Jonathan Kaufman's blog

One Friday afternoon in October 2004, Anvil Mining employees transported a Congolese army detachment in company plane to Kilwa, a copper mining town located near Anvil’s Dikulushi copper mine, which had come under the control of a small group of poorly armed men who had explicitly announced they did not intend to stop the company’s mining activities.  Over the course of two days, Anvil employees drove the soldiers around Kilwa in Anvil cars while they slaughtered townsfolk, burned their houses, and buried them in mass graves.  When the smoke cleared, over eighty civilian Kilwans were dead. 

On January 24, three judges on the Québec Court of Appeals informed the representatives of the victims that the courts of Canada are closed to their claims for redress.  (The judgment, in French, is available here.) 

As I described in a previous post, the victims of the Kilwa massacre sought justice in Congolese and Australian courts for years.  A Congolese military tribunal acquitted several defendants (including three company employees) of all responsibility for the killings after a trial marred by internationally criticized irregularities.  Australian lawyers who initially took on the case with the intention of suing Anvil at its headquarters in Perth ended up dropping it due to intimidation through costly procedural maneuvers, and interference by D.R.C. officials who prevented them from meeting their clients. 

Are wild claims “facts”?  Oil companies would like you to believe so.  Spend some time perusing the avalanche of submissions that oil and gas companies have sent into the Securities and Exchange Commission (SEC) trying to water down forthcoming rules requiring them to publish their payments to the governments where they operate, and you’ll notice that they have one thing in common: a nearly complete lack of facts to back up their wild claims.   

EarthRights International (ERI) advocates for strong rules because our community partners in Burma and elsewhere want to use payment information to hold their governments accountable for the wealth received from resource extraction.  But the companies complain that if they have to disclose their payments as Congress has mandated, they’ll lose contracts to less transparent competitors and could be forced to violate foreign restrictions on disclosure.  Their lawyers and lobbyists have done their job well – nothing keeps regulators off your back like an appeal to their fear of losing out to the Chinese or crippling American enterprise in uncertain economic times.  Yet their submissions are curiously devoid of evidence; instead of providing facts, the companies pose hypotheticals, speak in generalities, and float widely varying estimates of compliance costs with no explanation. 

Meticulous research by Publish What You Pay coalition (PWYP) members has shown that these scare tactics are just smoke and mirrors.  When you place the companies’  claims next to the actual facts, it's clear that what Big Oil really fears is public scrutiny of its questionable dealings, rather than competitive injury to its operations.  The SEC must show that it's not “in bed” with Exxon and Chevron and their friends and issue rules that comply with the law. 

The Norwegian Government has been given a second chance to put its money where its ethical mouth is.  Earlier this week, a coalition of scientists, environmentalists, and Nigerian community representatives petitioned Norway’s Government Pension Fund to divest from Royal Dutch Petroleum, claiming that the company is violating the Fund’s Ethical Guidelines by causing severe environmental damage through oil spills in the Niger Delta.  Norway should accept the complaint and divest, or risk undermining its public commitment to responsible investment and breaching its own Ethical Guidelines.

The Fund, which is reported to be largest sovereign wealth fund in the world and an influential global investor, subjects its investments to an ethical screen that is meant to prevent Norwegian public money from financing human rights abuses, environmental degradation, war crimes, and the trade in certain destructive products like weapons and tobacco.

Norway’s Council on Ethics investigates companies in the Fund’s portfolio and, based on its research, can recommend divestment if there’s an unacceptable risk that the company’s activities will make the Fund complicit in unethical behavior.  However, the recommendation is not binding; the Norwegian Ministry of Finance can decide to ignore the recommendation entirely, or to prescribe other courses of action, like active shareholder engagement.

The system has often worked well.  The Fund has divested from a number of mining and timber companies based on human rights and environmental concerns; the list of excluded firms even includes Wal-Mart, which was pegged as a violator of labor rights.  It has also divested from arms dealers and tobacco manufacturers.  The Fund was even able to take a position on the Israeli occupation of the West Bank, excluding from its portfolio companies that it deemed to contribute to violations of the law of war.  In a number of other cases, where the Ministry was unwilling to divest completely, it agreed to put companies under observation or practice active ownership with the aim of inducing them to improve their objectionable practices.

