the source of the confusion.
40. Simon Chambers raised the issue of the Korba Chimney disaster which happened at Vedanta subsidiary Balco’s operations in Chhattisgarh in 2009. “Each year I have asked about the suppression of the Bakshi report, an independent report carried out by a senior judge in Chhattisgarh. Vedanta put a stay on this report so it could not be acted on. I always ask if there will be an independent inquiry into the disaster. Tom Albanes promised me that there would be some kind of inquiry. This has not happened and now that Vedanta is delisting there is a fear that there never will be. Will Vedanta remove the stay on the Bakshi report or will it come out with a report on the deaths of over 42 workers? This is owed to the families.”
41. CEO Srinivasan Venkatakrishnan replied that this had been a very unfortunate accident impacting over 40 families following a massive lightning strike. “I am helpless to bring lives back,” he said, “but we will focus on the welfare of the families.” He said that a socioeconomic study done had shown that compensation and education had been done right including skills training. Seventy-five per cent of the families had said they are very satisfied with the support given. The report is still subject to litigation. But Vedanta Limited, which holds all the assets, is listed in India and issues American Depository Receipts in New York so the company will still be publicly accountable.
42. Samarendra Das said, “I have visited the families and what you say is not true. But I do thank you for holding a one minute silence today. A few years ago you had to be asked by a shareholder to hold silence for the victims at Korba. Was it because they were Dalits and Adivasis?”
43. Simon Chambers said, “I have visited families too. Many have received compensation but a problem for many of the families is that compensation may have been given to a wife or parents, and other members of the family may have received nothing.” He said that workers were earning a wage for an extended family. Compensation had not been distributed well. It would be good for Vedanta to look at this because there had been big fights in families as a result of people opportunistically marrying compensated widows.
44. Samarendra Das said that it was the same story with Punjab workers killed in an accident.
Another shareholder said, “I have been hearing these protests. Supposing everything goes against the company and you get fined: what is the worst case scenario impacting on your EPS [earnings per share]? Even British companies have disasters, like the Gulf of Mexico, and the CEO tells the market what is worst case scenario so the share price can be calculated.”
45. Navin Agarwal replied, “Our business is to do everything we do safely and sustainably so we are perceived as a company concentrated on all aspects of sustainability. If the company does well financially this is good, but we have to go beyond profit and loss and not compromise on safety and sustainability.”
46. Chief Financial Officer Arun Kumar added that there was always a complete review of all incidents and anything that has a quantitative impact is covered in the liabilities section of the Annual Report, and there was nothing more to disclose than had been disclosed.
47. As there were no further questions, Navin Agarwal closed the AGM just after 4pm.
48. He then immediately opened the Extraordinary General Meeting to obtain shareholder approval for registering the company as a private company. The opportunity for raising questions was presented so quickly that it had passed before I realised it. I wanted to ask why it was that the company’s decision to delist from the London Stock Exchange was announced immediately after the huge demonstration in London following the Tuticorin massacre. I asked Independent Non-Executive Director Geoffrey Green the same question after the end of the meeting, and he said that the company had been planning the move for a long time – the date of the announcement had nothing to do with the protest, even if it looked that way.
49. So all that happened during the EGM was voting by poll, a foregone conclusion given the total control exercised by Agarwal-family related entities. It reminded me of turkeys being asked to vote for Christmas: whether we did or not, Christmas was coming, and it was certainly not going to be advantageous to turkeys.
50. However, as the new private company will be registered in the UK, those of us who have hounded the company since its 2003 will continue to try to find ways to hold it to account here. So the question of who will have the last laugh in this farce remains unclear.
Before, during and for a while after the AGM, a noisy demonstration took place outside.