Vedanta and Corporate Social Responsibility

April 1, 2012

vedantacsr.jpg

By Shiv Sethi

Recently, the mining giant Vedanta launched a TV advertisement to showcase their ongoing role in social programs that reach and help uplift some of the poorest in India. The main protagonist of the commercial is a girl child named Binno with an infectious smile and dreams in her eyes: to be educated, to be fed adequately at school through mid-day meals schemes, to receive health care, and to become a ‘responsible’ (presumably corporate-world-doting) Indian. The advertisement enthusiastically informs us how Vedanta, in collaboration with the government and NGOs, is helping lift such children from a life of perennial poverty and deprivation. Similar commercials highlighting the role of corporations in funding social causes have also been sponsored by other companies. Is this the new face of corporate social responsibility we are expected to appreciate?

A slightly closer look reveals the fairly obvious fact that corporate social responsibility is an oxymoron. Corporations achieve their bottom line, access to resources at next to no cost and huge profits on investment, by tearing the very social fabric whose tatters they profess to darn in the guise of social responsibility. While this phenomenon has resisted the boundaries of time and space in the past 100 years, nowhere is this fact more evident than in the ongoing rush for mining resources in India by private companies in the past 20 years. Vedanta can claim a place in the front ranks in this plunder.

The rise and rise of Vedanta

Like many rags-to-riches stories, the history of Vedanta is more legend than real. One fact we know for sure is that Vedanta was launched on London stock exchange in 2003, with the backing of investment banking giant J P Morgan. With continual support of international finance, Vedanta managed to raise billions of dollars on international markets, allowing it to expand its mining and refinery operations in India and other parts of the world. Vedanta’s name is inspired by Hindu spiritualism and it is headed by an Indian, but, for all intent and purposes, it is a transnational company based in London.

Currently Vedanta is one of the largest mining companies in India. In 2011, the government of India facilitated Vedanta to take over Cairn Energy’s Indian operations, making it one of the most important diversified mining-energy conglomerates in India. According to Vedanta’s website:

We have experienced significant growth in recent years through various expansion projects for our copper, zinc, lead silver, aluminium, iron power and power businesses. Our Group Revenue for the fiscal year ending 31 March 2011 was US $ 11.4 billion.

From a humble beginning in the 1970s, Vedanta has clearly come a long way. It is one of success stories of neoliberalism in India: a marriage between global finance and local political patronage opening mineral riches of developing countries to the corporate world.

Corporate mining in India: a story of state-sponsored plunder

Deregulation of mining in India since the early 1990s has seen the sharp rise of many distinct but interrelated phenomena: large scale entry, as expected, of private national and transnational companies to exploit the mining resources of India, sharp increase in mining production by both public and private companies [1], and organized resistance of the inhabitants of the regions on an equally large scale.

Governments acquire mining land for public and private companies by invoking the colonial Land Acquisition Law of 1894; this manifestly ‘legal’ measure often involves coercion, staged public hearings, forcible eviction, and negligible compensation. It is not lost on the local communities, who have inhabited the land for hundreds of years, that the invocation of the law of eminent domain against them is a continuation of colonial policies. The resistance to government policies is often met with relentless and brutal suppression.

Private mining companies play an important role in enabling this ongoing land grab. As champions, and some of the main beneficiaries, of neoliberalism they influence policy making at state and central government level. Through such lobbying they ensure that mining companies acquire sub-soil resources without incurring any cost, pay negligible royalty to the government, environment laws are changed or suitably relaxed to allow excesses of mining companies, and state governments take responsibility for and deliver infrastructure needed to enable exploitation of mining resources. And increasingly mining policies in India are enacted by committees headed by representatives of these companies. The financial advantage these mining conglomerates enjoy vis-a-vis state governments can be gauged from the fact that the total revenue of all the states of India from mining royalties in 2011 was around 4500 crore rupees [2] , roughly a billion dollars, less than 1/10 of the revenue of Vedanta. The foregoing might suggest that the mining companies have no need to resort to extra-judicial measures to fulfill their agenda. Nothing could be further from the truth. Even as the laws of the country have galloped after private mining giants to adjust to their variable and ever expanding needs, such is the the dynamism of the sector it has managed to run even faster.

