Adani Ports and Special Economic Zone Ltd has been excluded from investment by Norway’s largest pension fund, KLP and the KLP Funds with effect from June 2021.
This due diligence-based divestment has been implemented on the grounds that Adani’s operations in Myanmar and its business partnership with that country’s armed forces constitutes an unacceptable risk of contributing to the violation of KLP’s guidelines for responsible investment.
India’s largest commercial port operator, Adani manages 12 ports in India, with logistics accounting for an important part of its business activity. Adani has entered into a business partnership with the military-owned conglomerate Myanmar Economic Corporation (MEC) for the construction of a new container port in the city of Yangon.
KLP was invested in Adani at the time the company was excluded.
“When Adani signed the agreement, information about the armed forces’ abuses was publicly available. This should have given Adani reasonable grounds to act with particular prudence with respect to the MEC, which owned the land. The company must exercise particular care when it operates in locations where there is war or conflict. Nor has the company adequately performed the necessary human rights due diligence assessments. There are reasonable grounds to suspect that the company puts commercial considerations before the risk to human rights,” KLP said.
The agreement’s potential termination was conditional on the financial consequences following from sanctions imposed by the US Department of the Treasury’s Office of Foreign Assets Control (OFAC), and not on the behaviour of the armed forces. Even though no further financial transactions are carried out, the agreement is valid for a term of 50 years, which means that the risk of contributing to future violations does exist.
In addition, the agreement’s object concerns a permanent and important piece of infrastructure, which may be used beyond the term of the agreement. In KLP’s view, the company has failed to take such steps with respect to the agreement as would constitute due diligence but has instead continued its business partnership with the MEC. Adani has therefore not acted with sufficient prudence in its choice of business partner in a country where there has been an ongoing conflict, involving systematic and extremely serious abuses that affect a very large number of people, for many years, it said.
Following publication of the “Port of Complicity report” in March 2021, Adani issued a public statement on its website, saying the port agreement was “facilitated by Myanmar Investment Commission”. It also said that the company would “engage with the relevant authorities”, and that it intends “to contribute towards the nation’s economic and social development goals”.
Subsequent to this, Adani was also removed from the S&P Dow Jones Sustainability Indices due to the company’s “commercial relationship with Myanmar’s military”.
A report also provides a list of companies which have business partnerships with the military conglomerate MEC, including Adani. In “Port of Complicity”, the voluntary organisations Australian Centre for International Justice (ACIJ) and Justice For Myanmar (JFM) have published details of the collaboration between Adani and MEC. These details are based on leaked documents.
In May 2019, Adani signed a development, operating and transfer agreement with the MEC. The agreement entails the construction of the country’s largest commercial container port Ahlone International Port Terminal 2.353 in the city of Yangon.
This port is being built on land owned by the armed forces, which has been leased from the MEC for a period of 50 years. Adani has committed to investing in the project, in addition to an annual payment to MEC to lease the site. According to Adani, the leasing fee has already been paid in full. On the other hand, the IFFMM also states that it has failed to discover the origins of MEC’s ownership of the land the port is being built on.
The armed forces currently own three commercial ports in Yangon, which are all, for the moment, in operation. The first phase of Adani’s port is scheduled for completion in 2021. When completely developed, the port will cover an area of 5 hectares (approx 12 acres). Its dock will be 635 metres long and will be able to handle three vessels at a time.
$30 million has been paid in leasing fees, plus a further $22 million in “land clearance charges”. On its website, Adani has referred to media coverage stating that the land is owned by the MEC. The IFFM’s report states that: “These examples raise serious concerns that foreign companies are leasing MEHL, MEC or Tatmadaw-owned property for significant sums, without facing due scrutiny as to how their payments are benefitting the Tatmadaw.”
KLP has engaged in written communication with the company about the agreement in Myanmar since March 2021. In April, a meeting between KLP and the company’s management was also held. Adani declared that the company takes human rights seriously, and that it has a human rights policy.
Adani maintained that its agreement was with the Myanmar Investment Commission, and that they had won the contract after a global tender competition. The company considered this agreement to be a major commercial opportunity, but also wanted to contribute towards economic development in Myanmar. Moreover, the company had fulfilled all its financial obligations under the agreement and there would be no further financial transactions, even though the agreement has a term of 50 years. The company emphasised this point several times during the meeting. The company confirmed that no due diligence assessments relating to human rights were performed before the agreement was entered into.
