It’s time for a mining rant! Our most important audience, our shareowners, need to be given more respect. We, the management of the mining industry, have allowed the securities regulators, stock exchanges, lawyers, accountants and governments to confuse, abuse and excessively tax us and in turn our shareowners. We produce financial statements, information circulars and other impenetrable documents that I am certain very few shareowners read due to the massive size and mind numbing narrative of these documents.
Think back to a time when you can remember a prospectus that had a one-page summary, or a one-page discussion of risk factors. Let me tell you, it was a very long time ago!
Our shareowners have a right to understand every document that we give them. It should be clear, concise, in plain language and that can be quickly comprehended. For that matter, management also needs to understand the materials we are sending our shareowners, which frequently doesn’t appear to be the case. For example, do you understand fully the 16-page letter of representations and warranties that your auditor drafts and demands that you sign before giving you an unqualified audit opinion on your annual financials? Do you think your shareowners have a chance in hell of following all the notes to your financials that might run 25-50 pages long?
Why have we let our financials reports become so obtuse?
We need to take back the ground we have lost to these pencil pushers and insist on getting value for the great and growing expense that accounting has become. Internal auditors, external auditors, tax auditors and consulting auditors have become a common feature and a plague. Have you ever looked at the size of the Securities Acts that dictate the behaviour of public company management?
These documents have grown tremendously in size and scope. They have been drafted by a myriad of lawyers with the stated objective of protecting the public, but the unstated objective appears to be business development for the legal community. The beadyeyed lawyers who work for a few years at the security regulators, long enough to author a new regulation that they become an expert in and then return to their law firm in order to advise clients, public companies, on their brilliant bit of confusion.
There are so many security rules and regulations that no one in the world has the mental capacity or capability to know and understand all these rules.
As a result, our regulators have inadvertently created an environment that is the opposite of what they say they are doing. The multitude of rules has produced a playground for the criminally inspired and inclined, because there is no common knowledge of all the rules.
As a result, the thieves are free to steal with virtual impunity and the crimes keep growing in size. Think of Madoff, Enron, Northern Telecom, BreX and the many other thefts of shareowners’ wealth.
How many more rules, regulations and defrauding of the public has to occur before we scream stop this nonsense? We should be pushing for much, much fewer securities regulations so that everyone has a chance to know all the rules and would be able can spot and stop a criminal instantly!
Let’s use Moses as a good example and give everyone the 10 commandments of securities law. Many of us have used the unfortunate phrase “a mining friendly jurisdiction” to describe the location of our property, but experience has demonstrated that this statement is at best a short-lived fantasy! We need to aggressively demand stronger protections for our shareowners’ capital from the avarice and capricious nature of governments!
Get battle ready! It’s time to go on the offensive! Let’s show our shareowners’ that we are serious about protecting their capital!
Rob McEwen is chair and chief owner of McEwen Mining.