Corporate Dec 19, 2012
Earlier this month Vedanta Aluminium Limited (VAL) announced it was closing its Lanjigarh refinery in Odisha.
VAL's chief executive officer told the Hindustan Times, "Despite out concerted efforts over the past three months to ensure sustainable supplies of bauxite for our refinery in Lanjigarh, we have not been able to find any solution."
The company said in a press release that the closure would affect 7,000 people directly or indirectly. Vedanta says the state government is not keeping its promise to provide bauxite linkage to the refinery.
"The bogey of job losses is meant to blackmail the central and state government and influence the court," social activist Prafulla Samantara told HT. According to Business Standard, the state government has started the process of identifying prospective alternative bauxite deposits for Vedanta now that Niyamgiri is out of bounds.
Does that mean Vedanta, whose mining practices have long been the target of activists, is in big trouble? Or that the activists have won?
Not so fast. An Open Magazine article (worth reading in its entirety here) says the government versus Vedanta case is a lot murkier than it would seem from the tit-for-tat press releases and official statements.
The Ministry of Environment and Forest did withdraw its clearance for bauxite mining in Niyamgiri after an international campaign against it. The ministry also came down on Vedanta for violating ecological norms and expanding the refinery without an environmental clearance.
But, says Open, "no explanation was offered for the ease with which the MoEF let the project go ahead in the first place."
That story is the real story that gets people up in arms about how much a Walmart spends lobbying India to get into the market. It's not that the lobbying is illegal but the sense is that the company-politician nexus is a juggernaut that will ride roughshod over everything else. A Vedanta setback is just a temporary blip. In nine cases out of 10, Big Business gets its way. And the perception is that when it does not, it's not because the government was on its toes, but because it was embarrassed into doing its job.
So it's a little hard to take at face value the current scuffle between Vedanta and the Odisha state government as anything but a lovers' tiff. Odisha is demanding that Sterlite Energy Ltd (SEL), a Vedanta company, deposit its contribution to the Odisha Environment Management Fund immediately, writes Business Standard. Meanwhile Vedanta is applying the screws on the Odisha government for not paying Rs 744 crore dues for power supply from SEL.
Despite all the bad press, Vedanta is happy to play the good Samaritan. On World AIDS day on 1 December, it kicked off an AIDS awareness campaign at Jharsuguda. At Lanjigarh itself it held a free camp for cleft lip and palate surgery. "This is a noble initiative," Dr Mukesh Kumar, the president and COO of VAL, said. "Vedanta hospital will continue to serve the people of the region." The Vedanta Foundation and the Odisha state government just signed an MoU for an e-Shiksha project that will help students in tribal areas get LED Pico projectors with memory and backup.
But Open Magazine says that's not enough. Its reporter found that the company has tried to build consensus through blank pieces of paper. It claims 3,000 villagers have supported their project. Open found a video that showed residents of the village being asked to put their thumb impressions on blank sheets of paper at a meeting organised by the local Block Development Officer, the village Sarpanch, Tehsildar and Vedanta's law officer.
In a situation where the state politicians and police are in bed with the company (and the centre is acting partly because an opposition party is in power in Odisha) anyone who speaks out does so very much at his own peril. The local journalist who took that video says he fears every day he will be branded a Maoist and thrown into jail. People fighting for compensation or refusing to give up their land have had dacoity charges slapped on them already.
That's easy to imagine happening because as Arundhati Roy explained in Outlook, the collusion between a company like Vedanta and powers that be is deep and entrenched. P Chidambaram was a non-executive director of Vedanta till he became the finance minister in 2004.
What are we to make of the fact that, when activists from Orissa filed a case against Vedanta in the Supreme Court, citing its violations of government guidelines and pointing out that the Norwegian Pension Fund had withdrawn its investment from the company alleging gross environmental damage and human rights violations committed by the company, Justice Kapadia suggested that Vedanta be substituted with Sterlite, a sister company of the same group? He then blithely announced in an open court that he too had shares in Sterlite.
This is not just a jholawallah critique from the Arundhati Roys of the world. Even Ratan Tata is speaking out about crony capitalism. As Gurcharan Das points out in his new book India Grows At Night:
Indubitably the 1991 reforms have unleased business enterprise and this has done a lot of good in lifting the millions out of poverty and into the middle class. But it has also given greater freedom to 'robber barons', as it did in the United States at the turn of the nineteenth century... Because many sectors of the economy have not yet been reformed India has increasingly moved to a disturbing situation where large business groups enjoy excessive power."
Vedanta complains the media is biased against it and never presents its side of the story. The story of Vedanta deserves attention not because it's about tribal lands or that the Dongria Kondh people regard the hills as their living gods. It's because when the state is weak and corruptible, every company just assumes that it pays to be a robber baron.
In a video obtained by Open when asked by an engineer if they had taken permission to raise the heights of certain embankments, a company rep airily says the company rarely does that. Work is done first and permission taken later.
That about sums it all up.
Read the Open report on Vedanta here.