TORONTO, June 28, 2012 /CNW/ - Trade unions representing Xstrata and
Glencore unionized workers across the world are opposing the proposed
merger of the two companies, including the extreme retention bonuses
being paid to Xstrata management.
"Regulators must consider breaking up these companies rather than
allowing further concentration and abuse of power," said Ken Neumann,
United Steelworkers (USW) National Director for Canada.
The USW is one of several unions affiliated with the 50-million member
IndustriALL global labour federation that oppose an Xstrata-Glencore
merger. IndustriALL members argue Xstrata and Glencore are major
examples of the 'resource curse' in which corporate exploitation of
natural resources leads to a lower relative standard of living for
people whose land is being exploited.
"Trade unions have frequently had very difficult relations with these
two companies and their intended merger can only magnify these problems
as the combined entity will become one of the mega-corporations
dominating the global resources sector," Neumann said.
"These corporations are increasingly distant from the operations they
own and manage, and from the communities affected by those operations."
Glencore leads the way in this regard because of its greater history of
secrecy and lack of transparency as a Swiss-based private company,
Trade union problems with Xstrata are well-documented.
Broken employment commitments in Canada after the takeover of Canadian
mining company Falconbridge.
In Australia there is an unresolved complaint under the OECD Guidelines
for Multi-National Enterprises concerning the company's effort to
destroy collective bargaining and reduce working conditions at its
operations. The company refused to participate in mediation procedures
provided under the Guidelines and is therefore in continuous breach of
the Guidelines to this day.
In South Africa Xstrata's effort to achieve a merger with Anglo American
were denounced by the National Union of Mineworkers because of the
company's poor record in industrial relations.
The Australian union complaint under the OECD Guidelines also covered a
major area of concern for shareholders - the anticompetitive marketing
arrangements with Glencore that provided that company - also Xstrata's
largest shareholder - with benefits not matched with those for other
Unions also note that Xstrata is subject to a further OECD Guidelines
complaint in Argentina.
With respect to Glencore, unions share widespread, grave concerns about
the company's conduct in many developing countries where weak
governance appears to give the company opportunities for dubious
dealings. The most recent examples include the findings of an
investigation by the international organization Global Witness into
mine asset purchases in the Democratic Republic of the Congo (DRC). As
well, a BBC investigation into Glencore's DRC operations found evidence
of child labour and extreme water pollution.
Recent research published in the journal Foreign Policy shows that
Glencore's fundamental business model relies on operations in weak
governance zones where public scrutiny and transparency are frequently
absent. The list of countries in which Glencore has been accused of
poor conduct include Colombia, Equatorial Guinea, Ivory Coast and
Zambia in addition to the DRC, the research indicates.
Glencore also stands accused by the global civil society network Publish
What You Pay of extreme financial engineering to reduce its tax
payments far below the level it should pay. Publish What You Pay says
that Glencore's effective tax rate is as low as 9.3 per cent, in large
part because many of its subsidiaries are located in "secrecy
Xstrata's corporate governance has been routinely challenged as
problematic for many years, with multiple, strong protest votes
concerning the company's excessive remuneration for top management.
There has also been the issue of the lack of an independent chairman,
with Glencore Chairman Willy Strothotte also chairing Xstrata for many
years. The two companies only belatedly fixed that problem when
Glencore moved to become a public company; Sir John Bond was appointed
as an independent chairman only in May 2011.
In the current merger proposal between Glencore and Xstrata, the top
management of Xstrata is to receive £240 million (about US $375
million) in so-called retention payments of which Chief Executive Mick
Davis is to receive £29 million (US$45 million). All without
performance hurdles; just for continuing in their jobs for which they
are already extremely well-paid.
Those who actually produce the wealth for Xstrata and Glencore - the
workers who toil in remote, harsh environments and deep underground
mines - are to receive nothing, while their bosses intend to bathe in
wealth beyond their wildest dreams.
Unions commend those of Xstrata's shareholders who have publicly
criticized the grossly unjustifiable retention packages to Xstrata
Unions say that Xstrata and Glencore are already too powerful in world
resources, especially given their poor track records. Further
concentration of power in the hands of those already known for their
propensity to exploit workers and bully governments can only lead to
Competition and corporate regulators should consider doing the opposite
of what Glencore and Xstrata propose; regulators should break up the
companies into smaller units so that their capacity to manipulate and
abuse markets, governments and workers is reduced.
Unions opposing the planned merger and who represent workers at Xstrata
include the Construction, Forestry, Mining and Energy Union (CFMEU) in
Australia, the United Steelworkers (USW) in Canada and the National
Union of Mineworkers (NUM) in South Africa.
SOURCE United Steelworkers (USW)
For further information:
Ken Neumann, USW National Director for Canada, 416-544-5990.
Joe Drexler, USW Strategic Campaigns, 416-434-7907, firstname.lastname@example.org
Bob Gallagher, USW Communications, 416-544-5966, email@example.com