Managerial Ethics End Term Exam (Academic Year 2015-16)

Batch: 2014-16
HRM Section C
Nikita Khanna
Roll No H14155
Case 8.3: Vedantas Rights on Bauxite Mining in Niyamgiri
Hills, Odisha
Date of examination: 26-Aug-2015

1. Update the selected case with latest developments (adding references) and justify why you
chose this case in terms of its currency, social impact and critical importance.
1997: London-based industrialist Anil Agarwals Sterlite Industries of India Limited signs
memorandum of understanding (MOU) for a mining project with the Orissa government
2002: Land acquisition and a gram sabha notice issued to villagers for the proposed Lanjigarh alumina
refinery project. According to the notice, 12 villages would be razed, 60 families displaced and 302
families would lose their farmland when project materialised
2003: Sterlite applied to the Union ministry of environment and forests (Mo EF) for environmental
clearance for the proposed refinery. The application made no mention of the 58.9 ha of forestland it
required
2004: MoEF granted the refinery environmental clearance on condition that Sterlite got mining
clearance before operationalising the refinery. The approval letter also stated: The project does not
involve diversion of forest land. This, despite the fact that another division of the ministry had
received an application for FCA clearance for the refinery.
2005: In September, CEC recommended to the Supreme Court that mining should not be permitted on
Niyamgiri hill. The report was a scathing indictment of the project and questioned the integrity of the
authorities involved
2006: MoEFs Forest Advisory Committee (FAC) asked the state sponsored Wildlife Institute of
India for a report, which further issued a study on the impacts of the bauxite mining scheme on forests
and biodiversity in Niyamgiri
2007: Vedanta started one million tonne alumina refinery at Lanjigarh hoping to get bauxite
from Niyamgiri. CMPDIL, according to Vedantas lawyers statements during Supreme Court hearings
on May 16 and May 18, 2007, cleared the project of all water-related concerns. CEC iterated its stand
that MoEF had acted irresponsibly and with undue haste in granting Vedanta clearances
2008: The Supreme Court decides not to follow the advice of the CEC and gives approval to Vedantas
forest diversion proposal in Niyamgiri
2009: In-principle clearance for 660.749 ha of forestland for mining was granted on December 11,
2008. Further, in April 2009, forest clearance was given for an additional area of 33.73 ha, despite
widedpread protests.
2010: A four member panel set up by Centre as ordered above found that Vedanta violated forest and
environmental laws in collusion with state officials. Temporary withdrawal of clearance rights by the
MoEF on the recommendations of FAC on August 24.08.10
2013: The SC ordered Gram Sabhas to be held in 12 villages to determine the views of Forest dwellers
on mining. The Vedanta refinery, closed since December 2012, restarted after sourcing raw materials
from other states. The 12th gram sabha held at Jarapa village in Rayagada district also rejected mining.
2014: After rejection of proposal by 12 Gram Sabhas, Environment Ministry issued a letter of
rejection to Vedanta. Vedanta Resources made it clear that it will not look at mining bauxite from the
Niyamgiri hills to feed its Rs 5,000 crore Lanjigarh alumina refinery in Odisha until it gets approval
from the local community.

Jul 2015: In Niyamgiri hills, paramilitary forces have been branding tribal Kondhs as Naxals which is
being viewed as a deliberate attempt to evacuate the land
Aug 2015: Protests organized across 7 locations in India and Africa against Vedanta with reports that
Modi Govt. is insistent about implementing the project in the name of development

REFERENCES:
http://www.livemint.com/Home-Page/TG5NrTlR5yBbDw8jq3QmpL/Timeline--Vedanta-mine-imbroglio.html
http://www.cseindia.org/node/1680
http://www.banktrack.org/manage/ems_files/download/vedanta_resources_in_niyamgiri_a_project_chronology
http://scroll.in/article/738955/the-dongria-kondhs-of-odisha-now-face-a-more-formidable-enemy-than-vedanta
http://www.ritimo.org/Claiming-Niyamgiri-the-Dongria-Kondh-s-Struggle-against-Vedanta
____________________________________________________________________________________________________

