7th June, 2016. On Friday 27th May the Hon Mr Justice Coulson published his judgment on the jurisdiction hearing between 1,826 Zambian villagers and Vedanta and it’s Zambian subsidiary KCM which took place in April in London, finding in the villagers’ favour that their case demanding compensation for personal injury and loss of livelihood due to gross pollution could be heard in the UK. The judgment (which can be downloaded at this link: KCM Coulson Judgment May 2016) is an indictment of KCM’s financial secrecy, historic dishonesty and attempts to pervert the course of justice, detailed in this article. To those of us experienced in legal cases against some of Vedanta’s Indian subsidiaries this does not come as a surprise but fits with the pattern of corruption and deception which Vedanta has become famous for.
This is a great victory in the preliminary stages of this major case against Vedanta and KCM for knowingly causing gross pollution from 2005 (just after they acquired KCM) to the present day. Our previous article details the shocking living conditions of thousands of villagers whose water sources have been chronically polluted causing sickness, poverty and even death. Video testimonies from some of the claimants and victims detail how people have ‘collapsed and died’ as a result of prolonged exposure to high levels of contaminants (as scientific papers attest).
The judgment exposes the secrecy and opaque nature of KCM, which, it reveals, has not filed any annual accounts in accordance with the Zambian Companies Act. Justice Coulson reports that the claimants’ lawyers had ‘searched for KCM’s accounts in Zambia, to very little avail’. Foil Vedanta has also been demanding that KCM’s annual reports and accounts are made public through our protests and reports since 2014.
The reasons KCM might want to hide its financial position were also explored by the court and Justice Coulson refers to the case of Konkola Copper Mines Plc v U&M Mining Zambia Ltd heard in the London Court of Arbitration in 2014 in which Justice Eder found that KCM was close to bankruptcy and ‘may not be good for the money‘ (in that case $55 million owed to their contractor U&M). The case cited reports by Grant Thornton and the Auditor General of Zambia which sought to reconcile Vedanta boss Anil Agarwal’s private claims that KCM made $500 million per year, with KCM’s loss making claims in Zambia. The reports found evidence of multiple tax evasion and capital flight devices used by Vedanta-KCM along with asset stripping and failure to invest any CAPEX as claimed. Alongside other evidence including ‘ministerial statements about the threat of insolvency, bankruptcy or receivership facing KCM and the existence of at least one debt of $30million which went unpaid‘ Justice Coulson concludes that:
‘I would be wrong to ignore the possibility that, if the litigation was conducted in Zambia, Vedanta/KCM could seek to strike it out, or if they lost at trial, Vedanta might put KCM into liquidation in order to avoid paying out to the claimants. The history of the U&M case demonstrates that these are possibilities which cannot be ignored.’
We have also warned Zambians of the distinct possibility that Vedanta may liquidate KCM, leaving an asset stripped resource, and huge liabilities including unpaid debts and the long term effects of pollution behind for the Zambian government to deal with.
The judgment also casts serious doubts on KCM’s honesty and the honesty of its witnesses noting that:
‘the U&M judges had rejected the evidence of Mr Pratap, KCM’s business controller and principal witness, as dishonest; and there was also a finding of dishonesty against Mr Ndulo, the senior legal counsel employed by KCM. This is of direct relevance to these applications because Mr Ndulo has provided statements for the purposes of the present applications.’
Justice Coulson also quotes a scathing ‘collection of criticisms’ by the three judges in the U&M case as evidence of KCM’s obstructive and dishonest approach:
Eder, Cooke and Teare JJ all found that, in that case, KCM had repeatedly acted in a dishonest and unjustified manner. Those findings are in uncharacteristically strong terms. The collective view of the judges was summarised by Teare J when he said of KCM that they were:
“…an entity which has employees willing to give untrue evidence, to cause unnecessary harm, to be obstructive of the arbitration process and to take untenable points with a view to delaying enforcement…a party willing to do all it can to prevent the other party from enforcing its legal rights.”
Further, Justice Coulson points to KCM’s attempts to delay and pervert course of justice in several cases, quoting Justice Musonda’s assertion in the 2011 High Court of Zambia case of Nyasulu and others verses KCM (the precursor to this UK pollution case) that KCM “was shielded from criminal prosecution by political connections and financial influence”, and notes the ‘rather baffling’ (to him) reversal of the damages awarded in 2011 damages when the appeal to that case was heard in the Supreme Court of Zambia in 2015. Foil Vedanta have also detailed evidence of corruption and miscarriage of justice in the Nyasulu and co water pollution case.