The company also confirmed that the port will be used for commercial purposes, and that this was expressly regulated by the agreement. On the other hand, the company could not rule out the possibility that the armed forces might issue orders for it to be used for military equipment, for example, given the authority they have in the country.
However, the actual agreement could not be shared with KLP on commercial grounds. The company disclosed that it takes this matter seriously after MEC was sanctioned by the US’ Office of Foreign Assets Control on March 25, 2021.
The company has significant financial interests in the US, and is therefore keen to assess whether its agreement in Myanmar could be encompassed by the OFAC’s sanction. For this reason, Adani obtained a legal opinion from a US law firm in April, which concluded that the risk was considered low.
“This assessment was shared with KLP, but only for KLP’s use in-house. At the same time, Adani was recommended to send a query to the OFAC to clarify the situation. The company stated that such a query would be sent and has confirmed in subsequent communications that it is in the process of doing so. If the OFAC confirms that Adani’s operations in Myanmar may be covered by sanctions, the company will terminate the agreement relating to the port in Yangon with immediate effect, since its impact on access to capital in the USA would render it commercially untenable,” as per a KLP statement.
“At the same time, the company said it found it hard to see that a commercial partnership could contribute to human rights violations. The company had no comments on the abuses the armed forces in Myanmar have perpetrated, but said they were keeping abreast of the ongoing situation following the military coup. Furthermore, the company considered that, in general, any national armed forces would have many business partnerships,” KLP said.
KLP has assessed whether Adani, through its business partnership with MEC, could constitute an unacceptable risk of violating KLP’s guidelines, including contributing to serious violations of the rights of individuals in situations of war and conflict.
Given the seriousness and the scope of the norm violations, the parties responsible are under investigation for crimes against humanity and genocide. The IFFMM’s reports emphasise that the risk of future norm violations is high, since there is a considerable risk of new abuses being perpetrated by the armed forces. The military coup has once again confirmed that the armed forces are capable of using arbitrary and disproportionate force against portions of the civilian population, with respect for fundamental human rights being completely ignored. Although the international community has condemned the abuses, the situation continues without any prospect of a speedy resolution in sight.
The agreement entails the construction of the country’s largest port, a massive infrastructure project. The port is being built in a city where the armed forces already own three commercial ports. It is, moreover, being built on land owned by the armed forces, which means the military has good control over all activities undertaken there. KLP said Adani itself admits that the highest risk it faces is to ensure that illegal goods are not transported into the country via the port. Furthermore, Adani has admitted that if the armed forces were to decide to use the port for military purposes, the company would not be able to prevent it, nor are there any mechanisms that would enable it to do so.
There is an imminent danger that the armed forces could use the port to import weapons and equipment, or as a naval base. This equipment plays a crucial role in the attacks carried out by the armed forces. In this way, the port could be used by the army to continue its violations of human rights. These factors show that the company is operating in a business sector where there is a high risk of contributing to human rights abuses.
IRSDC invites RFQ for redevelopment of Udaipur railway station
The Indian Railway Stations Development Corporation Ltd (IRSDC) has invited Requests for Qualification (RFQ) to redevelop Udaipur City Railway Station, officials said on Saturday.
The IRSDC in a statement said that the objective is to redevelop Udaipur railway station into a modern station with state of the art amenities.
It said that the redeveloped station has been envisioned to be transformed into an integrated railway station at par with an international airport.
“The station will be redeveloped on a Design-Build Finance Operate Transfer (DBFOT) model using principles of Transit Oriented Development (TOD). The concession period shall be 60 years and the concessionaire shall have the obligation to redevelop and maintain the station for 60 years along with the right to collect revenue from station users and commercial development,” it said.
It added that the total area for mandatory development is 49,8115 square meter and the built-up area for station estate development is up to 1,0,1374 square meter.
“The pre-bid meeting will be held on August 6, and the deadline for bid submission is August 31,” it said.
S.K. Lohia, MD and CEO, IRSDC said, “Udaipur City is a tourist destination of global repute. The redevelopment of the railway station aims to transform it into an iconic hub on the lines of an international airport and reimagine the travel experience.”
Lohia said that it will position the station as a fitting gateway to the city of Udaipur and have a multiplier effect on the local economy in terms of the generation of employment opportunities and subsequent commercial development.
“As a nodal organisation entrusted with station redevelopment, IRSDC is fully committed to deliver the project as per the schedule and contribute to India’s growth story,” he said.
The IRSDC said that redevelopment envisages a new east-side entry station building, with plans for new East-West Road connectivity through Railway Under-Bridges, connectivity with ISBT through commercial land via a network of pedestrian walkways, segregation of entry/exit in the station and easy signage for all types of passengers.
