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BHP: The Bit Australian

The BHP Billiton merger was an act of corporate tyranny. And, as Zoe Reynolds report, humanity does not figure on a corporate balance sheet.

"It is obvious that corporate democracy is not democratic at all because there is no opposition and no alternative strategies. At Friday's meeting BHP shareholders were in the position of the citizens of the People's Republic of China: protest all you like but when it comes to the elections there's only one mob to vote for and they've got one strategy."

(Alan Kohler, Australian Financial Review:'Corporate democracy runs riot',

19/5/01).

That mainstream media commentators from the so-called capitalist press focussed on the irony surrounding the absence of any real democracy in the major institutions of the 'free world' is a sign of the times.

In the corporate world decisions are made at the top of high rise office blocks that tower over the streets dwarfing all below. It is a dangerously distorted perspective, inflating the egos of company directors who have the power to decide whether whole communities are shut down and families torn apart. After all people appear as mere dots on the pavement. And humanity does not figure on a corporate balance sheet.

Unionists are only too aware of how dictatorial big business can be. They are the first to feel the full impact of corporate tyranny. Under globalisation social costs are rarely factored into the equation.

"Transnationals are not democratic," said MUA National Secretary Paddy Crumlin. "They are very ruthless in their corporate determination. They've got absolutely no values other than the so-called shareholder values. Their campaigns are constructed in the board rooms of London and New York and are basically about eliminating any opposition. This is what I call economic fascism. It is increasingly unacceptable to the world community."

"When a company shuts down they just give workers notice and throw them out onto the street," said CFMEU National Secretary John Maitland. "We've seen families crack under the stress. It's led to marriage breakups and attempted suicides. Mining companies have left a leave a trial of misery in their wake."

Company directors and CEOs unlike union representatives or politicians are not elected. But they are all too often left to dictate our lives and our communities. Indeed their power would be absolute but for unions.

World financial markets are now a greater danger to world stability than nuclear weapons, according to co-author of The Global Trap Dr Hans Peter Martin.

"The most bizarre aspect of democracy in the corporate state is the vote itself," wrote commentator David Uren (The Weekend Australian, 'Democracy tainted by corporate realities', 19/5/01). "The rich people get many more votes than the poor."

So why should democracy stop at the factory gate or the boardroom door when so many transnationals now have more clout than nation states? Why is 'Industrial democracy' once a buzz word no longer in vogue? And how come corporate governance is only now being put under the media spotlight?

A case in point in BHP Billiton, the biggest corporate merger in Australian history.

The $57 billion mega mining company is bigger than many of the countries it mines - like Mozambique. And the public controversy surrounding the recent merger vote in Melbourne on May 18 aroused as much comment and speculation as would a coup in Colombia, another third world country where Billiton, now BHP is actively engaged.

The merger itself was a coup of sorts. It was not the decision to go with Billiton that provoked public angst. It was the way The Big Australian went about it. When the decision was made, shareholders had no choice but to vote in favour. There was no real alternative.

On May 10 six unions covering BHP workers - the Association of Professional Engineers, Scientists and Managers Australia, the Australian Manufacturing Workers' Union, the Australian Workers' Union, The Communications Electoral and Plumbing Union of Australia, the Construction Forestry, Mining and Energy Union and the Maritime Union of Australia - held a media conference in Sydney announcing their opposition to the merger.

The union justified their involvement in the vote no campaign as major stakeholders in the company.

"Workers built the company and are entitled to know that any merger decisions are soundly based, in our interests and that of the nation as a whole, the statement read. What's more many workers are also shareholders.

"This merger is a dud deal," said CFMEU mining and energy division general president Tony Maher. "Poor investment decision are inevitably paid for by the workforce as much as by the shareholders, through cuts to jobs and costs."

Unionists questioned why BHP was paying such a high price for the merger with Billiton, why there was no independent report on the proposed merger, why a pay hike for executives was part and parcel of the deal, while workers had no assurance that there would be no more downsizing after it went through, why BHP assets had been so undervalued and why BHP CEO Anderson was vacating his position to Billiton CEO Brian Gilbertson a year before his contract was up.

