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June 10, 2011 8:30 pm
The board of Eurasian Natural Resources Corp cracked apart last week after bitter arguments between the owners and the directors of the Kazakh miner became public.
ENRC is one of London’s largest mining companies by market value and runs highly profitable chrome and iron ore mines in Kazakhstan. The ousting of two well-respected independent directors shocked the City.
But it confirmed some investors’ concerns about corporate governance at ENRC and other emerging-market-based resources companies on the London exchange. ENRC shares have traded at a discount to the mining sector this year, reflecting such concerns.
Sir Richard Sykes, the former chief executive of GSK and ENRC’s vice-chairman, was one of two independents whom shareholders voted off the board by a margin of more than 80 per cent after voting at their annual meeting. The other was Ken Olisa, former IBM executive.
Mr Olisa claims that both men were punished for complaining about the board’s “progressive dysfunctionality” and the need for better corporate governance. At the heart of both men’s complaints is their impression that the three billionaires who founded ENRC control undue influence over senior management despite not holding a majority of shares.
The board’s meltdown appeared set to continue as Mehmet Dalman, the third independent director, was poised to resign.
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