PIRC Raises Concerns On Vedanta Corporate Governance
20.07.10, 13:25 Uhr |
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LONDON -(Dow Jones)- Shareholders of U.K.-listed miner Vedanta Resources PLC (VED.LN) should oppose the election of three non-executive directors because of their role in the company's poor handling of environmental, social, and governance issues, investor advisory group PIRC said Tuesday.
This marks the latest in a string of public outcries against the firm's corporate governance record. Dutch pension manager PGGM Investments two weeks ago joined some of Europe's biggest public investors in selling out of Vedanta on human-rights grounds, even though Vedanta is one of the strongest gainers in the FTSE-100 index over the past 12 months.
PIRC recommended that shareholders vote against the election of senior non-executive director Naresh Chandra, chair of the India-focused miner's healthy, safety and environment committee and the remuneration committee.
PIRC said the failure of the company to recognize and address weaknesses in health and safety controls following an incident at the India-based Balco power plant this year is a "significant indicator of poor governance."
In September 2009, 40 workers were killed when a chimney at Balco's 1,200-megawatt thermal plant in the state's northeastern district of Korba collapsed amid lightning and heavy storms. At least three executives were arrested in connection with the incident. The power plant is owned by state-run Bharat Aluminium Co., which is 49% owned by Vedanta.
PIRC also said the failure of the group to engage with explicit investor led concerns over the impact of group activities on the Niyamgiri region and the control issues raised by fatalities are evidence of a "lack of competent oversight."
The Indian government recently launched a second probe into the company's plans to mine bauxite, a mineral used to make aluminum, near the Niyamgiri hills of the state of Orissa, India. The probe will investigate the project's social and environmental impact in an area where Amnesty International has been campaigning to protect the human rights of the local Dongria Kondh tribal community.
PGGM spent two years trying to organize a round-table meeting with senior management in order to discuss the Orissa project, but Vedanta declined to participate, the pension manager previously said. The project has been awaiting government approval for more than four years.
Aside from health, safety, social and environmental concerns, PIRC also raised concerns over payment of annual bonuses by the committee of which Chandra is chairman. PRIC said the bonuses were granted in contradiction to the safety criteria upon which such awards can be made. It also noted that salaries were raised significantly without explanation.
PRIC also recommended that shareholders oppose the election of non-executive director and remuneration committee member Euan MacDonald and non-executive director Arman Mehta, who chairs the audit committee and sits on the remuneration committee.
Vedanta wasn't immediately able to comment when contacted by Dow Jones Newswires.
PIRC recommended that shareholders vote against the election of senior non-executive director Naresh Chandra, chair of the India-focused miner's healthy, safety and environment committee and the remuneration committee.
PIRC said the failure of the company to recognize and address weaknesses in health and safety controls following an incident at the India-based Balco power plant this year is a "significant indicator of poor governance."
In September 2009, 40 workers were killed when a chimney at Balco's 1,200-megawatt thermal plant in the state's northeastern district of Korba collapsed amid lightning and heavy storms. At least three executives were arrested in connection with the incident. The power plant is owned by state-run Bharat Aluminium Co., which is 49% owned by Vedanta.
PIRC also said the failure of the group to engage with explicit investor led concerns over the impact of group activities on the Niyamgiri region and the control issues raised by fatalities are evidence of a "lack of competent oversight."
The Indian government recently launched a second probe into the company's plans to mine bauxite, a mineral used to make aluminum, near the Niyamgiri hills of the state of Orissa, India. The probe will investigate the project's social and environmental impact in an area where Amnesty International has been campaigning to protect the human rights of the local Dongria Kondh tribal community.
PGGM spent two years trying to organize a round-table meeting with senior management in order to discuss the Orissa project, but Vedanta declined to participate, the pension manager previously said. The project has been awaiting government approval for more than four years.
Aside from health, safety, social and environmental concerns, PIRC also raised concerns over payment of annual bonuses by the committee of which Chandra is chairman. PRIC said the bonuses were granted in contradiction to the safety criteria upon which such awards can be made. It also noted that salaries were raised significantly without explanation.
PRIC also recommended that shareholders oppose the election of non-executive director and remuneration committee member Euan MacDonald and non-executive director Arman Mehta, who chairs the audit committee and sits on the remuneration committee.
Vedanta wasn't immediately able to comment when contacted by Dow Jones Newswires.
DJG/dok