Telcos sought relief in guise of arithmetical errors: SC in AGR case
The Supreme Court has said that the telecom companies’ plea seeking ‘rectification’ of defects in computation of adjusted gross revenue (AGR) would lead to recalculation of the amount in AGR dues, which has already been rejected by the top court last year.
In a big setback for telcos, the Supreme Court on Friday dismissed their plea seeking correction of alleged errors in AGR calculation as misconceived. A day after the top court pronounced the judgment in the matter, it was uploaded on its website on Saturday afternoon.
The telcos had urged the top court to permit the Centre to verify their accounts and rectify the alleged defects in the computation of AGR dues, stating that if it is not allowed, the matter could threaten some of them in a highly competitive sector.
Dismissing the telcos’ plea, a bench headed by Justice L. Nageswara Rao said: “Though these applications appear to be innocuous at first blush, the end result of the relief sought by the applicants in the guise of correction or rectification of the defects or arithmetical errors in calculation of AGR dues, would be recalculation which would amount to the AGR dues, as specified in the order of this court dated July 20, 2020, being altered.”
The bench, also comprising justices S. Abdul Nazeer and M.R. Shah, noted that even at the time of passing of the July 20, 2020 order, an attempt was made to seek recalculation and reassessment, which was rejected by the top court outright.
“The dispute relating to AGR dues had remained pending in courts for a very long period of time and bearing this in mind, this court was at pains to emphasise, at the cost of repetition, that the AGR dues payable by the TSPs (telecom service providers) cannot be the subject matter of any future litigation,” the bench said, making it clear that any application for altering the AGR dues cannot be entertained.
The telcos had argued that the accounts pertaining to several years had to be scrutinised to arrive at the amounts payable by them towards AGR dues.
The companies had contended that a scrutiny of the accounts had revealed that certain ‘arithmetical errors’ had arisen due to inadvertence on the part of the Department of Telecommunications while computing the dues.
They argued that the top court judgment passed on September 1, 2020 needed clarification as even calculation errors cannot be rectified by the Union of India in view this judgment.
Senior advocate Mukul Rohatgi, representing Vodafone Idea, had referred to a note to demonstrate certain glaring errors in the demand raised by the Centre wherein amounts that have already been paid by the company were not taken into account for computing the outstanding AGR dues.
Senior advocate Abhishek Singhvi, representing Airtel, had submitted that the errors committed in computation of its AGR dues arose due to double counting of some revenue items, payments made but not accounted for, and accrued deductions not being given effect to.
Singhvi said that his client should not be made to suffer for certain calculation errors made by the Centre.
Senior advocate Arvind Datar, representing Tata, had submitted that there is no prohibition in seeking rectification of inadvertent errors committed in the calculation of AGR dues.
According to a note submitted by the DoT in the top court last year, Vodafone Idea owed Rs 58,254 crore, out of which it had paid around Rs 7,850 crore; Bharti Airtel owed Rs 43,980 crore of which it had paid over Rs 18,000 crore; and Tata Telecom owed Rs 16, 798 crores, out of which it had paid Rs 4,197 crore.
Go First operates first night flight from Jammu to Delhi
Budget airline Go First, formerly known as GoAir, has operated the first ever night flight from Jammu to Delhi.
Accordingly, the flight ‘G8 196’ – took off at 8.00 p.m. on Friday and was operated on Airbus A320neo.
“Going forward, Go First will operate scheduled flight from Jammu to Delhi and Srinagar.”
“This heralds the beginning of a new era for the union territory that has long advocated the introduction of night flights for better connectivity with the rest of the country.”
Notably, the airline, will operate four flights a week from Jammu on Monday, Tuesday, Thursday and Saturday to Delhi and three flight from Jammu on Wednesday, Friday and Sunday to Srinagar, respectively.
According to Kaushik Khona, Chief Executive Officer, Go First: “This initiative will assist the farming community and also strengthen the tourism sector, which plays a major role in the economic growth of the region.”
“We will continue to provide better connectivity and play a role in the economic development of J&K. Go First is also strengthening the network across the Union Territories of Jammu & Kashmir by enhancing the number of flights to-and-from Jammu to Delhi and Srinagar.”
Earlier this year, the carrier signed an MoU with the J&K government for the transport of perishable horticulture and agriculture produce to international markets at competitive rates.
This is a boon to farmers in the region and is aiding them generate an optimum return for their produce, the airline said.
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