‘You’ll have to talk to the UK staff’: can global water investors be held to account?

Most Malaysians know the YTL Corporation. Take the high-speed train from Kuala Lumpur International airport to the centre of the capital – YTL built it. Make a phone call in the country and it could be on YTL’s network. Its subsidiaries run luxury resorts, develop land, and manufacture cement. But tell them it supplies water to south-west England and that may surprise some in the south-east Asian nation.

In 2002, the bust US energy trader Enron sold 100% of Wessex Water to YTL Power International, a YTL Corp subsidiary, for about £545m plus £695m of Wessex debt. The Malaysian company saw its investment as the start of an expansion into Europe, although for its chair, Francis Yeoh, it was something more.

When the then Prince Charles awarded Yeoh a knighthood in 2019, the businessman credited his time studying civil engineering at Kingston University in the late 1970s for the growth of YTL. “In Britain, there is a real premium transparent, coherent regulatory framework, where the rule of law is the order of the day,” Yeoh was quoted as saying in the 2018 book Power Talk: Insights from Asia’s Leading Entrepreneurs. At a Malaysian government forum in 2014, Yeoh explained his preference for operating in countries such as Britain, Singapore and Australia. “The good thing about these three territories, I do not have to kowtow to the prime minister before I do a deal, I do not have to see them even, even after I have won the deal,” he said.

However, when the Guardian tried to reach Yeoh, 68, to ask about the pollution of English waters, his daughter Rebekah Yeoh Pei Wenn, a YTL director of corporate finance, said he was unavailable to discuss this topic “as we draw closer to our quarterly board meetings”.

After making an approach by phone, the Guardian went to the YTL Power offices in Kuala Lumpur – a stone’s throw from one of YTL’s numerous hotels, the Ritz-Carlton, to ask if it would be possible to speak to anyone there about the water company. A receptionist confirmed that “YTL is the owner of Wessex Water, but the staff are based in the UK, you will have to talk to them”.When the Guardian followed up via email, it was politely but firmly told that the chairman was unavailable, adding: “We wish you all the best for the article.”

Yeoh took over the running of YTL in the 1980s from his father, the late billionaire Yeoh Tiong Lay, whose initials form the company name. Forbes ranked him 17th on the list of Malaysia’s 50 richest people in 2022, with a net worth of $1.25bn (£1.04bn), which he shares with his six siblings.

An evangelical Christian, his apparent Twitter account posts biblical scripture, family videos and nods to the late Italian tenor Luciano Pavarotti, who enjoyed the Malaysian coast.

In February 2021, he tweeted: “YTL listed in the KLSE [Malaysia’s stock exchange] in 1986, we had total assets of USD20m. Today we are blessed with global assets of USD20b. This is miraculous!”

BlackRock: ‘We engage … but it is not the role of minority investors to direct these companies’

Every January, Larry Fink sends a letter to the world’s chief executives. Few of them can afford to ignore it.

The billionaire investor is the chair and chief executive of BlackRock, the world’s largest asset manager and a company that oversees a portfolio of investments that was worth more than $10tn at the start of the year – twice the annual economic output of Japan.

In recent years, Fink, 70, has been much concerned with the environment and has become, arguably, the most important proponent of “stakeholder capitalism” – the idea that a successful business must take into account all its “stakeholders” – employees, customers, partners, society and the environment, and not only this quarter’s profits.

It is not that Fink sees stakeholder capitalism as antithetical to making profits – far from it. “Stakeholder capitalism is not about politics. It is not a social or ideological agenda. It is not ‘woke.’ It is capitalism driven by mutually beneficial relationships between you and the employees, customers, suppliers, and communities your company relies on to prosper. This is the power of capitalism,” Fink wrote in his 2022 letter.

Most of BlackRock’s equity holdings are held through funds that track stock market indexes by buying shares in the companies that make up those indices, which is how it came to be a major shareholder in the English and Welsh water utilities market.

BlackRock holds significant investments in Severn Trent, which was fined £1.5m for sewage discharges last year, South West Water, which is being investigated for raw sewage dumping, and United Utilities.

BlackRock does engage with the companies it invests in and publishes a report of those engagements. The report shows the investor has engaged with Severn Trent, United Utilities and Pennon, of which Bristol Water and South West Water are subsidiaries. It does not detail the specifics of those conversations but, according to its guidelines, the conversations are about “pursuing durable long-term value”. “We believe that companies that take into consideration environmental, social and governance (ESG) risks and opportunities are better positioned to deliver long-term value,” the guidelines state.

Asked about the worrying reports and allegations of environmental damage by its investments, a BlackRock spokesperson said: “As a minority investor on behalf of our clients, we engage with publicly listed UK water companies on governance and material sustainability risks. It is not, however, the role of minority investors to direct these companies – this role is the responsibility of their management teams with appropriate board oversight, and as determined by their regulator.”

CK: No response

Apart from being the richest person in Hong Kong, CK Hutchison Holdings’ former chair Li Ka-shing, 94, also enjoys a near-mythical status in the city.

He is known for working his way up from a watchmaking apprenticeship to eventually owning a factory specialising in manufacturing plastic flowers and other plastic goods in the 1950s.

After that, Li moved into real estate, port operations, retail and telecommunications, consolidating his position as the most influential businessman in Hong Kong over the span of decades.

Li’s self-made reputation is woven into Hong Kong’s own “Lion Rock spirit” mythology, which attributes its economic growth from a coastal village to an international finance hub to perseverance.

Today, Li’s businesses in Hong Kong have near-total reach in its residents’ daily lives: from the supermarket they shop in, to their cellular provider and more than 100 housing projects where they live.

The tycoon’s influence is reflected in a widespread joke that says Li has the power to divert typhoons, so as to not disrupt work and production in Hong Kong. Among Hong Kong citizens, he is nicknamed “Superman”.

CK Hutchison Holdings is active in about 50 countries, employing more than 300,000 people worldwide. The corporation operates in 52 ports in 26 countries, has telecom networks in Europe and interests in Australian gas and Dutch energy. Among its many interests is Northumbrian Water in England, which was fined more than £500,000 last year for sewage pollution and is being investigated by Ofwat as part of a larger look into ongoing issues in the sector.

This summer, CK Infastructure sold off a 25% stake in the company, which provides water for 2.7 million people in the north-east of England, to the New York-listed private equity firm KKR for £867m.

The Guardian contacted CK Infrastructure to ask why it had bought an English water company; whether it still regarded English water as a good investment, and what responsibility Li Ka-shing and CK Infrastructure felt they had for the water system in England and towards the English public? However, despite a number of approaches, there was no reply.

Contributors

Lorcan Lovett in Malaysia, Dominic Rushe in New York, and Sum Lok-kei in Hong Kong

The GuardianTramp

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