WARREN BUFFETT’S MESSAGE? Gather Wealth by Beggaring People, Then Hand Out Alms

POSCO affected villagers seek responsible investment, not charity, from Buffett

March 23, 2011: Warren Buffett, one of the world’s richest individuals, will urge India’s ultra-rich to give away their wealth to charity at an exclusive dinner in Delhi today. At the same time, in Orissa’s Jagatsinghpura district, the struggle of thousands of villagers condemned to destitution by Korean steel giant POSCO underlines the hypocrisy inherent in Buffett’s message of philanthropy. Warren Buffett owns about 5% of POSCO, making his investment house, Berkshire Hathaway, the single largest owner of POSCO outside Korea.  This also makes him one of the biggest enablers of POSCO’s drive to rob over 50,000 villagers of their lands and livelihoods, rendering them destitute, while depriving India of large amounts of its natural resources with no known benefit to the country.

Berkshire Hathaway bought shares in POSCO in 2006, a year after POSCO had signed a Memorandum of Understanding with the State of Orissa to build an integrated steel plant in Orissa, including captive mines and a new dedicated port to ship ore and steel out of India.  In the five years since then, even as POSCO’s project in India ran into strong opposition from the thousands whose lives would be uprooted by the steel plant, Berkshire Hathaway’s POSCO stock has more than doubled in value besides yielding millions of dollars in dividends. Buffett has held onto POSCO’s shares at a time when the company has been complicit in violence against villagers in Orissa and when its dealings have been mired in corruption and deeply subversive of the democratic process.

Buffett’s Cause: Eradicating Poverty or Creating It?

“How can Buffett claim to care for the poor,” asks Professor Sirisha Naidu, “if his investments lead to the creation of that poverty in the first place?”  Prof. Naidu, a US-based economist, is part of the Mining Zone People’s Solidarity Group (MZPSG), which researched and documented how the POSCO project would demolish the thriving agrarian economy in Coastal Orissa and pauperize over 4000 families who are currently self-sufficient. As documented in MZPSG’s report, Iron & Steal: The POSCO India Story, betel leaf cultivators in the area earn an annual average of Rs. 40,000 per decimal of land (100 decimals = 1 acre). POSCO’s project pushes them into giving up this steady income in return for a paltry, one-time compensation of Rs. 11,500 per decimal – less than a hundredth of the compensation due by any reasonable measure.

In addition to the 22,000 villagers who will be displaced due to the construction of the steel plant, a further 20,000 to 25,000 people from around 30 neighboring villages will lose their livelihoods as fisherfolk because of the new port POSCO will build to ship iron ore and steel out of India. Furthermore, the extraction of coal and iron ore for POSCO’s steel plant will cause 116 villages, 32 villages in Keonjhar and 84 villages in Sundergarh, comprising mostly adivasi households, to lose access to the forests on which they are dependent. As documented in Iron and Steal, and contrary to the Orissa government’s inflated claim of hundreds of thousands of jobs, the POSCO project will generate a maximum of about 17,000 permanent jobs, jobs which are completely unsuited to the skills of the affected populations, and thus inaccessible to them.

As troubling as the widespread impoverishment of local populations is, it is only one of the disturbing outcomes of the POSCO project. For instance, as Dr. Girish Agrawal, a lawyer and civil engineer who works on infrastructure policy issues, points out, the terms of the Memorandum of Understanding between POSCO and Orissa are heavily tilted in favour of POSCO, designed to allow POSCO to extract and export vast amounts of India’s resources at negligible net cost to the company. “I can hear Warren Buffet laughing all the way to the bank while he smugly offers advice about charity. Welcome to twenty-first century colonialism.”

Another major negative impact of the POSCO project for India will be the environmental devastation it will cause. The port that POSCO proposes to build will be situated along the ecologically sensitive Jatadhari creek. Designed to be among the largest ports in Asia, it will spell doom for the vulnerable Olive Ridley turtles which come there to nest.  A study conducted by the Environmental Support Group and the National Forum of Forest People and Forest Workers demonstrates that the environmental clearances granted to POSCO were obtained fraudulently, by deliberately suppressing relevant information and misrepresenting the project. These findings were supported by inquiry commissions instituted by the Indian Ministry of Environment and Forests.

Charity versus Divestment

“While giving to the poor is commendable, isn’t it more ethical and honest to use your millions in ways that at least do not destroy livelihoods and condemn people to poverty?” asks Murli Natrajan, a member of MZPSG and a university professor in New Jersey.  Noting that Warren Buffett does not lack for opportunities to invest his billions in less rapacious companies than POSCO, Prof. Natrajan commented on the hypocrisy inherent in making millions of dollars by dispossessing well-to-do farmers of their lands, making them dependent upon charitable aid, and then making grand gestures by bequeathing millions to charity.

Recounting the brutal repression that local popular and democratic resistance to the POSCO project has faced over the past five years, with thousands of people severely beaten, many grievously injured in shooting rampages by state security forces, people being killed, spokesperson for the Posco Prathirodh Sangram Samiti (PPSS), Prashant Paikray says, “The villagers of Jagatsinghpura don’t want Buffett’s millions- they simply want to get on with the lives of quiet dignity they have led all this time.  All we are asking is for Buffett to ensure that his money is not used to force us away from our lands, and drive us into destitution.”

In 2006, Warren Buffett pledged to commit almost all of his wealth “to benefit others who, through the luck of the draw, have received the short straws in life.” In cases such as the POSCO project in Jagatsinghpura, the “short straws” are not due to luck, but a direct result of calculated decisions made by corporations, their lobbyists and the local governing elite who do not give a hoot about human and social costs, and violate all democratic processes to ensure private profits. These abuses can be curbed if people such as Warren Buffet divest from companies that put profits before people, and refuse to turn a blind eye to the ugly side of the businesses they own and support. That realization, the villagers of Jagatsinghpura hope, is one that Mr. Buffett will arrive at before it is too late for them and their families.


Comments

WARREN BUFFETT’S MESSAGE? Gather Wealth by Beggaring People, Then Hand Out Alms — 3 Comments

  1. well analysed ! i think sense of brotherhood and concern for fellow human being is completely lost , now in this era. building quick wealth at ant cost is the only mantra, in the name of development and economical growth. the so called corporates are blind for convenient reasons to suit their ambitions ,all over the world now. truly a misfortune for living beings at this point of time in this planet now.

  2. well analysed ! i think sense of brotherhood and concern for fellow human being is completely lost , now in this era. building quick wealth at any cost is the only mantra, in the name of development and economical growth. the so called corporates are blind for convenient reasons to suit their ambitions ,all over the world now. truly a misfortune for living beings at this point of time in this planet now.

  3. Pingback: Morituri Te Salutant | thepelicanbriefcase

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