RI Governance & Engagement, March 4: UK panel reviewing BP reporting

RI’s regular review of governance and engagement news

Environmental law organisation ClientEarth has made public its complaint against BP, made to the UK’s Financial Reporting Review Panel watchdog, that the oil giant used wildly unrealistic scenarios in its predictions of future energy demand. This helped justify risky extraction methods like tar sands and deepwater drilling. The scenario was a “smokescreen to provide superficial reassurance to investors” says ClientEarth CEO James Thornton. Link to complaint

Lucian Bebchuk, Director of the Program on Corporate Governance at Harvard Law School, has had his proposed election to the board Russian mining firm MMC Norilsk Nickel, endorsed by proxy voting advisory firm Glass Lewis. Bebchuk is one of three directors being proposed by Norilsk shareholder Rusal for election at an extraordinary general meeting slated for March 11. The EGM is the latest stage in a bitter takeover battle between billionaires Oleg Deripaska and Vladimir Potanin.

The $113.4bn five New York City pension funds have dropped five out of six activist fund managers since Democrat John Liu became city Comptroller last year, reports Global Pensions magazine. It said the activist funds let go include Breeden Capital Management, Relational Investors, Knight Vinke Asset Management, Shamrock Capital Advisors and Investec. Larry Schloss, the city’s chief investment officer, was quoted saying the managers were dropped due to cost. He said “What’s a better return on our money, being an activist ourselves or outsourcing activism to other managers. It was a very expensive way to be an activist.” The funds have retained Governance for Owners, the London-based activist manager.

Meanwhile, the NYC Pension Funds have withdrawn shareholder resolutions calling for annual director elections at software firm Adobe and bank holding company Capital One because the companies have agreed to support the measure, Comptroller Liu said. The funds have submitted similar requests to Alere, Juniper Networks and Neurocrine BioSciences for their forthcoming AGMs.

The UK watchdog, the Financial Reporting Council, has published new guidance on board effectiveness. It aims to assist firms to apply the principles of the Corporate Governance Code following changes last year – such as the greater emphasis placed on the role of the chairman and the importance of getting the right balance on the board.Three US pension funds – the Cleveland Bakers and Teamsters Pension Fund, the Southeastern Pennsylvania Transportation Authority and the Southwest Ohio Regional Council of Carpenters Pension Plan – are suing Bank of America Merrill Lynch and Emergency Medical Service Corp. over conflicts in agreeing to sell the firm for a below-market price, according to a Reuters report.
The State of Finland and the Finnish Shareholders Association have proposed that the Supervisory Board of oil firm Neste Oil Corp. should be abolished. Neste’s annual general meeting is scheduled for April 14.

Health Net Inc., one of the largest publicly traded health insurers in the US, has been dropped from the Calvert Social Index as it no longer meets the index’s standards for product marketing. Ball Corp. and Qwest Communications have been added following respective improvements in environmental footprint disclosure and governance. Link

The $147.6bn California State Teachers´ Retirement System says it has been awarded a multi-million dollar securities fraud judgment against Stuart Wolff, the former chairman and CEO of online real estate company Homestore.com. CalSTRS brought the class action suit against the firm after being named lead plaintiff in March 2002.

Canadian proxy firm Kingsdale Shareholder Services has gained another client in the oil and gas sector – Talisman Energy. Other recent wins include Canadian Oil Sands Ltd. and power generation giant TransAlta Corp. Link

Emerging markets guru Mark Mobius has hailed the potential corporate governance benefits arising from the listing of Romania’s Fondul Proprietatea on the Bucharest Stock Exchange. The move would introduce proper corporate governance practices and streamline decision-making processes at portfolio companies, he said. Fondul Proprietatea was set up in 2005 to compensate for assets seized under the former communist regime.

The World Bank’s IFC and the UK’s Department for International Development are launching the second phase of the IFC Central Asia Corporate Governance Project in the Kyrgyz Republic and Tajikistan. The project helps local firms strengthen corporate governance practices – thus improving their operations and enabling easier access to finance.