On January 6, 2022, Pentwater Capital Management LP
("Pentwater"), the largest minority shareholder of Turquoise
Hill Resources Ltd. ("Turquoise Hill") (TSX:TRQ) (NYSE:TRQ),
sent the following letter to Ngaire Woods, member of the Board of
the Directors of Rio Tinto plc (“Rio Tinto” or “Rio”)
(LSE:RIO), outlining continued corporate governance failures at Rio
Tinto. On January 7, 2022, Rio Tinto's attorney responded that
neither Ms. Woods nor any other Rio Tinto board member would
respond to Pentwater regarding the ongoing corporate governance
breaches that Rio is inflicting upon Turquoise Hill.
Dear Ms. Woods,
I am writing to you once again in your capacity as a Board
member of Rio Tinto. My goal is to convince you to stop further
harming Oxford’s reputation by continuing to sanction Rio Tinto’s
complete breaches of appropriate corporate governance with respect
to its controlled subsidiary Turquoise Hill.
I had hoped that you would respond to my previous letter dated
November 8, 2021. I assumed that as the Dean of Oxford’s Blavatnik
School of Government, you would be interested in learning as much
as possible about the corporate governance failures and egregious
misconduct committed by Rio Tinto. Since you are one of Rio Tinto’s
newest Board members, you could have been an advocate for positive
change. Instead, you completely ignored our letter, and now you
implicate yourself, as Rio Tinto is in the process of once again
making a mockery of appropriate corporate governance at Turquoise
Hill. It is no wonder Oxford’s own are publicly
criticizing Oxford, and specifically your school, for accepting
donations from a rogue corporate entity like Rio Tinto.
I have previously offered to speak with you and provide you with
my perspective on Rio Tinto’s track record of malfeasance,
accumulated over a decade of being invested in TRQ. Since Pentwater
is TRQ’s largest minority shareholder, it is one of the main
victims of Rio Tinto’s improper behavior. I expected Pentwater’s
interests to be aligned with yours, as an alleged champion of good
governance. It speaks volumes that you were not interested enough
in making a positive difference to bother responding.
The Sunday Times article dated December 23, 2021, which
criticizes Oxford’s cozy relationship with Rio Tinto, likely
explains your silence. The article details complaints raised by
multiple organizations at Oxford University over the fact that
Oxford has accepted large donations from Rio Tinto, including money
that Rio Tinto gave directly to your Blavatnik School of
Government, with Oxford accused of “laundering the reputation of
Rio Tinto.”
Your silence proves the conflict of interest here. How can we
expect you to hold Rio Tinto accountable for its abuses and
violations of basic corporate governance norms, when your own
school at Oxford eagerly accepted large amounts of money from Rio?
How can your students respect your purported ideals of proper
governance if you do not speak out against the sustained misconduct
of the corporate board on which you sit?
It increasingly appears that Rio Tinto intends to saddle TRQ
minority shareholders with the burden of financing the $2.3bn of
debt forgiveness that Rio Tinto has offered the Government of
Mongolia in a misguided effort to whitewash its own mismanagement
and malfeasance at the Oyu Tolgoi mine. Obviously, not only should
TRQ minority shareholders not be forced to foot Rio’s bill, but
they should be compensated alongside the Government of Mongolia for
all the harm they have endured from Rio Tinto using Turquoise Hill
as its corporate puppet for many years.
Your silence on this matter has been deafening. The news of the
donations that the school that you head accepted from Rio leaves
little hope that you will properly fulfill your corporate duties by
holding anyone at Rio to account for their bad actions and by
compensating the victims of Rio’s bad acts. As the article makes
clear, Oxford has an overly cozy relationship with Rio Tinto and
others in the mining business. One need look no further than Rio’s
own Board. For example:
Hinda Garbi, a Rio Tinto board member
since 2020, has been with Schlumberger for 25 years, since 1996;
she is currently the Executive Vice President of Services and
Equipment for Schlumberger. In April 2021, Oxford’s Climate Justice
Campaign released a blistering report, entitled “Money, People,
Reputation, Oxford’s Ties to the Fossil Fuel Industry,” in which it
detailed connections between various corporations (including, but
not limited to, Schlumberger and Rio Tinto) and Oxford.
Jennifer Nason, a Rio Tinto board
member since 2020, is also a Global Chairman for Investment Banking
at J.P. Morgan. Over the past four years, J.P. Morgan has led
Oxford University’s first ever bond sale, for 100-year bonds. Of
course, Rio Tinto has numerous connections to J.P. Morgan,
including that Bold Bataar, the Chief Executive of Copper at
Rio Tinto, previously spent eleven years at J.P. Morgan, with his
entire tenure at J.P. Morgan occurring during part of Ms. Nason’s
tenure.
Mr. Sam Laidlaw, a Rio Tinto board
member since 2017, is listed as an external member for the Oxford
University Said School of Business’s School Board and Global
Leadership Council, which oversees the work of the school and
approves strategic decisions. He is listed as the Chair of Said’s
Global Leadership Council. According to the 2016 Wolfson College
Record, he has even hosted Oxford’s Wolfson College’s Emeritus
Fellows at his home.
Two other Rio Tinto board members, Peter Cunningham, CFO
(and a Rio Tinto employee since 1993), and Simon Thompson,
Chair of the Board (and a Rio Tinto board member since 2014), are
graduates of Oxford.
Despite these conflicts and the fact that your continued
subservience to Rio Tinto’s management will likely harm Oxford
University, it is not too late. You can still take a stand for
appropriate corporate governance. Speak out and act now to prevent
Rio Tinto from committing another egregious violation of corporate
governance norms, while bringing great financial harm on the
minority shareholders of TRQ. Those investors should not be forced
to bear the cost of the proposed $2.3bn settlement. You cannot hide
behind the fact that TRQ is an independent company when Rio
appoints every Board member and refuses to allow minority
shareholders to have any representation on the TRQ Board.
The malfeasance and mismanagement by Rio Tinto detailed in the
Independent Consulting Group’s damning 2021 report of what happened
at Oyu Tolgoi were enabled by the fact that all of TRQ’s recent
CEOs and CFOs have either been Rio Tinto employees (concurrently
with serving in their positions at TRQ) or were Rio Tinto alumni.
Oxford also has its own deep ties to Rio Tinto. And now you are
squarely in the middle of both of these too cozy for comfort
relationships. The time to act is now.
As I stated before, I would be happy to speak with you anytime
on this topic and share the perspective I have accumulated on this
issue through my decade of being invested in Rio Tinto and TRQ.
Kindest Regards,
Matthew Halbower Chief Executive Officer Pentwater Capital
Management
Cc: Members of the Board of Directors of Rio Tinto plc and
Interested Parties at Oxford
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version on businesswire.com: https://www.businesswire.com/news/home/20220113005230/en/
David Zirin- Chief Operating Officer Pentwater Capital
Management 312-589-6401
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