Rio Tinto 99 AGM Perth questions

The RIO TINTO Campaign

Questions to the Board of Rio Tinto

The following questions were put to the Board of Directors of Rio Tinto at the Perth Annual General Meeting on 27 May 1999 in Perth, Australia. None of the answers were satisfactory.

Salary levels of Executive Directors vs company profits .

Rio Tinto's net profits for 1998 fell by around 40% whilst its Executive Directors enjoyed pay rises of up to 27%. How can the Chair explain the disparity between profit performance and Executive pay rises? What steps will the Board take to ensure that Directors pay only goes up when profits go up?

Health, Safety and Environment Report

At last year's AGM the Chairman promised that the company's annual Health, Safety and Environment report for this year would be released in time for the AGM. How can shareholders fully assess the risks associated with their investments, and question the Board on them, if the HSE report is published AFTER the AGM. Why has it not been released as promised?

Industrial Relations

In the company's statement of business practice entitled "The way we work" it states on page 9, and I quote: "The Rio Tinto groups' policy on human rights is based on its support for the United Nations Universal Declaration of Human Rights".

Article 23.4 of the UN Declaration states that "Everyone has the right to form and join trade unions for the protection of his/her interests." Rio Tinto's statement, The way we work, page 12, states: "employees will have the right to choose whether or not they wish to be represented collectively".

Mr Chairman, my question is: In light of the workers at Hunter Valley No. 1 coal mine voting overwhelmingly on two separate occasions to reject Coal & Allied's non-union agreement, and their repeatedly expressed desire for a union-negotiated agreement, when will Rio Tinto require all business units to negotiate agreements with unions in line with the expressed wish of the relevant workforce?

Record of Proceedings

A large number of shareholders and other stakeholders are interested in the company's policies and performance. But they are unable to attend the AGM. In the company's statement of business practice it says it is committed to transparency in its decision-making. So I request that the company make publicly available the transcript of these proceedings today. Can the Chairman give me that assurance?

Composition of the Board of Directors

Rio Tinto has a majority of its Board of Directors composed of Executive Directors rather than independent directors. When will Rio Tinto implement contemporary standards of good corporate governance by ensuring a majority of independent directors on the Board who can better represent ordinary shareholders' interests?

Public liability

I represent an organisation which has $8 million of Rio Tinto shares. I have read with some concern about the potential legal liability arising from Capper Pass in the UK over contamination from that smelter. There may be a large number of public and workers' compensation cases arising from that contamination. I have also heard that the Dutch Bank ABN-Amro is engaged in discussion with the company concerning its involvement in the Grasberg operation in West Papua, Indonesia. There are well-known major concerns there with respect to abuses of human rights, including extra-judicial killings by the military forces protecting the mine. There is also massive environmental pollution from the mine. What assurances can the Board give shareholders that Rio Tinto is not exposing itself to massive potential liabilities at these and other sites?

Occupational health and safety and the Lassing disaster

The Annual Report makes significant mention of the Lassing mine disaster in which 10 workers were killed. The Austrian minister responsible for mining pointed to illegal mining operations which may have contributed to the disaster. The company has, however, blamed a local manager for the illegal activity. Rio Tinto claims it devolves responsibility for many issues to the site level. How, then, does the Board of Directors keep a check on local managers to ensure they are fulfilling their responsibilities on health and safety? How can the Board be sure that there are not other Lassing disasters waiting to happen in Rio Tinto's portfolio?

Profit reporting

Rio Tinto has chosen to focus on "adjusted earnings" of US$1.1 billion rather than net profits of US$700 million in its annual report. If BHP had reported its figures the same way in 1998 it would have made a profit rather than a loss. Why is the Board placing its emphasis on a profit figure which is NOT determined in accordance with British accounting standards nor the best practice international standards with which BHP feels obliged to comply?

Legal proceedings

It is my understanding that Rio Tinto and its associated companies have legal actions proceeding against it for unquantified damages – potentially many millions, perhaps hundreds of millions of dollars - in countries as diverse as the UK, Austria, Namibia, Indonesia and Australia. In respect of Australia, I understand that the company is in danger of being found to have engaged in the largest unfair sackings in Australian history. Surely these bouts of litigation indicate that something is seriously wrong in the company's conduct of particular operations. What is the company doing to protect shareholders, not to mention the communities it operates in, from the consequences of the management practices which have caused this wave of litigation?

International law

In the last year Australian industrial relations law has been found to be in breach of international treaties on labour rights to which Australia is a signatory. The International Labour Organisation of the United Nations has found Australia to be in breach of two of the seven fundamental labour rights treaties. Rio Tinto, through its senior executive Mike Angwin, actively participated in the drafting of this Australian law. As this law has now been found to be in breach of international law, what steps will the Board take to alter practices at Australian operations to ensure that these businesses, nothwithstanding local laws, comply with internationally-agreed standards and international conventions?

Industrial relations – Gordonstone

In October 1998 the company announced that it would buy the Gordonstone coal mine in central Queensland. The Gordonstone mine has been the centre of both industrial and legal disputes for two years. The former owners Arco had been found to be anti-union, guilty of breaches of industrial law, and to have unfairly dismissed an entire workforce under the guise of closing the mine to effect retrenchments. Those workers had rights by order of the Australian Industrial Relations Commission to be re-employed at the mine should it be re-opened. That order is now subject of legal action.Rio Tinto commenced employing for the mine in November 1998. That recruitment was done clandestinely - no advertisements appeared in any media. It was done contrary to an order of the AIRC. In early 1999, while the sale was finalised, the company refused to talk to the union representing the workers who had been the victims of Arco. The company has now employed an entire workforce and has told the world that 80% of the new employees are former Gordonstone workers. The true facts are that only 10 of the 300 workers who were sacked by Arco have been re-employed. The company has also told the world they were recruiting on merit.

I have 2 questions:

How can the company state that it has recruited on merit when you have never advertised for mineworkers so as to allow the best candidates to apply?
If Rio Tinto believes it has done the right thing at Gordonstone why has the company continued to lie to all and sundry about what it has done?