The labour movement was not alone in its criticism.

Shadow treasurer Simon Crean said the release of a confidential memo showing Gilbertson taking control of core BHP petroleum and mineral division only fuelled talk of the merger being a reverse takeover. The ALP believed the BHP Billiton deal had far more serious national interest implications than the $10 billion Shell bid for Woodside blocked by Treasurer Peter Costello. But PM John Howard described the merger as a "marvellous" thing.

BHP's second biggest holder Colonial first state investment managers complained BHP managers had not been hard nosed enough in negotiations with Billiton. Auzeq, which compiles independent research for Australian institutional investors argued the deal would shift $4.6 billion worth of value straight out of BHP and into the hands of Billiton. The split should have been 65:35, not 42-58. Corporate Governance International, a major proxy voting advisory service, recommended that its clients oppose the merger. CGI said BHPs shareholders faced a "potential conflict of interest" by approving a deal which delivers a $143 million share windfall to Billiton's senior executives without getting access to additional key financial information on Billiton.

Billiton CEO and Chairman Brian Gilbertson alone gets $17.75 million. The London Association of British Insurers claimed payment to directors should only be made if there is a clear change of control. The executive pay hike was bundled into the deal so could it not be rejected without voting down the merger.

And BHP CEO Paul Anderson is poised to get a $3.2 million golden handshake on his departure next year, topped off with $13.6 million worth of free shares and options to buy more at bargain prices.

Yet shareholders were faced with the scenario of accepting the merger terms as dictated by management - or else. BHP executives threatened to resign if the deal did not get up. And shareholders were further intimidated by the threat of a $100 million liquidators fee if either side failed to endorse the merger.

Little wonder many compared their predicament as having a gun at the head.

As the controversy spilled over into the media, BHP took out full page advertisements in all major papers to win over retail investors.

"A corporation is a one party state, run by management and a board," columnist David Uren wrote in the Weekend Australian (Democracy tainted by corporate realities, 19/5/01). "The ruling party has unfettered access to the treasury to conduct whatever telephone marketing and media advertising campaigns are deemed necessary to win a vote. Any opposition would have to dip into its own pockets. This is democracy Singapore style..."

Two days before the the extraordinary general meeting the majority of shareholders had reluctantly rubber stamped the deal. The big backers had already caste their vote by proxy. 1,500 of BHP's 267,000 shareholders attended the meeting, but BHP executives already knew the result before it began.

In the strategy meeting held in ACTU rooms the evening before the formal vote union representatives acknowledged the merger was a done deal. They were counting only on a 10 per cent vote against and the opportunity to put the hard questions to BHP executives. They did more.

The no vote hit a record 11 per cent (98.18 million shares) against. This was almost double the previous BHP record set in 1984.

Workers from as far as central Queensland, Port Pirie, Pilbara and Port Kembla rallied outside the BHP shareholder meeting in Melbourne on the morning.

The protest swelled to 5,000 according to some media estimates, as construction workers on Melbourne CBD sites downed tools and marched to the Melbourne Concert Hall, waving placards such as "executive greed strangling community need".

ACTU secretary Greg Combet speaking on behalf of six affiliates and 28,000 BHP workforce said employees had the right to ask questions. "Managers in London are not going to have any interest in workers and families in communities in Port Kembla or Pilbara," he said. "We've got to stand shoulder to shoulder and keep a united voice."

"The Big Australian is to become the Big Pom," said AMWU chief Doug Cameron. "It's a bad deal.

"It's sending a message out to the world that Australia is just a big quarry, a big farm," Cameron said in reference to BHP Billiton plans to hive off the last of its steel manufacturing division.

AWU Secretary Bill Shorten called for an inquiry into the merger in place of the politically inspired inquiry into the building industry. "What we've got is a little company taking over a big company. It's stupid," he said.

MUA Deputy National Secretary Mick O'Leary, representing the 232 BHP Transport stevedoring workers and 212 seafarers on 12 BHP ships said the merger was a threat to jobs. "We won't cop job insecurity," he said.

Inside the meeting BHP workers and union officials were among shareholders and proxy voters who relentlessly put the hard questions to BHP executives, delaying the vote by three hours.