Currency, Social Impact & Critical Importance

It is the duty of the government in a democratic state to uphold the interests of its citizens, especially
marginalised communities, and to enforce the prevailing laws. The Environment Protection Act, the
Forest Conservation Act and the Forest Rights Act were all violated in this scenario, and the Odisha
government promised land to Vedanta without considering the concerns of the locals. The Niyamgiri
Suraksha Samiti claims that it is not only 12, but 160 villages that would be affected by the mining
operations. Granted that there is a rationale which states that natural resources belong to the state
(eminent domain) and that locals cannot veto such issues, especially when economic growth will be
beneficial to the public and will generate employment. However, the locals deserve a say, and it is
hardly fair to uproot them against their will when there are other options for sourcing bauxite;
extending an economic principle to ethics, uprooting them is not the Pareto optimal outcome for this
scenario. The freight equalization policy of the Indian government would help make it less costly for
Vedanta to source bauxite from other sites, and doing so would make business sense for the company
as well, given all the bad publicity this situation has created.
Firms exist to create value, and negative externalities should be minimised. Firms do not exist in a
vacuum; inputs for the firm come from its environment, and outputs go back into the same
environment, thus the firm is inextricably linked with its context. The local community is an
important stakeholder in terms of legitimacy and urgency, but it may lack power when it is a
marginalised community like a tribe in the forests of Odisha. While laws exist to protest these
communities from exploitation, it is the firms moral obligation to consider their concerns and
interests while taking any decision that will have an impact on their lifestyle, culture, means of
livelihood, heritage, etc. Governments should protect the rights of the marginalised with extra zeal,
instead of taking advantage of their lack of power.
In the context of todays concept of a firm, social and environmental responsibility have an important
role to play. Sustainability has pervaded all aspects of business, and the traditional business
organisation has been augmented to become a corporate citizen. Social and environmental concerns
have been incorporated into all points in the decision making process, from risk assessment (the
Equator Principles) to reporting (the Triple Bottom Line). In line with these expectations, it is justified
to expect the firm not to do any harm to the environment or the community, to take decisions that
serve the well-being of all stakeholders involved, to actively seek out the opinions and concerns of the
community within which it operates, and to undertake actions and pursue outcomes which maximise
social benefit. As for the policy makers, their duty to their people is inherent in the nature of their job.
Economic prosperity should be pursued, but social costs should be minimised in the process.
3

AOL 6: Assessing the Morality of Vedantas Rights on Bauxite Mining in Niyamgiri Hills,
Odisha by Applying Moral Rules of Deontological and Teleological Justice Ethical
Theories
Moral Judgment: Economic growth at the cost of forced displacement of local communities is
unjustified.
Table 11.5A: Applying Deontological Justice Rules to Justify Vedantas Rights on Bauxite
Mining in Niyamgiri Hills, Odisha
Justice Ethical Theory of
Ethical Rule based on the Ethical Theory of Deontological Justice:
Rules
Deontological Justice
R01
Kantian Formalism: Principles of Universalizability: This principle demands impartiality:
Act inasmuch as your do not unto others what you would not have them do to you. The
act is motivated by a efforts of the Odisha government and Vedanta to push the clearances
law that can apply to and get the mining operations running at the earliest without giving
the local tribes a chance to be heard can hardly be universalized as
all.
acceptable and applicable to all. One can safely assume these entities
themselves would not stand for such marginalization.
R02
Kantian Formalism: Principles of Reversibility: This formulation affirms human dignity
Act inasmuch as your that resides in rationality, freedom, equality & justice. The theory of
natural rights argues that collective goals of the state such as
act is grounded on
prosperity are not sufficient justification for denying individuals their
moral reasons that
right. Thus, the relentless pursuit of the mining operations are not
convince all.
grounded in moral reasons that convince all.
Principle of Deontological Justice among the marginalized: This
R03
Principle of
principle would be clearly & directly violated if the voices of the
Deontological
tribals were stifled and the industrial & economic interests of the
Justice: Safeguard
government and Vedanta were treated as superior. The final decision
economic and social
of the MoFE has delivered on this principle, something which the state
rights and duties of
government itself failed to do, and Vedanta continues to fail to do.
the marginalized
R04
Principle of
Principle of Deontological Justice among corporate executives
involved: When confronted with conflicting rights or duties, it is
Deontological
moral to act letting the situation with all its circumstances define
Justice: Also
safeguard rights and whose rights should prevail, however, after giving additional
protection to the rights of the marginalized and underprivileged. Thus,
duties of corporate
from a moral responsibility standpoint, the executives were dutyexecutives
bound to safeguard the rights of the Dongria Kondh.
Principle of Existential Situationism: Once again, in a situation
R05
Situationanism:
marked by conflicting rights or duties, it is moral to act letting the
When rights/duties
situation with all its circumstances define whose rights should prevail,
conflict, the actual
however, giving additional protection to the rights of the
situation should
underprivileged. The situation pits the larger interests of the state for
determine the
the greater good against those of the local tribe, which is an
decision and
important stakeholder in terms of legitimacy and urgency, but lacks
judgment but one
must own the act and power given that it is a marginalised tribe in the forests of Odisha. It
thus follows that the firm and the state are morally bound to uphold
its consequences.
their rights in such a situation.
R06
Existentialism: When Principle of Existentialism: It is important the agent own the
consequences of his/her actions. The Niyamgiri Suraksha Samiti
amidst uncertainty,
claims that it is not only 12, but 160 villages that would be affected by
risk and ambiguity,
4

