It cannot have come as a surprise that the Lundin Petroleum AGM rejected the proposal to investigate the company’s activities in Sudan and Ethiopia ten years ago.
Company shareholders’ meetings are not democratic gatherings in the sense of one person, one vote; at company AGMs it is capital that decides, just as in the Grand Hotel Winter Garden yesterday. But there is also an ethics in business that has to do with style and respect for other people’s views. That ethics did not apply in the Winter Garden yesterday when opposition shareholders were chastised like fractious toddlers.
The representatives of the institutional shareholders naturally knew what was happening when they went into the meeting, and they had already worked out that they had no chance of gaining any hearing for their proposal to appoint an independent enquiry, so the aim of the demand was presumably a different one, namely to arouse attention to the question of the company’s activities in Sudan and Ethiopia.
That aim was achieved, but the question is whether company shareholders meetings really are the right forums for actions of this kind, which chairman Ian Lundin also showed with anger and arrogance.
The risk is that shareholder demands that do not have a chance of being accepted by the majority merely taking a symbolic swing which rather achieves the opposite effect on public opinion and among other shareholders. It may be fun to annoy company management, but it is by and large pointless.
Today there are Swedish companies represented in practically every corner of the globe, in countries run by regimes that we Swedes, on the basis of our values, sympathise with and those we dislike. How companies then act is governed by a code of conduct that is in the public domain and that can be studied by the shareholders and other interested parties in the same way as one can study the company’s financial reports.
On that basis it is impossible in every situation to maintain control over how the company acts locally or guarantee that its products are used in an ethically satisfying manner. Some years ago Sandvik and Atlas Copco were accused of unethical business because they had sold mining equipment and spare parts to mining companies who did not conduct themselves properly in those countries where they were running their mines.
In all industrial activity different kinds of risks are involved which as shareholders one must decide about when one invests one’s money, including political risk and what one might call ethical risk. Certain companies work with small risks whilst others, who are often the ones providing the best returns, take great risks.
Among these is Lundin Petroleum and at least the major shareholders were aware of this when they invested their money in the company; this is not to say, on the other hand, that they give companies of this type the right to act in an unethical manner. On the contrary, it is even more important that there is an ethical code in place, that this is reviewed and that the revision is then studied by the AGM.
If it is possible to draw any conclusion from the Lundin Petroleum AGM, it is that dissatisfied shareholders should ensure that they have a majority of the votes at the AGM behind them in those cases where they wish to challenge the board.
The company management and board should, on their part, consider why they are a publicly quoted company. This means, among other things, that they should be open and prepared to be the subject of critical review and be criticised by other shareholders, who, what is more, have the right to have their say and to be treated with respect.