|JATAM - Mining Advocacy Network|
|Press release: Down to Earth, London Mining Network and War on Want|
In March of this year, the London Mining Network (LMN) issued a report (3) outlining these issues with case studies of various mining companies, including Bumi plc. At the company’s AGM in June of this year, shareholder activists raised the impacts and transparency of the company directly with the board, but their concerns were dismissed out of hand.
Press release: Down to Earth, London Mining Network and War on Want
Date: 2 October 2012.
Bumi’s lesson: FSA light-touch approach does not work
The announcement (1) of the UK's new Financial Services Authority (FSA) rules on reverse takeovers (2) and other regulatory 'blind spots' is yet another case of too little too late. Light-touch regulation of London-listed companies has for years allowed companies like Bumi plc and individuals associated with them to mislead investors and the public over the real impacts of their activities.
LMN has been lobbying government to strengthen the powers of the proposed new regulatory body, the Financial Conduct Authority (FCA). LMN wants the government to ensure that malpractice such as that which is alleged to have occurred in Bumi plc and its constituent companies is permanently excluded from the London financial markets. The FCA must have robust powers to monitor and penalise the behaviour of any UK listed company in order to ensure respect for international human rights and environmental standards.
The new head of the FCA, Martin Wheatley, has called on the financial authorities “not just to be ticking boxes, asking if people have been following the rules, but to be looking at outcomes and at what's going wrong and then taking action”. Andrew Hickman, from LMN member group Down to Earth, challenges Martin Wheatley’s power and willingness to prove that the FCA is more than just a box ticking regulatory body. “We call on regulators to look again at the issue of the listing, disclosure and transparency of mining companies, who are using the public's money – through pension funds(4), High Street banks and insurance companies – to fuel environmental and social abuse in Indonesia and elsewhere. In the case of Bumi's coal operations, this includes damaging local impacts as well as global impacts through the export of power station coal, contributing to greenhouse gas emissions, while many local communities still have no electricity (5). Companies like Bumi plc should be banned from operating out of London.”
Andry Wijaya, Coordinator of JATAM (the Indonesian Mining Advocacy Network) said: “We are shocked that so much attention is being paid to financial irregularities within Bumi plc and PT Bumi Resources, compared to the little attention being paid to tens of thousands of people affected by these companies’ activities in Indonesia. To this day, victims of the Lapindo mudflow disaster are still waiting for compensation from the Bakrie family, who are so heavily involved in the company (6). Striking workers at Bumi’s KPC coal mine have suffered at the hands of Indonesian security forces allied to company managers and Indonesian coal continues to be bulldozed from the forests of Borneo at a rate that threatens the livelihoods of those who live around the mine and those beyond through greed-fuelled trading in coal.”
Graciela Romero from War on Want said: “As it stands currently, the priority of the UK Listing Authority is ‘to protect investors in listed securities’. The new rules must emphasise the protection of communities, workers and the environment that are affected by listed companies. The Bumi plc case is just the tip of the iceberg of a business culture of impunity, which is based on complicity between regulators and companies in the London Stock Exchange and other major financial centres.”
For more information please contact:
Andrew Hickman, Down to Earth
Graciela Romero Vasquez, War on Want
Richard Solly, London Mining Network
2 A reverse takeover or reverse merger (reverse IPO) is the acquisition of a public company by a private company so that the private company can bypass the lengthy and complex process of going public. - taken from "Investor Bulletin: Reverse Mergers". (U.S. SEC Office of Investor Education and Advocacy, June 2011, http://www.sec.gov/investor/alerts/reversemergers.pdf.)
3 UK-listed mining companies and the case for stricter oversight, http://londonminingnetwork.org/docs/lmn-the-case-for-stricter-oversight.pdf
4 Some pension funds automatically invest in the top 100 companies on the London Stock Exchange, meaning that they sometimes invest in companies about whose behaviour they have significant concerns.
5. See: http://www.downtoearth-indonesia.org/sites/downtoearth-indonesia.org/files/85-86.pdf
6. The Bakrie family are controlling shareholders of PT Bumi Resources (29% owned by Bumi plc) and founding shareholders of Bumi plc.
Further information about Bumi
Down to Earth’s analysis of Bumi’s record and recommendations for change in regulation by the listing authority in the UK can be found at http://www.downtoearth-indonesia.org/story/indonesian-coal-company-london-stock-exchange.
London Mining Network’s recent coverage of Bumi is at http://londonminingnetwork.org/2012/09/bumi-we-said-so-didnt-we/.
For further reflection in Bumi’s record, see The Indonesian mining scandal at the heart of UK capital at http://www.minesandcommunities.org/article.php?a=11759 and From Burke to Bumi – an Indonesian scandal at http://www.minesandcommunities.org/article.php?a=11939.
Further articles about Bumi are available at http://www.minesandcommunities.org/list.php?r=1949.
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