Rio Tinto backgrounder 3

The RIO TINTO Campaign site

BACKGROUNDER No. 3

March 1998

RIO TINTO – THE GLOBAL CORPORATE AGENDA

Rio Tinto, along with many other multinational corporations, holds the view that the 'free market' means trade unfettered by regulations. Multinational companies are lobbying to have many regulations revoked – such as those covering human rights or international conventions which restrict transboundary pollution.

An exampe of this is the Multilateral Agreement on Investment (MAI), which is currently being lobbied for the by the international business community. The MAI will give greater power, but less responsibility, to companies and investment houses operating across the globe. It is to the signed by the 29 member nations of the Organisation for Co-operation on Economic Development (OECD) - including Australia. Environment groups, trade unions, aid agencies and other organisations are lobbying to have the MAI stopped altogether – or amended so that key legislative rights to curb the power of corporations can still be invoked by nation states in which they operate. Many organisations are concerned that the MAI will give unfair advantages to international corporations to the detriment of indigenous and cultural rights, national investors and environmental protection.

However, well before the advent of the MAI many companies were already claiming that many environmental and social regulations impacted on their profits, and were thus "restrictive." These companies claimed such regulations stopped them fulfilling their main responsibility - to increase shareholders dividends. However, in many instances this 'fiduciary' responsibility is used as a excuse for unacceptable corporate activities. It is most important to challenge the motives behind the “profits before everything” policy which is driving some companies. In particular, do these companies have to put increasing dividends before everything else? Most shareholders sign-up in the knowledge that the size of their dividend depends on many factors - e.g. paying for environmental safeguards or cost-of-living wage rises for workers. Shareholders know, therefore, that companies may not always be able to deliver increased dividends. Indeed, many shareholders, when made aware of the tactics companies claim to need to use in order to increase dividends, have either sold their shares or openly expressed their opposition at Annual General Meetings.

It is in developing countries that the unchecked pursuit of profits is often most keenly felt. In such places companies, often aided by corrupt politicians and bureaucrats, operate without any of the checks which should govern corporate `citizens.' It is in some of the developing countries where Rio Tinto is operating, or is a joint venture company, that some of the worst abuses of workers, community and environmental rights have taken place. It is within this context of the pursuit of “profits at any cost” that Rio Tinto's current push to strip away workers' rights to maintain their wages and conditions - through de-unionising its operations - should be viewed.