Today is International Anti-Corruption Day, so it seems like a great moment to think about what we can all do to assist in the fight against global corruption, which makes products more expensive and less reliable for consumers, increases business costs, and undermines governance in resource-rich countries, exacting an estimated cost of one trillion dollars annually.  As I’ll explain below, one thing we can do is contact Democratic Senators who are planning to propose legislation that could radically undermine U.S. anti-corruption efforts.

There have been lots of positive developments in the fight against global corruption, including:

• The Department of Justice has successfully concluded a growing number enforcement actions against major international businesses that have committed bribery on a massive scale, often in countries stricken by corruption like Nigeria and Haiti.
• Countries like Russia and China have passed strict laws against foreign bribery, increasing the probability that our competitors in those countries will be held to the same standards as those operating in the U.S.
• The U.K. has raised the bar on anti-corruption efforts, passing laws that criminalize all forms of bribery – offical and non-official – and holding companies strictly liable for the actions of their employees.
• International cooperation is on the increase, allowing for cross-border cooperation on an intrinsically cross-border issue.

On the other hand, however, there are worrying developments here in the U.S.  For example:

I usually think of Scandinavian countries as great examples of responsible international engagement – they’re known for protecting the environment, promoting human rights, and not tolerating corruption.  That’s why I was so disappointed with a decision coming out of the Norwegian Ministry of Finance this week.  The Ministry elevated corporate fiction and energy politics over ethical obligations this week by rejecting the findings of its own expert consultants, who recommended that Norway’s public pension fund divest from PetroChina, concluding that the Chinese oil company is linked to severe human rights abuses around Burma’s Shwe Gas Project and a crude oil pipeline under construction across the breadth of Burma.

The Government Pension Fund – Global is entrusted with investing Norway’s surplus oil income and is the first or second largest pension fund in the world, occupying 1% of global equity markets.  For almost a decade, the Fund has been charged with observing strict Ethical Guidelines that restrict the kinds of companies it can invest in.  The government has created an expert Council on Ethics, which can recommend that a firm be “excluded” from the Fund’s investment universe if it concludes that the firm violates the Ethical Guidelines.  These recommendations, which are backed up by rigorous factual research and reasoning, are made public but are not binding on the Ministry of Finance, which makes the ultimate decision on divestment.

The global movement for transparency in the management of natural resource revenues took a major step forward today as the European Union announced a new directive requiring extractive companies to report their payments to governments on a project-by-project basis.  This EU initiative picks up the momentum started when the U.S. Congress enacted disclosure requirements as part of the Dodd-Frank Wall Street Reform Act.  It also decisively rejects the oil industry’s attempts to block the rising tide of transparency.

The new proposals, which are contained in amendments to the EU’s Accounting  and Transparency Directive, are crucial for a number of reasons.  First, they extend revenue disclosure rules to Europe; between U.S. and European regulators, such rules will now apply to the vast majority of extractive companies in the world.  A new, binding global standard for revenue transparency has effectively been set.

News broke this week of a federal anti-bribery investigation against News Corp., Rupert Murdoch's media giant, for paying U.K. police officials for confidential personal information on tabloid targets. This development, together with a report released at a briefing at the U.S. Capitol earlier this month, gives me hope that the tide has begun to turn on the U.S. Chamber of Commerce in its concerted attack on the Foreign Corrupt Practices Act (FCPA), the landmark U.S. law that makes it illegal for companies to bribe foreign officials.

In the last few years, businesses have been forced to pay enormous fines to the Department of Justice for engaging in widespread, intensive foreign bribery. Siemens AG, the German electronics giant, paid a whopping $800 million for corruption that spread across dozens of countries worldwide. In July, two Miami businessmen were convicted of bribing Haitian officials for a telecommunications contract, undermining the devastated country's recovery from earthquake and civil war. They face the potential for hundreds of thousands of dollars in fines.

Meanwhile, U.S. diplomatic efforts have fostered the enactment of anti-bribery laws worldwide and the development of new international norms addressing corruption through treaty law and intergovernmental cooperation. While the FCPA may have been the first law of its kind, the UN Convention Against Corruption, to which 140 nations (including the U.S.) now belong, requires laws criminalizing foreign bribery.

I was thrilled to hear earlier this week that the European Parliament has proposed strong rules that would require extractive companies to publish what they pay to governments around the world – a measure that will increase revenue transparency and help affected community members to hold their governments responsible for the management of national resource wealth.

