Following the accusations, recriminations and resignations surrounding Bumi PLC, and consequent calls by financial commentators for better regulation by the London listing authorities, activists and NGOs are calling on the government to explain to the investing public why it blocked an amendment to the Financial Services Bill which would place a responsibility upon UK regulators to "foster ethical corporate behaviour, including respect for internationally-recognised human rights".
The amendment to the Financial Services Bill, currently being scrutinised in the House of Lords, was tabled by Lord Wilf Stevenson.
However, at the request of Treasury Minister Lord Sassoon, it was withdrawn after the minister made clear that the government does not see vigilance over corporate ethics to be part of the new financial authorities’ remit. A similar amendment was overruled when the Bill was debated in the House of Commons.
The London Mining Network (LMN) says it has demonstrated time and again how light touch regulation of London-listed companies has for years allowed mining corporations and individuals associated with them to mislead investors and the public over the damage that these companies' activities do in the countries where they operate.
In March 2012, the LMN published a report outlining these issues with case studies of various mining companies, including Bumi PLC. It made recommendations for the proposed new Financial Conduct Authority.
However, it is not just civil society organisations calling for better regulation. A recent editorial on the Bumi case by the Financial Times criticized the listing regime and called for a governance clean up of companies “before they list and not after”.
Patrick Kane, Senior Programmes Officer at War on Want for natural resources and conflict, commnted: “We already knew that the reform of the financial sector regulatory system is completely inadequate and won’t stop abuses by UK companies operating abroad. The UK government claims to be committed to ensuring that companies respect human rights and promote sustainable development."
He continued: "The amendment which the government opposed would have been a small step in the right direction, but still a long way from what is required to stop corporate abuses. The fact that the UK government opposed it shows that ministers do not care if UK-listed companies respect human rights and act responsibly here and in other countries.”
Andrew Hickman, of London Mining Network member group Down to Earth, added: “The case of Bumi PLC is a perfect illustration of why the government’s light touch approach to reforming regulation of the financial sector fails communities on the ground. There are numerous examples of abuses associated with Bumi and the Bakries, the powerful Indonesian business family which controls Bumi’s coal mining operations in Kalimantan, Indonesia.
"They include a brutal attack against striking workers at the KPC mine in March this year. Meanwhile ten thousand victims of the Lapindo mudslide are still awaiting compensation from another Bakrie venture on Java. Mere transparency and dependency on shareholder activism is not enough to ensure good corporate behaviour at Bumi. We really need a regulatory authority with teeth, willing to take robust action in cases like Bumi. Instead the government is determined to block even the smallest move towards allowing our regulatory authorities to put respect for ethics and human rightson the business agenda.”
* Amendment 165DA, See: http://www.publications.parliament.uk/pa/ld201213/ldhansrd/text/121008-0...
* 'UK-listed mining companies and the case for stricter oversight': http://londonminingnetwork.org/docs/lmn-the-case-for-stricter-oversight.pdf (*.PDF Adobe Acrobat file).
* Financial Times editorial: 'Fool's Coal', 15 October 2012.
* London Mining Network: http://londonminingnetwork.org