“Investors have given the board every opportunity to resolve this sensibly and proportionately,” said James Fitzgerald, legal counsel for shareholder activist group the Australasian Centre for Corporate Responsibility. “Now they have been forced to intervene themselves. What does it say that shareholders can see what Rio’s own board apparently cannot?”
Rio Tinto, Australia’s second-largest miner, has faced widespread condemnation from Indigenous land groups, the federal government and wider public over its destruction of the rock shelters. Rio Tinto had legal approval to conduct the blast, and said it believed it had the consent of the land’s traditional owners, the Puutu Kunti Kurrama and Pinikura (PKKP) people, until the eleventh hour when it was too late to call off the detonation safely.
Mr Thompson announced Mr Jacques, iron ore boss Chris Salisbury and corporate affairs boss Simone Niven would be stripped of some of their 2020 bonuses over “failures of omission” that contributing to the destruction but did not sack any executives. Mr Thompson said this was because they were deemed to be the best people to lead the crucial internal changes required.
Several major Australian super funds including AustralianSuper, HESTA and UniSuper, immediately raised concerns that the board’s proposed consequences failed to deliver meaningful accountability. These demands have now been echoed by calls from a group of 81 British public sector pension funds, the Local Authority Pension Fund Forum, which said the Juukan Gorge disaster exposed a deeper, systemic governance issue that must be addressed “more fully and urgently”. The group’s chair, Doug McMurdo, said the issue raised questions about the company’s executive leadership team.
“I am increasingly concerned that these failings are systemic, which calls into the question the actions and judgment of the company’s main decision-makers,” Mr McMurdo said.
Vas Kolesnikoff, the executive director of top proxy advisory firm ISS, which advises institutional shareholders, said bonus cuts have been falling short of investors’ accountability expectations for governance failures.
“They just don’t work,” he said. “I think shareholders have seen that in order to change the culture, it could be that there is pressure for JS to go.”
If the chief executive was not removed, Mr Kolesnikoff said he expected Mr Jacques, Mr Thompson and potentially other Rio Tinto directors to face protests votes at its next annual shareholder meeting.
“It’s not a question of heads rolling as a symbolic gesture,” another corporate governance advisor said, “but a bigger question about whether this management team is the right one.”
A federal parliamentary inquiry, which is investigating the circumstances of the site’s destruction, has heard testimony from former Rio Tinto Aboriginal relations personnel criticising a corporate restructure undertaken when Mr Jacques become CEO in 2016, which dismantled the company’s Aboriginal engagement policies developed over many years and weakened the miner’s approach to cultural heritage.
Bruce Harvey, who ran the mining giant’s global community and Indigenous relations, and Glyn Cochrane, a senior adviser until 2015, said Mr Jacques’ changes diluted the roles of mine site leaders, anthropologists and archaeologists in community relations, telling the inquiry the Juukan Gorge disaster would never have happened under the previous framework.
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Business reporter for The Age and Sydney Morning Herald.
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