Jonathan Kaufman's blog

Bloomberg reported last week that Zijin Mining – China's biggest gold mining company – had been fined $4.6 million dollars for environmental pollution, and that high company officials had been detained in connection with toxic spills in Fujian Province. The article focuses on the growing efforts of the Chinese government to enforce environmental laws, at least in extreme cases, and points out the inadequacy of fines that reach into the millions of dollars in a mining industry that sees revenues in the billions.

Zijin itself has a troubling record when it comes to accountability for earth rights abuses. It is the parent company of Monterrico Metals, a mining company formerly based in the UK, which has been implicated in the torture of several unarmed protesters at the Rio Blanco mine in Peru. In 2009, a British judge had to issue a freezing order preventing Zijin from removing all its assets from the UK, which would have shielded it from executing any eventual judgment against Monterrico for its actions. (The Monterrico case goes to trial in the UK later this year.)

These latest developments remind of us the continuing urgency of two of the biggest question marks in the field of corporate social responsibility: As Chinese extractive companies begin to operate more widely throughout the world, will they operate according to global standards of responsible behavior? And what will be the Chinese government's role, if any, in ensuring that they do?

On April 7th, the Doe Run Company, a U.S. mining and smelting corporation, initiated an international arbitration against Peru, claiming that Peru treated it unfairly by imposing and enforcing environmental remediation requirements at the company's notoriously polluting smelting facility at La Oroya, which has been described as one of the most polluted places on Earth. This appears to be the latest in a series of moves by extractive companies to retaliate against countries that dare to apply environmental and other public interest regulations, in the guise of upholding free trade agreements.

The Doe Run saga is complex, but the two-sentence backstory is that after taking over a heavily polluted facility from a state-owned entity, the company defaulted on its environmental obligations (called “PAMA” in Peru) repeatedly over the course of twelve years of operation, requiring the Peruvian government to grant extensions and, eventually, impose itself as a preferred creditor to ensure environmental performance. In 2009, the company decided to close the smelter, citing financial problems related to the global recession and Peru’s environmenal demands, and now faces bankruptcy proceedings in front of a Peruvian regulatory agency.

Railway Station in La Oroya, Peru

Rather than cleaning up its act and paying its creditors, however, Doe Run has struck back by hauling the Peruvian government in front of an arbitral tribunal and claiming that Peru has violated the U.S.-Peru Free Trade Agreement. Among other allegations, the company insists that Peru treated it unfairly and inequitably and devalued its investment by imposing environmental obligations and positioning itself as one the company's creditors through the PAMA process. Moreover, it now insists that Peru is required to assume liability for all environmental pollution at La Oroya, including lawsuits brought by Peruvian children against Doe Run in a state court in Missouri.

I’ll bet you think that one of the perks of being a shareholder in a corporation is the power to express your displeasure about corporate policies and vote to replace directors if you’re unsatisfied with their performance.  If you’re under this impression, then you’re legally right.  But judging by recent actions at the big oil companies, you’re only right in practice if you express opinions with which top management agrees and – heavens forbid – you’re not trying to speak for the people who are dispossessed and impoverished by the corporation’s operations.

Until today, I thought Chevron was the only oil company that had gone beyond the now-familiar practice of ignoring the complaints of communities affected by its operations, and had become so arrogant as to suppress the dissenting views of its own shareholders.  (Last year in May, representatives of communities around the world were turned away, threatened, and in some cases arrested despite holding valid proxies executed by Chevron shareholders that authorized them to enter the meeting, speak to the assembled shareholders, and vote on their behalf.)

Then I read that BP, too, had excluded shareholders from its annual meeting this week. The article does not explicitly say which shareholders were excluded, noting only: 

Outside the Excel convention center in the east of London, about 30 people, including fishermen from the United States, gathered to protest BP’s role in the oil spill. They banged drums and held up banners. Some shareholders were refused entry to the meeting, Mr. Svanberg said, because they appeared to have a plan to disrupt the meeting. 

But the implication is clear – shareholders who may have intended to speak out about BP’s responsibility for the Deepwater Horizon spill last summer were denied their right of entry on suspicion that they were attending not to exercise shareholder rights but rather to protest.

