A working reponse from Rio Tinto

Saturday, 01 April 2000


    The Rio Tinto board believes the union resolutions are matters "that are vested in the authority of the boards". But board members have agreed to put them to shareholders at AGMs in London and Brisbane.

    Their response to the resolution concerning corporate governance saysthe board includes a strong independent element headed by R V Giordano, "who is, and will remain, a deputy chairman and the senior non-executive director. This has always been entirely clear, which makes it difficult to understand the purpose of this resolution". "The composition of the Rio Tinto board has in recent times been about one half executive and one half non-executive. This more than satisfies the requirements of the Combined Code on Corporate Governance of the London stock exchange which calls for a minimum of one third of a board to be non-executive and is in line with current practice in the UK. Rio Tinto also meets the requirements of the Combined Code in all other aspects of corporate governance. "In practice, of course, it is the quality of non-executives which counts far more than the number. In Rio Tinto, their standing and experience is exceptional by any measure.

    "The title proposed for Mr L.A.Davis, as a deputy chairman, when he retires from his role as chief executive, is appropriate to his responsibilities when he returns to Australia. As indicated when we announced his appointment, the board sees a clear potential benefit in having an Australian based director who is totally

    familiar with our global business." In terms of the second union resolution dealing with labour practices, the board's response is the following: "Rio Tinto is one of a very small proportion of companies around the world with an explicit statement of business practice, The way we work. "The way we work covers those aspects of this resolution which are relevant to our business. It does not specifically refer to the use of forced or child labour (contained in the code of labour practice that forms part of the union resolution), since neither occurs within the group and never will. It does cover a number of other subjects, not all of which are covered by the core ILO conventions: discrimination, harassment in the workplace, fair and just remuneration, and education, training and development of employees and many other issues. The way we work includes the right of employees to choose whether or not they wish to be represented collectively. "Rio Tinto understands the essential purpose of ILO conventions to be to protect employees from poor employment practices. Signatory governments then reflect them in national law.


    "In view of the ambitious standards described in The way we work which go well beyond standards of business practice required by the governments of any country in which we operate, your directors see no useful purpose in this resolution. Nor do we see shareholder resolutions as an appropriate mechanism for single interest groups to seek amendments to the company's statement of business practice."



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