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Time for business ethics to take a front seat

Time for business ethics to take a front seat
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First Published: Wed, Mar 03 2010. 09 41 PM IST

Updated: Wed, Mar 03 2010. 09 41 PM IST
Attention over the annual circus that is the Union Budget diminished attention on another circus: mining.
For the mining sector, the news this past month was clearly the shedding of Vedanta Resources Plc. stock worth $5.9 million (Rs27.08 crore) by the Church of England. The Church said in early February that it wasn’t satisfied that “…Vedanta has shown, or is likely in future to show, the level of respect for human rights and local communities that we expect of companies in whom the Church investing bodies hold shares”. Vedanta stock on the London Stock Exchange is yet to recover from that denouncement of its practices at and around Niyamgiri Hills, the site in Orissa from which a subsidiary plans to mine bauxite ore to feed its 5 million tonnes per annum aluminium plant.
Company officials have since released full-page advertisements in Indian newspapers to claim that the project benefits locals, displaced and otherwise, among the poorest in the world. Such ads have also claimed that aluminium is the “only replacement for wood to save our forests and planet”, a statement unlikely to enthuse scientists and protesters alike.
While it isn’t perhaps the most restful of times for Vedanta, the recent flurry of official statements as to mining in general and mining in conflict areas in particular—areas of Maoist rebel influence—is astounding.
Barely days after the news of Vedanta stock being sold by the Church of England, on 9 February, the Financial Times of London published a statement by home minister P. Chidambaram saying, “We are willing to suspend all memorandums of understanding (with mining companies) until we talk to the Communist Party of India (Maoist) and review them.” The minister had uncharacteristically acknowledged a key rationale for Maoist agitprop and recruitment in ore-rich Jharkhand, Orissa and Chhattisgarh that a mixture of business and politics is steadily depriving forest-dwelling and rural folk of their habitat without adequate recompense; and Maoist rebels protect the interests of the disinherited and downtrodden.
Towards the end of the month, Chidambaram’s colleague, environment and forests minister Jairam Ramesh, slammed the governments of Goa and Karnataka for issuing mining leases without clearance from his ministry, and also announced that his ministry would review projects by Vedanta and another iron ore and steel project, also in Orissa, by South Korea’s Pohang Iron and Steel Co., or Posco. The heightened pitch drove a major transnational bank to include as queries at a briefing session for investors in Mumbai: “How significant is the threat of Maoism? Is it still just a ‘red corridor’ or is it bigger? Could it derail the India growth story? Is it a front by MNC (multinational company) metal firms via NGOs (non-governmental organizations) to stop Indian competitors from increasing domestic mineral production?”
My answer there was the same as it is here. The Maoist presence is significant. It is bigger than signalled by the obsolete phrase “red corridor”. This and other local conflicts have the potential to hamper India’s growth. And, Maoists are not a front by MNC metal firms to trip Indian businesses, or by Indian firms to trip one another or those from overseas.
That’s the easy part—the acquiescing or denial of such theories. More difficult is to gauge the face value factor of utterances by Chidambaram, Ramesh and their colleagues, among them the minister for mines B.K. Handique, who has gone as far as to declare that miners, present and prospective, should pay more to the displaced and ensure better rehabilitation.
My estimate is that it won’t amount to much. Mining is too ripe a plum to not be plucked by economic and political interests. Statements by ministers have the flavour of talk-is-cheap rhetoric, not impending policy or a reformist do-it-or-else scenario. Moreover, there is little indication that the Centre and Maoists are close to a negotiated ceasefire despite drumbeating by both sides. The ludicrous exchange in the last week of February, when the home minister demanded a Maoist ceasefire offer be faxed to him, only to be given a mobile number by a senior Maoist leader—expectedly, nothing came of it—merely exposed the inopportunity for talks.
And so, it will be up to activists and the media to pressure businesses into being good corporate citizens that subscribe to smart ethics. They might score sometimes, as with the Church of England moving to dump Vedanta stock in a public washing of hands. But more often, such action will mean little in the face of a political environment in India that readily permits corporate absolution.
Sudeep Chakravarti writes on issues related to conflicts in South Asia. He is the author of Red Sun: Travels in Naxalite Country. He writes a column alternate Thursdays on conflicts that directly affect business.
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First Published: Wed, Mar 03 2010. 09 41 PM IST