NEWS May 11 2001

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 Balfour Beatty hit the buffers over Ilisu

May 2nd saw a landmark victory for the campaign against the Ilisu Dam project in south east Turkey, with protesters dominating the annual general meeting of Balfour Beatty and some institutional investors supporting a Friends of the Earth resolution against the company’s involvement in the scheme. The dam itself has been the subject of increasing controversy as it will displace 78,000 Kurdish people from their homes and destroy the ancient city of Hasankeyf.

Balfour Beatty, the UK-based construction giant, which is part of a Swiss-led consortium bidding for the contract to build the dam, has been startled by the strength of the campaign, and may be regretting their decision to get involved with the project. Lord Weir commented, ‘If we had known then how controversial this project would be we could have saved ourselves a lot of trouble by not taking part in it, but this was not the case at the time.’

Protesting share-holders from a remarkable variety of groups turned up for the AGM. In addition to supporters of the Ilisu Dam Campaign and the Kurdish Human Rights Project, representatives of trade unions, UCATT and the RMT arrived to question the Board over their responsibility for the Hatfield train crash. Also present were campaigners against the Birmingham Northern Relief Road, and animal rights activists protesting BB’s involvement with the controversial Huntingdon Life Sciences. Channel 4’s Mark Thomas also attended. Security was tight – evryone entering was searched and put through a metal detector and even the seating in the hall had been arranged for defensive purposes with the front (unbroken) row completely occupied by very large security staff.

Questioning was dominated by protesters who massively outnumbered all other shareholders, the board and hotel staff. The first session was devoted to company matters other than the Ilisu Dam project. Shareholders asked searching questions on a wide range of issues embarrassing to the company, ranging from bribery and corruption charges in Lesotho and the United States, to the company’s ethical and environmental policies (Balfour’s ethical policy would easily fit on the back of a postcard), to the Birmingham Northern Relief Road.

A separate session was set aside for questioning on the special resolution and the Ilisu dam. Charles Secrett, director of Friends of the Earth, opened the questioning. He warned the board that this was an issue that would not go away, indeed that issues of corporate responsibility could only become ever more prominent. The only way for Balfour Beatty to protect its reputation and its profitability in future would be for the company to take real action over such controversial issues and to support the resolution.

Special Resolution 15, calling on the company to adopt the recommendations of a report by the World Commission on Dams, was proposed by Friends of Earth who had bought £30,000 worth of shares in Balfour just for this purpose. If adopted the ethical recommendations of the report would effectively bar Balfour from taking on the Ilisu Dam contract. Balfour Beatty’s board claimed sympathy for the recommendations but urged shareholders to vote against the resolution, as it did not want to be bound by them.

At the end of the meeting, campaigners were overjoyed to learn that preliminary results suggested the FoE motion had around 14 million votes, and over 75 million had abstained – this would give it 16% of the vote, the largest proportion ever achieved by a shareholder resolution in the UK. Many of those institutional investors who abstained did so as a thinly veiled warning to BB’s directors. Many institutional investors, including the University Superannuation Scheme, have recently adopted policies of active and considered abstention, in such cases. ‘Abstentions should usually be read as shareholders who sympathise with the resolution but don’t go the whole hog,’ commented Pirc, consultants on corporate governance.

But the story ended with a bizarre twist. Later that day Balfour announced that there had been a mix-up in the voting. The three institutional investors who supported Friends of the Earth’s resolution had made a mistake, they claimed, having accidentally ticked the wrong box on the polling form. The alleged errors were quickly rectified after phone calls from Balfour’s company secretary to the fund managers in question, so ultimately Balfour, who denied any pressure was put on the fund managers, claimed a majority vote against the resolution.

Charles Secrett was unconvinced: ‘Balfour has been scurrying around behind the scenes in a desperate attempt to shore up support. I suspect they twisted the arms of these institutions… Whatever the final vote, it is clear that we’ve got the company rattled.’

In the week since, Balfour Beatty has seen mixed fortunes. The day after the AGM, A Balfour Beatty led consortium was named as one of the preferred bidders for the privatisation of the Tube. Just days later, news broke of the leaked final report on the Hatfield rail crash, as seen by the FT, which apparently records that the Balfour Beatty track inspector has admitted he usually walked in the ditch beside the track, so couldn’t see the rails properly, and that Balfour’s ultrasonic tests, which indicated a problem, were not acted upon. This ties in with allegations made by railworkers at the Balfour Beatty AGM that the company’s employees could have prevented use of the damaged rail but failed to do so.