While BHP executive and chairperson Don Argus described the merger as "fair and in the best interests to share holders" and Paul Anderson BHP CEO said it was "driven by a desire to increase the value of (shareholders) investments" by creating a 'mega company', worker shareholders saw otherwise.

"After BHP made its big mistakes in the 1980s and early 1990s, the Australian workforce copped it in the neck," said Port Kembla worker and shareholder Les Watson, MUA, referring to the ill-fated $3.2 billion buy out for us based Magma Copper in 1996. Three years later the entire investment was written off as a loss.

"More than 30 per cent of the workforce became retrenched, with others forced to work 12 hour shifts," he said. "And the fundamental reason was that BHP management needed to squeeze more out of us to make up for their lousy commercial decisions."

In a passionate address to shareholders Kim Winterbourne, MUA stevedoring worker Westernport described the merger as a national tragedy.

"BHP Ltd is one of Australia's largest companies," he said. "It's a company in which most Australians either hold shares directly, or indirectly via their superannuation savings. This deal is a reverse takeover and will go down in history as one of the shonkiest deals that was ever foisted on BHP shareholders and the Australian public. It is appalling that BHP assets have been undervalued relative to those of Billiton."

"Much of the Billiton assets have been accrued in the last couple of years on a spending spree that has saddled the company with debt. A lot of assets are cast offs from Rio Tinto and bhp itself. For example the Colombian coal assets were sold by Rio Tinto only last year. Rio Tinto, if not Billiton was able to recognise that coal mining prospect in a country torn apart by a civil war over drugs is not really a good prospect at all..."

"BHP management has not bothered to consult this workforce about the merger any more than it has genuinely consulted its shareholders. We have been represented with a fait accompli - a done deal. Or should I say a dud deal".

John Maitland, National Secretary of the CFMEU and President International Chemical Energy Mining and General Workers' Union covering 20 million workers from 110 countries stressed the unions weren't against all mergers. It was the way they had gone about this one.

"I think the point is that BHP has failed to convince anyone that this is a good deal," he said. "BHP has essentially squandered the good will of workers by forcing individual contracts in WA, squandered the goodwill of the community by closing down steel operations and now it has squandered the goodwill of shareholders.

"It's all about how you deal with the major challenges of human rights and workers rights," he told the meeting. "These are just as important as money issues. They are the issues that will bring long term return on investments. Are you going to give Australian workers freedom of association? Are you going to avoid job losses in Australian communities?"

Maitland then read a letter of solidarity from South African National Union of Mineworkers General Secretary Gwede Mantashe: "Billiton and its predecessors were part of the apartheid regime against whom we had to struggle for many years. We will have to strengthen our existing cooperation to ensure that the company respects the human rights of its workforce wherever they operate. I note with concern that BHP has been seeking to deny its workers their basic rights in Pilbara in Western Australia. We view the denial of bargaining rights as a major issue for us and pledge to join you in holding the company to account for its labour practices on the international stage."

Unionists were not the only shareholders speaking against the terms of the merger, with only one speaker in favour during the three hour debate leading up to the vote.

But the chair declared a majority show of hands in favour when the motions were put at 1pm. By evening BHP announced the overall vote had passed and that the share price had peaked at $23.

The Big Australian became the bit Australian. The mega merger became a reality.

But the union movement had meanwhile organised a merger of its own.

Long before shareholders took their vote, the ACTU was quietly working behind the scenes getting old union rivals to bury the hatchet and speak as one.

A national summit of 12 unions from Australia and New Zealand took in Wollongong on April 20 as a first step towards forming a single bargaining unit to ensure the BHP merger did not further undermine hard won conditions, job security and collective union rights.

The CFMEU took it a step further with National Secretary John Maitland enlisting the commitment of the South African union covering Billiton employees, which he read out at the shareholders meeting.

"Billiton and its predecessors were part of the apartheid regime against whom we had to struggle for many years," wrote South African National Union of Mineworkers General Secretary Gwede Mantashe. "We will have to strengthen our existing cooperation to ensure that the company respects the human rights of its workforce wherever they operate. I note with concern that BHP has been seeking to deny its workers their basic rights in Pilbara in Western Australia. We view the denial of bargaining rights as a major issue for us and pledge to join you in holding the company to account for its labour practices on the international stage."