R07

right or wrong, truth

or falsehood, and
good or evil cannot
be clearly
distinguished, and
then act in the midst
of doubt.
Legalism: Legitimacy
of government laws
and industry
ordinances

R08

Contractualism:
Binding capacity of
freely agreed on
contracts.

R09

Parenesis: A Code of
ethics that counsels
and exhorts action.
The obligation is
parenetic or
hortatory.

the mining operations. The attempts to underplay the environmental

and social impact of the mining project, in a bid to reap its economic
benefits, does not constitute a justifiable stance in terms of decision
making amidst uncertainty. Risk and return are to be measured not
only in economic terms, but also in social and ecological terms, so as
to respect the rights of the environment & society. Thus,
existentialism does not justify displacing the local tribes.
Compliance to legitimately promulgated and enforced
government laws and industry ordinances: The Environment
Protection Act, the Forest Conservation Act and the Forest Rights Act
were all violated in this scenario, and the Odisha government
promised land to Vedanta without considering the concerns of the
locals. Vedanta should not have set up their refinery without obtaining
permits, and the state government should not have made promises
without complying with legal & moral codes of conduct in a bid to
fuel investment. An investor-friendly government may follow the
principles of realpolitik, but the plight of displaced tribal peoples who
continue to suffer from their loss of habitat and livelihood cannot be
ignored, and a more optimal outcome must be strived for.
Compliance to freely agree on contracts: Vedanta encroached upon
forest land without waiting for the final clearance, based only on the
preliminary clearance & the promises of the Odisha government. Even
if one does not take this to be a violation of a contract & gives
Vedanta the benefit of the doubt, that does not lend ethical or moral
authenticity to their actions, given that rights & laws were being
violated.
Is wealth maximization ruled by credible and valid industry and
corporate ethical codes of conduct: Codes of conduct in industry &
mining do not permit flouting of laws or violations of the rights of
local communities, with encroachment upon forest land and
displacement of tribals against their will. In fact, Vedantas own code
of conduct emphasizes upholding human rights, compliance with law
& regulations, relationships with stakeholders, and protecting the
environment. Thus, though this code may only exhort & not bind, it is
being violated.

AOL6: Table 11.5B: Applying Teleological Justice Rules to Justify

Vedantas Rights on Bauxite Mining in Niyamgiri Hills, Odisha
Justice Ethical Theory of
Rules
Teleological Justice
R10
Hedonism:
Satisfaction and
Pleasure of all
(Jeremy Bentham)

R11a

Utilitarianism (J. S.
Mill): Maximize
utility of all

R11b

Consequentialism (E.
Anscombe 19202001): Maximally
reduce harmful
consequences to all.
Eudemonism
(Aristotle): Principle
of happiness of the
maximum