In Burma, a handful of companies remove billions of dollars in oil, gas, and minerals from the earth each year, providing a sustaining lifeline to a brutal military regime. In Angola, Gabon, and Equatorial Guinea, multinationals provide an oil revenue windfall to notoriously corrupt governments, allowing officials to live lavish lifestyles that bear little resemblance to their modest public servant salaries and contrast tragically with the living standards of most of their citizens. Every day, extractive companies pour millions of dollars into the coffers of dictators and generals, exposing themselves and their investors to serious political risks while devastating the lives of the members of the communities where the extraction takes place. Until now, apart from a scattering of voluntary and domestic disclosure measures, there’s been no way even to inquire into how much this revenue stream costs the affected populations or benefits the public purse.

This all began to change last year, when the U.S. enacted a law requiring oil, gas, and mining companies to publish a wide range of the payments they make to governments for all their extractive projects. That measure is currently caught up in a complicated rulemaking process, in which the oil companies are trying their best to roll back the law and weaken it by introducing loopholes and pushing the government to allow them to report at a high level of generality.

Last week, Accountability Counsel – a long-time ERI partner organization – announced the failure of talks between two Peruvian indigenous communities and Maple Gas, an oil company that used to be headquartered in the U.S., over the severe health impacts of repeated oil spills in the creeks the communities use for drinking and bathing water.  The communities had hoped that this mediation – sponsored by the International Finance Corporation (IFC), which is invested in the extraction project – would help convince Maple to clean up its act and pay compensation.  Unfortunately, the process has run aground over – of all things – the communities’ request that Maple pay for an assessment simply to study the health impacts of its operations.

This development strikes me as being both frustrating and hopeful, at the same time.  On the positive side, the fact that the communities were willing to break off talks suggest a determination not to be bought off, and a display of willpower that will sustain them in the battles that are doubtless to come.  Many other communities, if put in a similar situation, might be overawed by the presence of international financial institution representatives and company officials, and conclude that whatever came out of the negotiation process would simply be the best that they could get.  I suppose I shouldn’t be surprised, though; the last time the communities of Canaán de Cachiyacu and Nuevo Sucre felt that the company wasn’t living up to its promises, they dressed in full traditional war garb and occupied Maple’s production facilities, shutting them down for days.  And with the capable accompaniment of Accountability Counsel, the communities clearly knew when to walk away.

Every once in a while, ERI gives me the opportunity to re-energize my work and build new connections by meeting creative, dedicated activists and lawyers who are fighting earth rights abuses in their home countries.  Last week, in Douala, Cameroon, I got a major dose of inspiration while attending an international conference hosted by the European Center for Constitutional and Human Rights (ECCHR) and the Societé Nationale de Justice et Paix du Cameroun, aimed at linking local African human rights defenders with transnational lawyers.

This conference was the second of a series of related gatherings organized by ECCHR (the first was last year, in Bogotá; the next will be somewhere in Asia, next year), on the theory that human rights lawyers and other activists fighting corporate abuses in host countries may benefit from the advice, assistance, and accompaniment of lawyers in the countries where the companies are based.  Over the  course of the conference, I conferred with representatives of communities from several African countries and listened, amazed, at the courage and brilliance that these activists have brought to their fight against multinational corporations.

Sydney, a young lawyer from Zambia (and an excellent dancer), fights to expose the lopsided contracts of a Swiss mining company in an atmosphere of intimidation where the people have no right to information.  Martine, a grass-roots leader from a community in southern Chad, has repeatedly brought attention to the environmental and humanitarian disaster of the Chad-Cameroon pipeline through complaints to the World Bank's Inspection Panel, the Compliance Advisor Ombudsman's office at the International Finance Corporation, and other forums.  In return for her efforts, she has been jailed and forced into hiding repeatedly, once for over two years straight.  Emmanuel, a former combatant from Sierra Leone, runs a leading constitutional and human rights law practice, fights for media freedom, and is pushing for advocates to use the regional African community courts as means to enforce states' human rights obligations.  Brice, a community defender from Congo-Brazzaville, has used smart public advocacy to persuade Agip, the Italian oil company, to devise a community consultation mechanism that has brought real environmental and economic benefits to forest dwellers.