A Joint Statement by Phulbari Solidarity Group, London Mining Network, Foil Vedanta, Urgewald and XR Asian Affinity Network
The London-listed coal mining company, GCM Resources plc, are holding their AGM this year on 25 February but they are pressing forward a pernicious policy that excludes their own shareholders and restrain people from attending the AGM. GCM said that ‘due to the ongoing COVID-19 pandemic, the AGM will be held virtually as a closed meeting with a minimum number of directors and shareholders present, such that the legal requirement to hold a quorate meeting will be satisfied; and no other shareholders will be permitted to access, attend or participate either in person or virtually.’ GCM goes on saying, ‘As a consequence of the current COVID-19 restrictions imposed by the UK Government, shareholders will not be permitted to attend the Annual General Meeting and will only be able to vote by proxy. This year, only the Chairman of the Meeting may be appointed as a proxy.’
Note this: the company is using COVID-19 restrictions to exclude shareholders from a virtual meeting, at which the risk of transmission is zero. It would be legal and practical to admit shareholders to the virtual meeting. In case GCM Resources’ video conferencing capacity is insufficient to allow more than their legal quorum of two shareholders to attend a virtual meeting, London Mining Network offered the possibility of hosting GCM’s AGM on their own Zoom account – but GCM did not respond to the suggestion. We assume, therefore, that GCM Resources is deliberately trying to evade engagement with, and accountability to, their own shareholders.
The UK Government’s Financial Reporting Council published a Corporate Governance report in October 2020 examining the varying practices of UK companies in responding to legislation limiting gatherings in the light of COVID-19. The report, AGMs: an opportunity for change, explicitly criticised this kind of arrangement: ‘The use of closed meetings without any additional opportunities for shareholders to engage – although legal – effectively disenfranchises retail shareholders from their right to hold boards to account, and such meetings are not aligned with the importance of shareholders engagement set out in the UK Corporate Governance Code.’ (see Page 9)
The Financial Reporting Council’s report goes on: ‘Shareholder rights are best served by companies that provide highly effective and clear communication before, during, and after the meeting, and allow full participation from those shareholders that wish to attend, either in person (when this is possible) or virtually.’ (see Page 11)
The board of GCM Resources certainly needs to be held to account. GCM’s shares were temporarily suspended from trading on the London Stock Exchange’s Alternative Investment Market (AIM) on 6 January 2021 after the company’s Nomad (Nominated Advisor), Strand Hanson Limited, has resigned on 4 December 2020, with no reason being given. But we believe that this is a result of our letter campaign 2020. All AIM-traded companies have to have a registered Nomad if they are to continue trading, and it took GCM over a month to lure another advisor, W.H. Ireland Limited, in to take on the role.
AIM has come in for serious specific criticism for regulatory weakness. The highly respected UK NGO Rights and Accountability in Development (RAID) made a submission to the London Stock Exchange during a 2017 review of AIM’s rules. That submission criticised the rules review itself for not being radical enough, and called for a wholesale, independent review of AIM, with terms of reference including the ability to consider the option of closing AIM down if it could not be significantly reformed. Citing numerous examples, and referring to a number of high-profile scandals and failures, RAID’s submission listed a number of short-comings. These included, among other things, limited due diligence on admission to the market; a lack of scrutiny making ongoing due diligence extremely weak; and the failure of AIM’s privatised system of regulation whereby day-to-day regulation is passed to fee-paying companies, the Nomads. In 2018 London Mining Network published a report examining the appalling human rights and environmental impacts of eight mining companies trading on AIM; one of them was GCM Resources.
So AIM itself is clearly a cesspit of poor practice; the system of Nomads is open to abuse amounting to corruption. Against this background, GCM Resources’ behaviour seems to have been so unacceptable that the company’s Nomad Strand Hanson Limited ditched them. We call on W H Ireland Limited to do likewise.
GCM’s only asset is a coal deposit in Phulbari, Bangladesh, where they have no licence to mine and where they face massive opposition from the tens of thousands of people who stand to be forcibly relocated if a mine should be constructed. GCM’s CEO Gary Lye has been abusing community leaders and peasants in Phulbari and Dinajpur, by filing false cases against 18 frontline organisers of Phulbari outburst 2006. On 4 February and 24 January the 18 community organisers have had to face trials in DInjpur in the midst of a pandemic.The company is currently relying on agreements with Chinese energy companies to remain in business.
GCM remain, as they always have been, a model of poor corporate practice. We call on the London Stock Exchange to delist the company from the Alternative Investment Market. We call on the company to get out of Phulbari; to get out of Bangladesh; and to get out of London. We call on the company’s Board to do something more constructive with their time than pursuing a project which would wreck the lives and livelihoods of tens of thousands of people in Phulbari and contribute to the climate catastrophe which threatens to wreck life for everyone on this planet.