Bumi board continues to ignore concerns about coal impacts in Indonesia

At the Bumi EGM, February 21st, London (Photo:DTE)

DTE Briefing, 22nd February, 2013

Shareholders from Down to Earth, London Mining Network and War on Want attended Bumi plc's meeting in London yesterday to question the company about the devastating impacts of its coal-mining operations in Kalimantan. The current Bumi board, facing a revolt by shareholders led by Nat Rothschild, 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 refute this attempt at disassociation, by pointing out that Samin Tan,the current 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. By this point, even the meeting chairman was looking embarrassed.  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.
To remind the board of its dismissive and completely inadequate response to questions raised at the 2012 AGM, Richard Solly of London Mining Network, asked the board what measures the company would take to make itself aware of comments and criticisms made of its activities in the public arena, on the internet and in the media.  Some dogged persistence at the microphone by Richard Solly bore fruit when his comments were reluctantly accepted by Sir Julian Horn-Smith.  A sign that perhaps, at last the leadership of this company was beginning to take note of what its critics in the NGO community have been saying.

Note: 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 (a 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 more reports see today's posting by LMN: At the battle of Bumi, pyrrhic victory as Board still refuses to face the truth

[1] Also operated by Bumi Resources – see Bumi plc meets today in London to sort out ownership feud, DTE Press Release, February 21st, 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