According to the ministry of mines, there were 9415 active mining leases for major minerals (excluding coal) in the country (Annual Report 2010-11, Ministry of Mines). On the other hand, a parliamentary committee on illegal mining identified 14,504 illegal mines in 2005 (for details see [3]). Or the instance of illegal mining is far higher than legal mining in India. As noted by a recent study on mining in India [3]:

“An indication of the scale of illegal mining is that 27,000 cases of illegal mining were reported in the period April-September 2010 alone; in that period, just 900-odd First Information Reports were filed, or about 3 per cent of the cases; the fines realised were just Rs 94 crore (Rs 940 million)”

Vedanta is a worthy member of the fraternity of private sector mining in India

A glimpse of Vedanda’s corporate practices in India

Vedanta is involved in bauxite mining and refining in Eastern India. These operations came under the scanner of a government of India appointed committee, Saxena committee, in 2010 (the discussion in this section is based on [4]).

In an attempt to win bauxite mining rights on Niyamgiri hills in Odisha, Vedanta funded two Environment Impact Assessments in 2002 and 2006, a concession in line with government’s flexible laws to enable the entry of corporate mining. Saxena committee found these reports to be thoroughly deficient as they failed to take into account the impact of mining on the most crucial resource of the region: water [5]. Saxena committee, while recommending the rejection of Vedanta’s proposed lease, noted “Given that there have been several deliberate attempts on the part of Vedanta Alumina Limited to conceal information and falsify it in order to get the project approved, withdrawal of approval of the project as a result of the above would thus appear to be the most appropriate action at this stage.”

The Saxena committee found Vedanta’s operating aluminium refinery to be in illegal occupation of 26 hectares of forest land and in blatant violation of pollution regulations. The committee noted that the refinery had proceeded to expanded refining capacity without adequate clearances

“in complete violation of the EPA and [which] is an expression of the contempt with which this company treats the laws of the land.”

If this was not enough, only 3 of the 14 mines that supply bauxite ore to the refinery have environment clearances, leading the committee to observe that

“the refinery is in violation of the MoEF condition of sourcing bauxite from mines with environmental clearance, and instead is sourcing bauxite from illegal mines that do not have such clearance.”

In the face of fierce resistance of the Dongria Kondhs and other inhabitants of the region, the central government was forced to reject Vedanta’s requisition to mine in Niyamgiri hills. However, the company did not have to face the consequences for violating almost every law of the land in its operations in Odisha. In less than a year after the Saxena committee report, the central government in fact moved to reward Vedanta by brokering a deal that allowed Vedanta to take over Cairn Energy in India.

Clearly there is little private corporations cannot get away with in the new and shining neoliberal India.

Corporate social responsibility

Private corporations and government bodies in India are in some kind of a symbiotic embrace: the former feeds off the latter to become even stronger while enervating the latter. The massive concessions and subsidies the state and central governments offer private mining in India have enabled these corporations to assume such mammoth proportions, they have begun to resemble a parallel government in the mining areas.

And these corporations duly act to assume this new role thrust upon them, something akin to ‘White man’s burden’ of the colonial era. Like in the colonial era, naked self-interest is portrayed as universal social responsibility.

Their social responsibility takes myriad forms. Sometimes they directly fund armed counter-insurgency to quell peoples’ revolt, e.g. the funding of Salwa Judum by steel companies Tata and Essar, as noted even by a report of the ministry of rural development. Salwa Judum was directly involved in forced eviction and burning of nearly 700 villages in Dantewada district, Chattisgarh between 2005 and 2007. By various estimates, this act displaced nearly 30% of the population of the district, destroying their habitat and means of livelihood. Salwa Judum has also been implicated in multiple cases of rapes and murders. The Supreme Court ordered the state government to disband Salwa Judum and rehabilitate the villages. As things stand, none of these orders have been acted upon and no member of the organization or their sponsors in the state government or the corporate sector have been brought to justice, even as thousands arrested on charges of practicing or supporting violence against the state languish in jails and await judicial trials [6]. Tata is one of companies that have sponsored commercials to highlight their investment in social programs in India [7] .

Corporations do not just move to fill the vacuum created by the state’s abdication of social responsibilities in the neoliberal era, they in fact help create that vacuum. And it is a vacuum in which notions like social entitlements are things of the past. Surely, socially disadvantaged groups such as the tribal communities of Dantewada district, subject to displacement destroying their social cohesion, constant threat, and subjugation cannot so easily demand social entitlements. They find themselves at the mercy and the goodwill of government and corporate bodies, the very organizations largely responsible for their present plight.

