Corporate governance back in the news!

In today's business newspapers the Kazakh-owned mining firm ENRC is heavily featured. There are some strong criticisms being voiced in terms of the ongoing corporate governance row that has seen some high profile British-based Directors being voted off the board. ENRC, which is listed on the London Stock Market, reported surging first-half profits despite rising costs, as it was boosted by higher metal prices and increased demand from China. The company's profits hit £986million which represents a 33 per cent increase on the previous year. Despite the figures the concerns about the corporate governance issues are the main reason that the company's shares are trading at a 20% discount to its rivals. The background to this story is that a few months back the company's majority shareholders (Kazakh-based) declined to endorse the re-election of the senior independent director, Sir Richard Sykes, the former Head of Glaxo Smithkline. At the time there were suggestions that his demise owed much to him querying the independence of the Chairman Johannes Sittard who is closely aligned to the Kazakhs. There are also worries about the company's Chief Executive Felix Vulis and in particular his failure to reduce the dependence of the company on its Kazakhstan-based operations.