Chiquita paid paramilitaries for security services and intelligence on guerilla groups, with full knowledge of who and what they were funding and with the intention of receiving their support services, according to a trove of documents recently made public by the the National Security Archive.  Many of these documents, which the NSA – cooperating with the Public Justice Clinic at the George Washington University School of Law – obtained through Freedom of Information Act (FOIA) requests, directly contradict claims Chiquita has made that it paid the AUC paramilitaries under duress and received no benefits from those payments.

The NSA plays a critical role in US civil society: it uses governmental public disclosure laws to their fullest effect, to shed light on dark spots in national and world history and expose truths that the US government would often prefer to remain hidden.  To obtain these documents, NSA’s Mike Evans and his GW student partners tangled with several federal agencies, including the State Department, the Department of Justice, and the FBI – and in some cases took them to federal court – in order to prevent them from witholding public documents.  As a result of their efforts, we now have a valuable window into the role of US businesses in the ebbs and flows of the Colombian civil war over the past two decades.  Moreover, the plaintiffs in ERI’s case against Chiquita have new ammunition to prove that Chiquita was knowingly and intentionally complicit in state-sponsored human rights abuse by Colombian paramilitaries.

In my post yesterday, I covered what I like about Prof. Ruggie's Guiding Principles.  In this post, I'll talk about what's not covered by the GPs – what I consider to be a missed opportunity to clarify central legal principles on the application of the international human rights regime to corporations.  It’s important to note that Ruggie is not claiming that the GPs are a statement of legal principles, but I would have liked to see them reflect the current law.

In the Ruggie framework, states have a duty to protect human rights and to remedy their violations, while businesses have a moral “responsibility” and expectation to respect human rights.  So far, so good, and pretty non-controversial.  But Prof. Ruggie leaves open – and  studiously avoids – the questions that would potentially incur the opposition of the companies whose consensus he has sought.

Does international law impose human rights obligations (as opposed to just expectations) on companies, in addition to states?  How far does the state duty to protect and provide remedies extend, and could a state violate its international legal obligations by failing to enact laws or declining to reduce barriers to accessing such remedies?  What is the status of the requirement of due diligence – is it a legal defense, a proactive duty, or simply a good idea?  And would international law ever require, rather than permit, a state to exercise extraterritorial jurisdiction over its own companies’ actions?

I can think of a number or reasons why the GPs decline to address these questions.  First, the “pragmatic approach” counsels against tackling such issues – why chase after ephemeral and controversial points of international law when there are concrete gains to be made now through win-win, collaborative efforts?

Second, Prof. Ruggie was not given the mandate to develop new legal norms, but rather to identify what already exists; if he were to take positions on controversial legal questions, he could be accused of pushing beyond his mandate and risk losing support for what he has already achieved.

And third, the old trial lawyer’s advice: never ask a question whose answer you don’t know in advance.  Maybe he fears that if he were to turn over such dangerous stones, human rights groups wouldn’t like the answers he came up with.

In December, when Prof. John Ruggie, the UN Secretary-General’s Special Representative for Business and Human Rights, came out with a discussion draft of his Guiding Principles – the culmination of six years of work on the question of what and how human rights obligations apply to businesses – much of civil society was dissatisfied. 

Ruggie was blasted for taking retrograde stances on a number of issues, most prominently extraterritorial jurisdiction (my colleagues and I believe that in at least some cases, States have an obligation to regulate and provide remedies for the actions of their companies abroad; Ruggie identified no such principle).  He did make clear that his principles were not a legal document, but we believed it would be better if the GPs reflected the law.

Now that his final version has been publicly released, I see some major positive developments.  Knowing all the consultation and cogitation that went into them, I think the GPs are a pretty impressive document.  They set out a plausible framework for dividing responsibility between governments and businesses on human rights issues, provide commonsense suggestions on the range of grievance mechanisms and remedies that are necessary to effectively address human rights impacts, and assist companies to construct due diligence regimes. 

The very fact that Prof. Ruggie was able to get companies and governments to sit down and discuss these issues rationally – let alone to agree on doing something about them – is a tremendous achievement.  I don’t necessarily agree with all his conclusions, but then again, I’m sure the companies don’t, either.  Hopefully, the GPs represent the start of a process and not an end in themselves.

In particular, Prof. Ruggie has consistently and forcefully pushed the envelope on corporations' internal responsibilities, i.e., the things they should do to in terms of corporate policy and structure to prevent human rights impacts, address them when they occur, and do right by individuals and communities who are aggrieved as a result of corporate activities. 