In the U&M case Justice Coulson notes KCM’s determination to delay proceedings and refuse to pay debtors despite their rightful claims:
‘there was a revealing statement in those proceedings by the executive director of the mine who said that, although KCM acknowledged that they had failed to pay sums that were due to the claimants in that case, they “would hold on to the money to the end of the dispute, which it would fight bitterly, no matter how long it took, including in Zambia where proceedings would take many years.”’
As a result Coulson highlights ‘the evidence that KCM will be likely to prolong the case if at all possible’ as a key reason why they should be trialled in the UK where attempts to pervert or delay justice will not be as available to them, or as effective.
The judgement also reveals Vedanta’s deceptive claims about their Corporate structure. While in their much heralded CSR report Embedding Sustainability they note that oversight of all Vedanta’s subsidiaries rests with the Board of Vedanta, and even mention issues with water quality in Zambia claiming that “we have a governance framework to ensure that surface and ground water do not get contaminated by our operations”, they argued in the London court that Vedanta (the only London registered aspect of the business) only have nineteen staff, eight of whom are Directors:
‘Vedanta are simply a holding company with very few staff and no mining expertise, whilst KCM is licensed to and operates the mine. They say that Vedanta had no knowledge of KCM’s systems of work and that Vedanta had no knowledge that KCM was relying on it to protect the claimants, because it was KCM who possessed the relevant expertise.’
Justice Coulson rightly points out that Vedanta is a very wealthy holding company which has profited millions annually from KCM and as a result should definitely be included in the claim.
He goes on to detail evidence that access to justice is very minimal in Zambia, noting the prohibitive dearth of lawyers and lack of legal aid, stressing that he does not wish to make a ‘colonial condescension’ but justifying the UK jurisdiction of the case in question. Bizarrely, to back up KCM’s assertion that the claimants would have access to justice in Zambia, KCM have themselves been looking for a lawyer for the victims, but the judgment notes that they have been unsuccessful as the only lawyer they could identify would not be able to undertake the case due to lack of expertise and standing, as well as his lack of will to fund the case himself. Even James Nyasulu and co’s previous lawyer Mr Shepande is quoted saying that he only took on their pollution case at the Supreme Court appeal hearing “primarily because the claim was almost at an end and I was hopeful that I would be paid in full at the end of the case”. With this in mind it is perhaps not surprising that justice was not done.
James Nyasulu gave this reaction to the judgement:
“This judgment confirms my pleadings in our 2007 High Court case that KCM would use all the money and political influence at their disposal to stop any action against them. It brings shame on Zambia that our judiciary and legal profession have been more interested in making money from these multinationals than getting justice for poor Zambians who are left with poverty and pollution. Even the highest courts in Zambia are extremely corrupt as we have discovered when KCM’s own lawyer Albert Wood was appointed as a Judge in our Supreme Court hearing. It was only through written complaints on this conflict of interest that he was removed. No wonder most Zambians feel helpless in taking matters to court and believe that the poor will never be protected while the rich, despite any of their wrongdoings, will be. I salute Judge Coulson with all my heart for revealing the truth about our nine year fight for justice against KCM.”
A spokesperson for Foil Vedanta said:
“While it is very easy to put the blame of corruption in the Zambian legal system, we must not forget about the role that is played by World Bank, IMF and the Zambia EITI who never investigated KCM’s non existent accounts. There are a myriad of European funded initiatives such as the Norwegian Government funded Minerals Value Chain Monitoring Project which were supposed to bring transparency in the mining sector, while in Zambia British, Canadian and Swiss companies like Vedanta, First Quantum Minerals and Glencore are pillaging the country at an ever greater rate, sucking out their resources in an unequal colonial exchange.”
The judgment also gives some clues about the arguments Vedanta/KCM will be using in the following hearings. KCM is already making attempts to deny that the victims have documented landownership or rights over the land in question. As we know from multiple cases in India including the Niyamgiri case, denying the rights of long term occupants without proper documentation, or working with local government officials to disappear or deny land deeds is a well used tactic to prevent damage or resettlement claims against the company.
Vedanta have already announced to the press that they are considering appealing this jurisdiction judgement, validating Justice Coulson’s concerns that the case is likely to be protracted and obstructed by the company at every juncture.