R12

Ethical Rule based on the Ethical Theory of Teleological

Justice:
Principle of Universal Hedonism: This principle was most definitely
not upheld by the state government & Vedanta in all their efforts to
push for the mining operations to start, in a bid to line the pockets of a
few, at the expense of the well-being of the local community. With
their lifestyle, culture, means of livelihood, heritage, etc being
impacted, it is quite logical that the Dongria Kondh were not satisfied
with their land being encroached upon.
Principle of utility-maximization of the greatest number fulfilled:
This outcome was not being pursued by Vedanta & the Odisha
government either. The benefits of industry & profits reaped from
such an enterprise will line the pockets of a few, majorly UK-based
Vedanta, and the political classes in Odisha. The trickle-down effect is
more urban legend than reality, and the state of the common man in
Orissa only brings this point home. This can perhaps best be explained
by the resource curse (or the paradox of plenty). Myrdals theory of
backwash also applies here.
Maximally reduce harmful consequences to all: This rule of
consequentialism was not being adhered to either, given that the
outcome being pursued by the state & Vedanta was producing a gamut
of harmful consequences for the local tribe, while maximizing benefits
accruing to themselves.
Principle of happiness of the maximum fulfilled: The happiness of
the state, desperate to promote industrial activity, and that of Vedanta,
happy to exploit the resource rich Niyamgiri Hills for profit, were
most definitely being pursued, but the happiness of the Dongria
Kondh was being subordinated to the agenda of the state & the firm.
Not only were they going to be displaced from their homes, their
religious & spiritual well-being was going to be impacted as well,
given that they considered the hills holy.

AOL 6: Table 11.6: Assessing the Morality of Vedantas Rights on Bauxite

Mining in Niyamgiri Hills, Odisha by Applying Moral Rules Based on
Distributive Justice Ethical Theories
Distributive
Justice
Rules
R13

Ethical
Theory of
Distributive
Justice (DJ)
Formal
Justice:
Egalitarianism
(Canon 1)

R14

Socialist
Justice
(Canon 2)

R15

Naturalist
Justice
(Canons 3 &4)

R16

Retributive
Justice
(Canon 5)
Capitalist
Justice
(Canon 6)

R17

R18

Libertarian
Justice
(Canon 7)

R19

Libertarian
Justice
(Canon 8)

Ethical Rule based on the Ethical Theory of Distributive Justice:

Aristotles Canon of Equality: Egalitarianism emphasizes equal access to

the goods of life that every rational person desires based on need and equality.
The Dongria Kondh were being marginalized, with their needs & desires
being subordinated to the greater good in terms of economic prosperity for
the state. This violates the canon of equality.
The Canon of Need: There are other options for sourcing bauxite; the freight
equalization policy of the Indian government would help make it less costly
for Vedanta to source bauxite from other sites, and doing so would make
business sense for the company as well, given all the bad publicity this
situation has created. On the other hand, rehabilitation of displaced tribes does
not have a very good track record in India. As the Dongria leader, Lodu
Sikaka, put it: "We'll lose our self-esteem if they take away our hills and
forests. Other Adivasis [India's tribal peoples] who have lost their homes are
dying of desperation; they are being destroyed. Earlier they used to till their
land but now they are only drinking without working. They have become kind
of beggars." [source]
The Canon of Natural Merit & Ability: This canon emphasizes rewards
based on ability. This canon is not being violated given that rewards are not
being pursued or distributed in a manner that disregards ones merits. Vedanta
has the ability to mine Bauxite, and refine it into alumina.
The Canon of Effort: This canon is not being violated either, as the situation
does not involve rewards that do not recognize relative levels of effort.
The Canon of Productivity: This canon invokes the economic principle of
free enterprise capitalism. This system rewards services rendered, capital
advanced, risks run, and profits generated. Thus, Vedanta & the state were
adhering to this cannon in their efforts to promote the mining project
The Canon of Social Utility: This cannon distributes surplus according to
ones value to society or the common good. From the point of view of the state
& Vedanta, this cannon was being upheld, given that economic progress &
industrial growth in the state would add to common good. However, this is a
very subjective evaluation. What is common good? Does sacrificing the wellbeing of the local tribes in the pursuit of economic growth count as common
good? Moreover, to whom would the surplus really accumulate? Given
Odishas history, it is a classic example of the resource curse (or the paradox
of plenty), and the odds that the benefits will actually be reaped by the
common man seem quite bleak based on the current state of affairs.
The Canon of Supply-demand: This canon invokes the economic principle
of laissez faire that defines (socially) useful contributions by the law of
supply and demand. From a purely market-oriented standpoint, Vedantas
mining operations make sense, and this cannon was upheld. However, this is
not necessarily moral; how stable and ethical are market-exchange values?
Moreover, the need for state intervention as a means of protecting the rights
of the marginalized cannot be emphasized more in a situation such as this
one. Profit-generating capabilities should not be the only consideration in
such scenarios.

