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Business Ethics Term Paper

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Business ethics involved in Indian mining

The following paper looks at the major problems in Indian Mining industry, the key players involved in the entire system and tries to offer suggestions to improve the efficiency of the process for the better functioning of economy

Especially when one is dealing with natural resources and public wealth, earning profits shouldn‟t be our goal, earning profits in a right way i.e environmental and society friendly way should be our goal. Any work that causes benefit to few but harm to large number shouldn‟t be done. Ethics is not simply the absence of a negative; it is not a list of „rules‟ we should follow and „regulations‟ we should not break. Rather, it is a vibrant code that expresses our values. When we live an ethical life or run an ethical business, it means our decisions, policies and behaviour are all congruent with our values. These values lay the vision for the world.

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In a resource rich country like India, mining is one of the key industries in the Indian economy without which Indian economic growth would not have been the way it is. Having said that mining in India has been a contentious issue and has been plagued by a dangerous mix of bad policies, weak institutions, corrupt government oversight and thus regulation of India‟s mining industry is largely ineffectual. The result is chaos. The level of lawlessness that is prevailing in India‟s mining industry is hard to overstate. Illegal mining is rampant in Indian mining sector. According to official statistics, there have been more than 82,000 instances of illegal operations of mining in 2010 alone and an annual rate of 30 criminal acts for every legal mining operation in India. But according to me, an even bigger problem is the failure of key regulatory mechanisms to ensure that even legal mine operators comply with the law and respect human rights. We can see look at the examples of iron mining in Goa and Karnataka states to illustrate broader patterns of failed regulation, alleged corruption and community harm. It shows how even mines operating with the approval of government regulators are able to violate the law with complete impunity. Finally, I try to offer practical, straightforward recommendations on how the Indian government could begin to address these problems.

Human rights violation Although Indian government is obliged by International law to protect the Human rights of citizens from abuse of mining firms and other companies, its laws are designed very poorly and implementation is even poorer due to private interests and inefficient administration of corrupted civil servants. Human rights violation is rampant due to shoddy implementation of
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regulations. The result is that key government institutions stand by as spectators while outof-control mining operations threaten the health, livelihoods and environments of entire communities. In Iron mining areas of Goa and Karnataka, Human rights watch noted that mine operators had contaminated the water sources of local residents due to inefficient practises followed in mining and overexploitation of natural resources was a normality. Spillage from the overfilled trucks carrying mined materials caused the crops in the area to be filled with metallic dust and left a trail of harmful smoke behind. Homes in the villages were also coated with metallic dust leading to respiratory problems and people who raised their voices were intimidated and threatened. All of these allegations echo common complaints about mining operations across many parts of India. Corruption In Karnataka Minster Mr. Janardhana reddy had used his ministerial position in the state govt. to illegally mine and cheated the Indian people by embezzling billions of rupees thus depriving the state of funds that could have been put towards the improvement of the state‟s dismal health care and education systems. Ineffective regulation in Karnataka was the key factor in giving corrupted people a free hand in mining sector. Public officials openly admit their inefficiency to tackle such a problem. Indian companies are left to regulate themselves by India‟s govt. thus leading to large scale corruption. In Goa too similar problems are there, activists and even the CM of state allege illegal activities in mining industry and surprisingly no one in the mining industry is denying. One company executive interviewed by Human Rights Watch spoke of “chaos and corruption” and a “total lack of governance” in the state‟s mining sector. A spokesperson for the Goan

