Where is the moral indignation about the Nyrstar case?

While Trafigura ransacks and incorporates Nyrstar, a jewel in our industrial crown, everyone stands by and watches.

The Turnhout Commercial Court will on Tuesday deliver an interlocutory judgment in a case brought by a group of minority shareholders against the zinc processing company Nyrstar and its majority shareholder Trafigura. The court must decide whether it can hear the case on the merits, or whether it should follow the argumentation of Trafigura that the court lacks jurisdiction.

Trafigura took a minority stake in Nyrstar in 2015. The global commodities trader has since used that for a perfidious cuckoo strategy. It places its men in key positions and manages to influence decisions that go against the interests of Nyrstar and serve those of Trafigura. They force Nyrstar NV into commercial agreements and debt obligations that only serve the interests of Trafigura. Mines are sold at prices far below their market value, with some of them later found to indirectly benefit Trafigura again.

Trafigura is slowly eroding Nyrstar. In 2019, it provoked a completely preventable liquidity crisis by withholding at least EUR 400 million in committed upfront payments and credit facilities that would have saved the company. This gives Trafigura the opportunity as a 'white knight' to come to the rescue of Nyrstar with new strangleholds. By making use of a restructuring mechanism under British law, it gets 98 percent of Nyrstar for next to nothing via a shell company in the UK.

Do not allow our economy and businesses to fall into the hands of people and institutions of questionable reputation.

A large group of Belgian minority shareholders did not leave it at that and instituted legal proceedings at their own expense against the board of directors of Nyrstar NV and Trafigura. But their battle is one of David against Goliath. Trafigura is not only a powerful trader, it is also a company that is let to punish. As soon as things come to a head, it surrounds itself with an army of experts and business lawyers to avoid conviction. Trafigura is involved in several lawsuits worldwide. The company has been convicted in the Netherlands, and is suspected of corruption and forgery in Brazil and China. Despite European sanctions against Russia for its invasion of Ukraine, Trafigura has until recently maintained good relations with Russian banks and companies owned by President Vladimir Putin's oligarchs.

The minority shareholders are facing a formidable opponent. But they are alone in their struggle. Where is the public moral outcry on this matter? A company is flagrantly violating its governance rules and its fiduciary duties to loot and take possession of a jewel in Belgium's industrial crown, while everyone stands by and watches. Let us hope that this is due to a lack of factual knowledge.

Watch Dog

This does not apply to the FSMA, which is supposed to watch over the interests of all shareholders, and therefore especially the minority shareholders. The financial watchdog opened an investigation more than two years ago and has access to a whistleblower: the former internal auditor of Nyrstar NV. Until now the FSMA remains silent.

Is the watchdog interested in hiding? Is he in danger of having a conflict of interest? What if it turns out that the FSMA has not acted diligently? Isn't it time to apply the recommendations of the European regulator ESMA, which state that it is time for more governance at the regulator?

This is the biggest hold-up in Belgian industrial history. Isn't it about time that Belgian society is informed about the provisional or final conclusions of the FSMA

This is the biggest hold-up in Belgian industrial history, involving - apart from the minority shareholders who brought the case - numerous Belgian investors. Is it not time that society is informed about the preliminary or final conclusions of the FSMA? And is it not time for other institutions and individuals to assume their responsibilities, to show ethical leadership and not to compromise our values and moral standards? Where are the politicians? And the business world? It is time to let our institutions show what they know and what they stand for. Let justice do its work. Do not allow our economy and businesses fall into the hands of people and institutions of questionable reputation.

The Nyrstar case is a symptom of a wider disease. A year ago, The Economist called Belgium 'the most successful failed state' in an article. If a state continues to fail in some of its most fundamental roles, it will not remain successful. It is time to startrethinking what we stand for and how we can make our state and our institutions work again. That will require ethical and political leadership. Founded on moral indignation.

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Published in De Tijd