R20

Individual
Justice
(Rescher)

R21

Fair
Opportunist
Justice
(Rawls)

R22

Libertarian
Egalitarian
Justice
(Rawls)

R23

Libertarian
Justice
(Nozick)

R24

Nonmalfeasance
Justice (USA)
Preemptive
Justice

R25

R26

Protective
Justice

R27

Procedural
Justice;
Corrective
Justice

R28

Beneficent
Justice

Reschers Canon of Legitimate Claims: Legitimacy of claims goes hand in

hand with an equitable reward system. The claims of the Dongria Kondh are
legitimate, given that they have the backing of the legal system, and they have
the right to their ancestral land from a moral, egalitarian & natural justice
standpoint. The claims of Vedanta are not as legitimate given that they have
no right to the land, and they can source bauxite from elsewhere. The claims
of the government are more legitimate as the state has a say in land related
matters (eminent domain), but the duty of a democratically elected giverment
to its citizens, especially the marginalized, cannot be overlooked.
Rawls Equality Principle: An executive action is ethical if it offers all
stakeholders fair opportunity for benefits. The actions that Vedanta wanted to
take in terms of pushing for clearance for their mining operations do not
afford fair opportunities to the local tribes, as the benefit distribution is
skewed in favour of the firm.
Rawls Difference Principle: An executive action is ethical if it seeks to
nullify among firm's stakeholders the advantages stemming from the
accidents of biology, geography and history. At first glance, one may see this
principle as being upheld by Vedanta & violated by the tribals, but this
evaluation would be shallow. The right of the tribals to be heard can hardly be
attributed to an advantage stemming from an accident of history; this is a
basic human right & is ethically & morally sound in terms of egalitarianism,
natural justice & deontology. On the contrary, the unfair advantage lies with
the corporate giant in terms of muscle power, and the support of the Odisha
government which has been trying to get the clearances from the MoFE to get
the operations started. Thus, strict egalitarianism was violated.
Nozicks Principle of Distributive Justice: This principle relates to justice
in acquisitions & transfer. The relentless pursuit of the mining clearances by
the state & the firm with little regard for the rights of the local tribes, and for
the laws that protect forest land & forest dwellers, violates this principle.
Principle of Strict Liability: The principle of non-malfeasance was also
violated, given that the displacement of the Dongria Kondh would most
definitely cause harm to their emotional, spiritual & social well-being.
Principle of Preventive Justice: The actions of Vedanta & the state
government were in violation of this principle as well. Not only were their
intentions geared not to prevent harm, they were in fact causing harm, both
ecological & social.
Principle of Protective Justice: The Dongria Kondh were not being
protected from harm in the scenario being pursued by the state & Vedanta.
The irony here is that by the very nature of democratic governance, it is the
duty of the state to protect the rights of the marginalized.
Principle of Procedural Justice and Corrective Justice: The actions of the
firm & the state were not correcting any past injustices, they were in fact
committing one by pursuing their own goals & violating the rights of the
locals to be heard. Justice in the procedure in terms of hearing the locals out,
as well as justice in terms of the outcome where they would end up being
displaced, was not being delievered,
Principle of Beneficent Justice: It is the duty of the executive not only to
avoid, prevent & protect from harm, but also to actively strive to do &
promote good. As for the state, it is once again inherent in its nature & very
reason for existence that these outcomes be delivered. Once again, alas, this
rule was violated by the state & firm in their pursuit of economic gains.