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mining industry estimated that nearly half of all mining in the state violates various laws and regulations. Role of Ministry of Environment and Forests (MOEF) The ministry of Environment and forests is tasked to give environmental clearance after considering new mine‟s potential impact on human rights and livelihoods of affected communities. The process has proven to be dysfunctional. Usually clearances are given solel on the strength of Environmental Impact Assessment (EIA) reports commissioned and paid by the very companies looking to mine. Naturally these reports ignore the human rights issue and other community impacts. These reports in most cases are extremely inaccurate and contain false information. Important conclusions are just copied from one report to other, while assuming regulators are not going to read anything. “In the most notorious example of this phenomenon, a mine in Maharashtra state received clearance to proceed even though its EIA report contained large amounts of data taken verbatim from a similar report prepared for a bauxite mine in Russia.” It is no surprise that under this framework, almost no mining project is ever denied environmental clearance. Once the clearances are received, monitoring systems are so poor in India that there are few people for thousands of mines and thus they are rarely able to check upon them. So they rely entirely on compliance reports provided by mining companies themselves which in turns makes the process completely ineffective. As we can see India‟s Ministry of Environment can be thought as the main culprit in this entire process simply because any success on its part is very essential to minimizing the human rights issues. According to Human Rights Watch fixing the environmental clearance

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method and other process linked to Ministry of environment are most needed in safeguarding the human rights of mining affected communities.

Political consequences The situation in the India‟s Mining sector turned out to have deep political and economic implications. The scandals in 2011 made the public to come together and collectively overthrow the govts in Karnataka and Goa. Karnataka CM was forced to resign and the state mining industry was closed down by a belated central govt. crack down at a big economic cost. In March 2012, Goa‟s state govt. was voted out of power due to public rallying together in order to counter the scandals plaguing the states mining industry.

• One has to make sure that concerned officials focus their attention on potential human rights and impact on communities near proposed mines through existing impact assessment process or new assessment process focused exclusively on human rights. • We have to take away the option from mining firms to select and pay the consultants who make EIA reports. These reports could be funded through a general fund paid for by mining firms but under govt. control. • We have to empower the expert appraisal committees to carry out a more detailed review of the negative impacts of new projects, also push for more site visits. This process needs a lot of recruitment of staff and other resources and will slow down the process of project consideration and clearance. • Tighter rules need to be drafted for mandatory public consultations and imposing robust sanctions needs to be done. We have to include criminal prosecution where appropriate on
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mining companies and consultants who have provided material false information in their EIA reports and were negligibly incorrect. • An independent review needs to be initiated of the Environmental Impact Assessment reports covering all the existing mines to check for correctness and to find out any materially false or misleading data. Suspend the licenses of mining operators and order them to reapply for clearance if their EIA reports contain falsified information. • We have to empower the ministry of environment and forests (MOEF) to make sure they actively monitor the existing mining projects. This can be done by increasing the staff and providing adequate resources to carry out their roles effectively. • We have to explore ways to make sure that institutions which prepare the EIA reports are well acquainted with human rights principles and try and implement best practices followed globally related to mining sector.

Indian mining industry is riddled with controversy and scandals with private contractors exploiting the powerless workers by denying the basic Human rights and making them work in deplorable conditions. Nowhere in India can we find working conditions which meet the international standards. Added to this is the corruption of powerful ministers who take mining contracts in the name of third parties and make millions of rupees by over exploitation of mining areas. The Ineffective government institutions only seem to aid these people and waste millions of rupees of public wealth. There is an urgent need to implement strict controls in allotting and regulation of mining contracts, there needs to be standards which should be met by every contractor to continue with contract or his license suspended until he changes his policies. Ministers need
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to be strictly monitored and all their actions be closely watched by special authorities so as to stop them from exploiting public resources.

References: Vedanta hurt by Church of England decision to sell stake - Economic Times Mining company in eastern India loses millions in investments due to „ethical concerns‟ « Values, morals and ethics - copper mining India (1980-2009) „Ethical Mining‟ and Adivasi Community as „Stakeholder‟ at Sanhati Delhi's ethics law to hit mining groups - BBC News - Ministers 'stole millions in Karnataka mining scam' BBC News - Why mining in India is a source of corruption India, The Next Mining Giant? The 7 Challenges Ahead Top 7 Reasons To Believe In India‟s Mining Future India's Goa State Suspends Mining - Mines and Communities: Norwegian government indicts Vedanta as "grossly unethical"

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