Gold mine dispute seen as test case for Indonesia
Around Indonesia in 180 Days would be a suitable title for the latest foreign investor soap opera to emerge from south-east Asia’s largest economy. That is how long international arbitrators have given Newmont Mining of the US and Sumitomo of Japan to divest 17 per cent of a subsidiary that owns a major gold mine on the remote island of Sumbawa.
After years of largely ignoring Indonesia, global miners are considering it again since a new mining law was passed in December. Critical regulations that will implement the legislation are still awaited, but the handling of the Newmont Nusa Tenggara share divestment will also sway investors.
With legislative elections taking place next week and a presidential election in July, there is a possibility that this two-year-old dispute between the companies and the government could become a political football; there were highly charged exchanges over the issue last year.
Several key government officials have changed since, but the dispute is being monitored closely as an indication of how Jakarta plans to deal with foreign investors. If opaque political and business interests are allowed to meddle, it will send a signal that Indonesia is not really open to foreign business. Jakarta can avoid that risk by being openly transparent and professional in the resolution of this dispute.
Setting a precedent
Sir Tom McKillop, ex-chairman of Royal Bank of Scotland, won’t get many thanks for doing the honourable thing and retiring as a non-executive director at BP.
It looks as though it sets a precedent for other ex-directors of the bank, such as Bob Scott, still chairman of Yell, the directories group, and Janis Kong and Sir Steve Robson, who hold non-executive roles at, respectively, Kingfisher, the retailer, and Xstrata, the miner. BP’s board can’t be too happy, either. That’s not just because Sir Tom was, in chairman Peter Sutherland’s words, an “outstanding director”, but because his departure is a reminder that
Mr Sutherland (also a former RBS director) and his deputy Sir Ian Prosser are both overdue for replacement.
Sir Tom faced specific obstacles to continuing as a director of BP. As chairman of RBS – a pharmaceuticals expert overseeing a global bank – he shoulders a large part of the blame for not keeping Sir Fred Goodwin, the former chief executive, on a tight leash. Sir Tom is still embroiled in an awkward spat with Lord Myners, the City minister, over who said what to whom about Sir Fred’s politically embarrassing pension entitlement. And the fact that he and Mr Sutherland sat together on the RBS and BP boards is precisely the kind of cosy boardroom linkage that can give corporate governance a bad name.
But still, Sir Tom took the right decision. To assume that non-executive directors’ work at different companies should be judged in isolation makes no sense, particularly as the clients – institutional shareholders – are often the same.
Musical chairs
UBS and Credit Suisse, the two giants of Swiss banking, have long been the best of enemies. It was rare, virtually unheard of, for a UBS banker to switch sides to Credit Suisse and vice-versa.
In recent years, however, this tradition has been steadily eroded – at least at lower management levels. Last year, perhaps as a result of the mounting problems at UBS, the tempo intensified in the Swiss game of musical chairs, with two senior UBS executives moving to Credit Suisse.
First to go was Paul Arni, former UBS head of private banking for Switzerland, to take charge of Credit Suisse’s Zurich region. A week later, Hans-Ulrich Meister, a UBS veteran who headed its Swiss business banking division, was put in charge of Credit Suisse’s domestic banking activities.
The irony is that Mr Meister replaced Ulrich Körner at Credit Suisse, who was appointed Wednesday the new UBS chief operating officer by Oswald Grübel, the bank’s chief executive. Mr Grübel is a former Credit Suisse chief executive recently dragged out of retirement to try to sort out the mess at UBS.
Mr Grübel’s move to UBS is by far the most spectacular example of how things are changing in the Swiss banking industry. He clearly intends to bring a new broom to UBS and seems to have little hesitation to recruit some of his veteran Credit Suisse lieutenants to assist him in this task.
