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Home--Issues--Globalization Vedanta: The Serial Offender In November 2007, the Norwegian government's vast Pension (Oil) Fund disinvested all its shares in Vedanta Resources plc, a UK company which few have even heard of, and whose parlous record has been virtually ignored by the British press. The Nordic government, acting on advice from its Council on Ethics, was unflinching: "The allegations levelled at [Vedanta] regarding environmental damage and complicity in human rights violations, including abuse and forced eviction of tribal peoples, are well founded. The company seems to be lacking the interest and will to do anything about the severe and lasting damage that its activities inflict on people and the environment." Vedanta was launched on the London Stock Exchange in December 2003 by incorporating the key assets of a thirty-year old Indian enterprise called Sterlite. The Initial Public Offering (IPO) was engineered by HSBC, Citigroup, Australia's Macquarie Bank, Deutsche Bank, ICICI Securities India, and JPMorgan Cazenove; between them they reaped around £13 million in joint service fees. The following year, thanks to a US$ 700 million bond issue made by ABN Amro, Barclays Capital and Deutsche Bank, the company embarked on a US$ 2.2 billion expansion programme with the aim of becoming India's biggest copper and aluminium producer. Shortly afterwards, Vedanta also acquired Zambia's leading copper company, KCM; and, in 2007, it bought 51% of Sesa Goa, India's largest exporter of iron ore. With a current share capital of just under £5 billion the company is ruled by its London-based founder and 54% shareholder, Anil Agarwal, whose prior exploits in his home country had already marked him out as a controversial figure. In 1998, for example, Sterlite was found guilty of participating in a massive self-serving shares' scam, as a result of which the Securities and Exchange Board of India (SEBI) initially banned it from trading for two years. The sparse attention given Vedanta by the UK press has centred on its operations in Orissa.. On July 17th BBC's Ten O'Clock News ran a story pitching the "fate" of a "remote Indian tribe", the Dongaria Khonds, against this "global mining firm", as a 3-year long battle appeared near to its conclusion. At the centre of the conflict is the lush, bauxite-rich, Nyamgiri mountain range, revered by the Khonds as a sacred site, and coveted by the company to provide raw material for a nearby alumina refinery. According to several leading ecologists, if Vedanta proceeds with its mining plan, 660 hectares of prime forest will be destroyed, and up to a hundred streams dry up, threatening the vital Vansadhara river that irrigates the plains. Site clearance for the refinery had already started in 2004 without permission from India's Environment and Forest ministry (MoEF). Two villages were razed to the ground that year and the occupants brutally removed by police to a concrete colony, swiftly dubbed by critics a "concentration camp". After petitions by three Indian environmental and human rights organisations, a sub-committee of the Supreme Court (SC) soon set out to investigate Vedanta's alleged violations. In September 2005 the committee unequivocally rejected the mining of Niyamgiri, demanding Vedanta also answer for illegally constructing the refinery. However, in early 2006, the SC side-stepped the verdict of its own subcommittee, referring the matter to a government advisory group which then approved diversion of forest land for the mining project subject to certain conditions. The debate rumbled on until late last year when the SC made an extraordinarily quixotic interim ruling: citing the Norwegian government's damning report, it banned Vedanta from the Nyamgiri Hills, but invited its Sterlite subsidiary to submit a plan for the same purpose. Since then, Orissa's own State Pollution Control Board has found the Vedanta refinery guilty of polluting the Vansadhara river. At the time of writing, the Supreme Court's final judgment has not been delivered, but many observers fear the worst.[The Supreme Court of India heard the case on July 25, 2008 and reserved judgment. The judges are expected to deliberate further on setting up the "modalities and conditions" under which the mining activities could proceed. The judgement is now expected anytime.- Editors at India Resource Center] The dramatic stand-off between the Khonds, their numerous supporters, and the most powerful mining company operating in India, is undoubtedly significant. It has become a test case for implementation of the government's draft new forest policy, which theoretically grants tribal peoples (Adivasi) rights to territory previously denied them. Nonetheless, it has been up to a small group of UK protestors, working in concert with overseas colleagues, to draw attention to Vedanta's other abuses in Zambia, Armenia, and elsewhere in India. They have done so by publishing a major critique ("Ravages through India", 2005), posting numerous critical reports on the internet [see www.minesandcommunities.org] and challenging the board and Vedanta shareholders at all its AGMs. This year on July 31st, dissident shareholders will demand the company address criticisms in an Indian MoEF report of October 2007, which hammered Vedanta's Chhattisgarh-based subsidiary, Balco, for its "deplorably callous and casual attitude" to environmental appraisal of expanding bauxite mining in the state. The same month, Vedanta was indicted for wilfully using a defective pipeline to dispose of highly toxic tailings from its Zambian copper mine, and constructing the country's premier copper smelter without official permission; it still has to answer convincingly to these charges. But slowly the net is folding around this "serial corporate offender" In June 2008, Vedanta/Sterlite agreed to buy out north American copper company, Asarco, in a cut price deal which would absolve the UK company of responsibility for meeting billions of dollars in outstanding personal injury and environmental restitution claims. Unexpectedly, and after priming by three major US environmental watchdogs, members of the powerful Congress Judiciary Committee have urged the federal Attorney General to scrutinise Vedanta/Sterlite's environmental record in India and Zambia before allowing the take over to proceed. All the more regrettable, then, that the global banks bulwarking the company, and its most important UK shareholder (AXA Framlington), have failed to demand anything approaching this level of accountability. To echo the Norwegian government's conclusion: "[Vedanta's] violations against the environment and human rights… are recurrent at all the subsidiaries subject to investigation and have taken place over many years, indicat[ing] a pattern in the company's practices where [they] are accepted and make up an established part of its business activities." Roger Moody is an experienced international researcher and campaigner and the managing editor of the Mines and Communities website. The article above first appeared in Ecumenical Council for Corporate Responsiblity Bulletin, London, August 2008. |
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