The Wollongong meeting condemned the company's hardline industrial relations strategy as out of touch with normal Australian values and community standards.

"BHP must accept the fundamental right and choice of employees to join, organise and be represent by their unions through collective bargaining, " said ACTU President Sharan Burrow. "We will extend our mutual co-operation across our workplaces and internationally," she said.

The union lobby campaign against the merger was a first step.

BHP introduced individual contracts in 1999 in the Pilbara, sold off is steel division, closed its Newcastle mills disputes in Queensland with coal miners and is now set to hive off its Wollongong steel production.

And things are set to get worse.

Billiton boss Brian Gilbertson is reported to be rushing to Australia to take over management of core assets minerals and petroleum. His big aim? To reduce wages to Rio Tinto levels, according to this week's media reports. There will be review of all assets and some will be sold. This, too, will be up to Gilbertson.

Meanwhile Channel 9 Sunday program (May 20) televised BHP CEO Paul Anderson announcing BHP interest in Woodside Petroleum.

BHP already controls half of Bass Strait operations and one in six of northwest shelf.

A new mining colossus BHP Billiton now straddles the four continents of Europe, Africa, Asia and the Americas.

To survive, BHP Billiton workers of the world must do likewise.

______________________________________________

Lest We Forget

It is not the first time BHP has flirted with fascism. In November 1938 Japanese bombs were already blooding China. Port Kembla wharfies were a far sighted bunch. Knowing that BHP pig iron was destined for the Mitsui war machine and Japan's 'downward thrust', through South East Asia to Australian shores, they took a stand. They struck a boycott on the BHP shipments.

Rupert Lockwood brings the dispute to life in his book War on the Waterfront: Menzies, Japan and the Pig Iron Dispute. It is the story of how 180 men in sweaty work singlets and hob nailed boots went hungry rather than load shipments of munitions metal to fuel the Japanese war machine.

Mitsui was a centrepiece of the Japanese war effort. But weapons are not possible without the many tonnes of raw materials and BHP was only too happy to oblige with around 300,000 tonnes. It was at a time when Australian industry was seriously short of pig iron for its own foundries, construction and rearmament program. But Japan paid more.

For BHP, profits came before patriotism. Menzies backed the company all the way. His support for Japan and BHP in the lead up to WWII earned him the name Pig Iron Bob. The rest is history.

So too BHP's role in WWI. The company was so wound up with the German war machine, the Australian army raided its offices in 1914 to end its traffic with enemy agencies. While the Allies were crying out for led, zinc and copper, Australian output was at Germany's disposal. A representative of Kaiser Wilhelm von Hohenzollern was on the BHP Board of Directors. Prussian Hugo Karl Emil Von Buecke was a director, both of BHP (1892-1916) and the Adelaide Steamship Co. BHP was, in Lockwood's words a 'nest of spies'.

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  Issue 97 contents

»	Spotlight on HIH�s WorkCover Link
»	Construction Industry Faces Safety Crisis
»	Statewide Strike Off But Della on Notice
»	David and Goliath Battle at IBM
»	Natasha�s Democrats Face Senate IR Test
»	Howard Abandons Working Families
»	City Councils Recognise Birth � Now for the Bush
»	BHP Forced to Back Off Kembla AWAs
»	Impulse Bores Workers Into Submission
»	Coach Drivers Win Permanency
»	Boss Pockets Compo Payment
»	Union Wins Battle in AWA War
»	Publicans Want to Reduce Bar Pay
»	Abbott Agrees to Ban Asbestos
»	Union Acts to Save Leichhardt Refuge
»	Trade Union Choir Turns Ten
»	Activists' Notebook

»	The Soapbox
»	The Locker Room
»	Trades Hall
»	Tool Shed

»	Thanks from Indonesia
»	Hester Spot On
»	Fuelling Voter Anger
»	May Day - The Debate Continues
»	Not a Chaser Fan

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