Whether he will be able to attract other Credit Suisse bankers to jump ship is another question. Swapping a good job at Credit Suisse to join the beleaguered UBS seems pretty risky, especially since UBS is hardly in a position to splash out with the sort of politically incorrect money necessary to lure talent. The tempo is likely to become more adagio than allegro in the Credit Suisse-UBS musical chairs.
After years of largely ignoring Indonesia, global miners are considering it again since a new mining law was passed in December. Critical regulations that will implement the legislation are still awaited, but the handling of the Newmont Nusa Tenggara share divestment will also sway investors.
With legislative elections taking place next week and a presidential election in July, there is a possibility that this two-year-old dispute between the companies and the government could become a political football; there were highly charged exchanges over the issue last year.
Several key government officials have changed since, but the dispute is being monitored closely as an indication of how Jakarta plans to deal with foreign investors. If opaque political and business interests are allowed to meddle, it will send a signal that Indonesia is not really open to foreign business. Jakarta can avoid that risk by being openly transparent and professional in the resolution of this dispute.
Setting a precedent
Sir Tom McKillop, ex-chairman of Royal Bank of Scotland, won’t get many thanks for doing the honourable thing and retiring as a non-executive director at BP.
It looks as though it sets a precedent for other ex-directors of the bank, such as Bob Scott, still chairman of Yell, the directories group, and Janis Kong and Sir Steve Robson, who hold non-executive roles at, respectively, Kingfisher, the retailer, and Xstrata, the miner. BP’s board can’t be too happy, either. That’s not just because Sir Tom was, in chairman Peter Sutherland’s words, an “outstanding director”, but because his departure is a reminder that
Mr Sutherland (also a former RBS director) and his deputy Sir Ian Prosser are both overdue for replacement.
Sir Tom faced specific obstacles to continuing as a director of BP. As chairman of RBS – a pharmaceuticals expert overseeing a global bank – he shoulders a large part of the blame for not keeping Sir Fred Goodwin, the former chief executive, on a tight leash. Sir Tom is still embroiled in an awkward spat with Lord Myners, the City minister, over who said what to whom about Sir Fred’s politically embarrassing pension entitlement. And the fact that he and Mr Sutherland sat together on the RBS and BP boards is precisely the kind of cosy boardroom linkage that can give corporate governance a bad name.
But still, Sir Tom took the right decision. To assume that non-executive directors’ work at different companies should be judged in isolation makes no sense, particularly as the clients – institutional shareholders – are often the same.
Musical chairs
UBS and Credit Suisse, the two giants of Swiss banking, have long been the best of enemies. It was rare, virtually unheard of, for a UBS banker to switch sides to Credit Suisse and vice-versa.
In recent years, however, this tradition has been steadily eroded – at least at lower management levels. Last year, perhaps as a result of the mounting problems at UBS, the tempo intensified in the Swiss game of musical chairs, with two senior UBS executives moving to Credit Suisse.
First to go was Paul Arni, former UBS head of private banking for Switzerland, to take charge of Credit Suisse’s Zurich region. A week later, Hans-Ulrich Meister, a UBS veteran who headed its Swiss business banking division, was put in charge of Credit Suisse’s domestic banking activities.
The irony is that Mr Meister replaced Ulrich Körner at Credit Suisse, who was appointed Wednesday the new UBS chief operating officer by Oswald Grübel, the bank’s chief executive. Mr Grübel is a former Credit Suisse chief executive recently dragged out of retirement to try to sort out the mess at UBS.
Mr Grübel’s move to UBS is by far the most spectacular example of how things are changing in the Swiss banking industry. He clearly intends to bring a new broom to UBS and seems to have little hesitation to recruit some of his veteran Credit Suisse lieutenants to assist him in this task.
Whether he will be able to attract other Credit Suisse bankers to jump ship is another question. Swapping a good job at Credit Suisse to join the beleaguered UBS seems pretty risky, especially since UBS is hardly in a position to splash out with the sort of politically incorrect money necessary to lure talent. The tempo is likely to become more adagio than allegro in the Credit Suisse-UBS musical chairs.