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Bumi board continues to ignore concerns about coal impacts in Indonesia
![](https://www.downtoearth-indonesia.org/id/sites/downtoearth-indonesia.org/files/imagecache/node/Bumi%20EGM%202013-4-web_0.jpg)
DTE 95, March 2013
(This article is a combination of a press release and briefing, both published previously on this site in February 2013).
Shareholders from Down to Earth, London Mining Network and War on Want attended Bumi plc's meeting in London in February to question the company about the devastating impacts of its coal-mining operations in Kalimantan.
Bumi plc was listed on the London Stock Exchange in 2011 despite criticism about its operations in Indonesia.The social, environmental, human rights and health impacts of massive-scale open-cast mining are blighting the lives of communities in Kalimantan as Indonesia's 'coal rush' continues.
Indonesia's coal mega-mine, Kaltim Prima, is controlled by PT Bumi Resources, the Indonesian company which in turn is 29% owned by London-listed Bumi plc. It produces over 40 million tonnes of coal per year, which is exported mainly to markets in China and India. Meanwhile, villagers living near the mine have a long experience of forced evictions, livelihood loss, pollution, strikes and company collusion with State security forces.
Coal, the dirtiest of the fossil fuels, is also contributing to global climate change, bringing a further layer of disruption to the lives of poor communities in Kalimantan as well as the wider population.
Jointly operated by BP and Rio Tinto in the past, the mine renewed its UK links in 2010 when British financier Nat Rothschild struck a deal with Indonesia’s powerful Bakrie family to bring large-scale Indonesian coal mining to the London Stock Exchange, through a back-door deal avoiding the scrutiny of normal listing requirements for new companies.
The UK government has been widely criticised for allowing Bumi plc to list on the London Stock Exchange, despite the involvement of the Bakries in corruption, malpractice scandals and a long history of social and environmental impacts on local communities. These include a brutal attack against striking workers at the KPC mine in March last year and association with the Sidoarjo mudflow disaster, which killed 14 people and forced 30,000 people from their homes.
Now the Bumi deal has gone sour. In the run-up to the EGM, it appeared that all sides in this internal conflict were looking to do anything it takes to win control of the company, from public relations dirty tricks and hidden shareholder alliances to recruiting new backers regardless of their ethical and business records.
Inadequate response
At the February EGM, the Bumi board failed again to adequately respond to concerns raised about the real impacts of the company's coal mining operations in Indonesia.
Patrick Kane of War on Want asked the board what assurances it could give to respond to the negative impacts of Bumi plc's mining operations in Indonesia, such as environmental and social destruction and labour issues raised at the previous Annual General Meeting. He commented that given the dismissive reception given at the previous meeting, there was little faith that these issues would be seriously confronted and resolved.
Scott Merilees, Bumi's chief financial officer, praised the operations and CSR record of Berau coal (84.7% owned by Bumi plc). In response to this, Andrew Hickman of DTE questioned the board as to the continued lack of transparency in the company's reporting and financial affairs.
Sir Julian Horn-Smith, the meeting's chair, attempted to distance the company from these allegations by saying that they related exclusively to PT Bumi Resources, which was only partly owned by Bumi plc. However, Nat Rothschild, the deposed founding shareholder at the heart of the company's internal disputes, interrupted proceedings in order to point out that Samin Tan, the Bumi plc chairman was also the chairman of Bumi Resources Minerals, with an entitlement to appoint four directors to the board of PT Bumi Resources. Andrew Hickman restated the transparency question, asking when the board of Bumi plc would provide this clarity and whether shareholders could have any confidence that any future board would do any better.
Again Scott Merilees extolled the virtues of the company's operations: how labour relations were untarnished, how Indonesian mining regulation was exemplary, how Berau coal has won plaudits for its corporate social responsibility record. He went on to describe examples of the benefits that Berau had brought to local communities, mentioning a small business owner from whom he bought a pint of milk when he visited the mine once, who had previously been a mine employee. He mentioned support the company had given to local communities, such as helping to set up palm oil plantations. In response, Andrew Hickman commented that the board's ignorance of the labour dispute at the KPC mine[1], where Indonesian security forces were used to violently suppress a strike, was shocking in a London-listed mining company. Even by the standards of other mining companies, Bumi's record fell below the line of acceptability. Maybe it was time for UK regulators to intervene, he said.
Nat Rothschild failed in his attempt to replace the current board of Bumi plc and to rejoin the board himself as executive director. But he did succeed in his attempt to remove two of the directors, including Bakrie ally Nalin Rathod; and one of his proposed additions, diplomat Richard Gozney (former British ambassador to Indonesia), will join the Board. This is evidence of the scale of the revolt against the current leadership of the company. As Reuters put it, the vote “moves attention to the next step in ending one of London's messiest corporate battles - the divorce with the Bakries and separating out part-owned Bumi Resources, which the Bakries had brought into the company.”[2] Indonesia’s powerful Bakrie family is involved in a wealth of businesses in Indonesia including mining, oil and gas, property and plantations as well as national politics.[3]
For further background on Bumi see:
Drama at Bumi misses the point LMN, February 14th, 2013
In the shadow of the scandals surrounding Bumi plc, proposed ethics and human rights amendment to Financial Services Bill 'blocked' Press release by War on Want, London Mining Network and Down to Earth, October 16, 2012
Bumi's lesson: FSA light-tough approach does not work Press release: Down to Earth, London Mining Network and War on Want
2 October 2012.
Bumi falls at first hurdle DTE briefing, 14th June, 2012
Coal giant questioned over deaths, abuse, corruption at first AGM, Press Release by DTE, London Mining Network and War on Want. 14th June 2012.
An Indonesian company on the London Stock Exchange DTE 91-92, May 2012
For further background on KPC and coal-mining in Indonesia see:
Indonesia's coal: local impacts - global links DTE newsletter 85-86, August 2010
[1] Also operated by Bumi Resources – see http://www.downtoearth-indonesia.org/story/bumi-plc-meets-today-london-sort-out-ownership-feud, DTE Press Release, 21/Feb/2013.
[2] See ‘Rothschild defeated in Bumi showdown’, Reuters, 21/Feb/2103 at http://uk.reuters.com/article/2013/02/21/uk-bumi-vote-idUKBRE91K0G920130221.
[3] See An Indonesian company on the London Stock Exchange DTE 91-92, May 2012, and How much land? Snapshots of corporate control over land in Indonesia, DTE 93-94, December 2012 for more background.