In the neoliberal era, a reference to social responsibility, be it by government bodies or the corporate sector, is the name of generalized charity offered to the victims of the past (or impending) assault. This charity, which might take the form, for instance, of the expansion of public distribution system in Chhatisgarh by the government or Vedanta funding universities [8] and hospitals, also serves to divide the ranks of potential dissenters.

Corporate social responsibility is a deliberate ploy to counter, fragment, control, and re-channel peoples’ resistance, against corporate takeover of community resources, by means other than direct violence or its explicit threat. At one level, it is a business investment to pacify a section of middle class, civil society, and state bureaucracy which tends to sympathize with peoples’ cause against resource plunder. At another level, it is partial usurpation of essential functions of the state to embed corporate practices deeper into the structure of the society. It should be noted that all the social acts being portrayed in the Vedanta advertisement are traditional functions of the state: education, health services, mid-day meals scheme for children, etc. It should not be forgotten that so long as corporates act as, and are perceived as, outsiders plundering resources, their social base remains extremely narrow. Their expulsion from a region evokes euphoria and not a sense of lose. However, once they become guardians of essential social functions, they ensure their longevity in the region. In other word, they achieve the status of a corporation that is too-big-to-fail, the ultimate aim in the corporate world. In perpetuity, they expect, and gain the favour of, governments of different political hues to bestow them with favourable laws, direct subsidies, and other forms of largess.

Behind Binno’s smile is buried the deep anguish of the tragedy of inhabitants of mining areas of central and east India. This smile might represent a ray of hope for a small section of urban dwellers who themselves are beneficiaries of neoliberalism. But communities targeted by such measures know such gestures do little more than adding insult to injury.

I thank Partho, Debarshi, and Pinaki for useful comments.

Notes:

[1] see e.g. http://sanhati.com/excerpted/4697/, Figure 4. It is difficult to dis-aggregate this sharp increase in mining into public and private components because this is also the period in which a large number of public mining companies were privatized, e.g. Hindustan Zinc Limited, the second largest Zinc producer in the world, was a publically owned company. In 2002, its majority shareholding was sold to Vedanta. It is currently a subsidiary of Vedanta Resources PLC.

[2] e.g. http://articles.economictimes.indiatimes.com/2011-12-07/news/30486129_1_cr-royalty-mining-cos-mining-firms

[3] http://www.rupe-india.org/51/proposal.html

[4] see e.g. http://sanhati.com/excerpted/2754/ for a summary of Saxena committee report

[5] Niyamgiri hills are essentially composed of Bauxite. Being a highly porous rock, Bauxite has a large water retention capacity. Therefore, Niyamgiri hills form an aquifer for fresh water which feeds five rivers in the region. Mining on the hills will destroy this semi-perennial water source and even affect communities living hundreds of kilometers away.

[6] see e.g. http://sanhati.com/articles/4718/ for the situation in Jharkhand

[7] http://sanhati.com/articles/4085/ for a discussion juxtaposing corporate acts of steel giant Tata in Kalinga Nagar in Odisha to their professed role in social responsibility

[8] Vedanta university is a proposed 15000-crore project of Vedanta Foundation which was granted 6000 acres of land in Puri by Odisha government and cleared by MoEF in April 2010. Less than a month later, the conditional environmental and Coastal Regulatory Zone clearances were cancelled and kept into abeyance for an indefinite period. In March 2012, National Green Tribunal ruled in favour of Vedanta.

1 Comment »

One Response to “Vedanta and Corporate Social Responsibility”

  1. rahul Says:
    April 18th, 2012 at 1:37 am

    Noamundi earns ‘ideal mine’ tag from central panel – The shah commission praised Tata Steel’s operatng system at the Naomundi mine in west singhbhum.
    Also the commision called it as idea mine in that region.

    For more information please do visit any of the following link..

    http://www.youtube.com/watch?v=0eU4T1MJhco

    http://www.flickr.com/photos/webmaster2012/6942079326/

    http://masterdt.wordpress.com/2012/04/17/tata-steel-in-the-media/

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