This week, Prof. John Ruggie, the UN Secretary-General’s Special Representative for Business and Human Rights, released the final version of his Guiding Principles – the culmination of six years of work on the question of what and how human rights obligations apply to businesses.  I will review the final GPs in this post and two that will follow next week.

ERI commented extensively on the discussion draft of the GPs, which was circulated back in December.  In particular, we were pleased to see that Prof. Ruggie had taken a holistic approach to the issue of business and human rights, recognizing that both states and enterprises have the ability to infringe on the full range of internationally recognized human rights and, therefore, have parallel responsibilities to prevent human rights impacts and remediate them when they occur.  We voiced concern, however, on a number of points. 

In the final version of the GPs, Prof. Ruggie addresses some of ERI's recommendations.  Notably, the final version clarifies that enterprises should avoid involvement in all gross human rights abuses, rather than limiting its scope to the somewhat debatable category of international crimes; that states may incur international liability when businesses they own or control commit abuses; and that states may have an affirmative obligation to enact laws to protect human rights.

On the other hand, Prof. Ruggie declined to take up ERI's invitation to make clear the fact that international law does, in some cases, extend direct obligations to corporations. (Specifically, that international law imposes on legal persons the same obligations that apply to natural persons.)  Instead, Prof. Ruggie chose to focus on a non-legal corporate “responsibility to respect” and did not address enterprises' legal obligations at all.  (More on this in a future post.)

I just read that Ricardo Alberto Sierra, a lawyer in Medellín who was helping Colombians to seek justice against Colombian paramilitary groups, was assassinated on Monday in front of several members of his family. This blog post is dedicated to Mr. Sierra and the courageous people – lawyers, activists, and victims alike – who continue to face intimidation and violence in Colombia as a result of their efforts to bring to light the atrocities committed by paramilitaries during the country’s long civil war.

I didn’t know Mr. Sierra personally, but I know lawyers in Colombia who do similar work. Mr. Sierra had worked with the Public Defense System for the Judicial Representation of Victims since 2007, and represented people whose family members were killed by the AUC, the principal paramilitary group in Colombia from 1997 to 2004. These victims of violence are participating in the Justicia y Paz (“Justice and Peace”) process, an initiative by which paramilitaries agree to lay down their arms, make full confessions of their crimes, and pay reparations to their victims in exchanged for reduced penal sentences. With Mr. Sierra’s assistance, Colombians were able to stand up and seek the truth – they could present testimony and evidence to the tribunals, ask questions of the defendants, and seek compensation for their injuries.

For people across Colombia who were traumatized and frightened into silence for so long, Justicia y Paz promises to provide a platform from which to tell their own stories and learn what happened to their loved ones. But as the murder of Mr. Sierra shows, the threat is still very much present. Today, we in the US tend to hear much about how the security situation in Colombia is drastically improved, except in isolated pockets of the country. This may or may not be true, but human rights defenders, social activists and trade unionists in Colombia are still threatened and/or killed at an alarming rate.

I was thrilled to hear yesterday that the Cerro de Oro Hydroelectric Project, near Oaxaca, Mexico, has been temporarily suspended while its financier, Conduit Capital Partners LLC, addresses complaints about environmental and social impacts and a failure to consult local communities. ERI’s colleagues at the California-based organization Accountability Counsel (AC) have been representing the Cerro de Oro indigenous communities and assisting them to make their voices heard by the Overseas Private Investment Corporation (OPIC) – the US federal agency whose investment enabled Conduit to finance the project – and the Oaxacan State Government.

Accountability Counsel specializes in using the accountability mechanisms of international financial institutions and other dispute resolution forums to assist communities facing environmental harms arising out of development projects. According to AC, the Cerro de Oro project is likely to have devastating effects on surrounding communities, including the destruction of water sources and fishing grounds and the contamination of agricultural land. The communities have not been given information about the progress of the dam, and the only environmental impact assessment that has been conducted overlooked major aspects of the dam’s consequences.

It’s instructive to see how the communities attained this rare victory. After attempts to negotiate directly with the company broke down, AC assisted them to file a complaint with OPIC’s Office of Accountability, which provides “problem-solving” services to communities experiencing the adverse effects of OPIC-funded projects. While substantial assistance from OPIC has not yet been forthcoming, the information contained in the communities’ complaint formed the basis of a campaign that led the Congress of Oaxaca State to unanimously decide to investigate the project and host public hearings on their findings. Evidently the potential exposure and mounting pressure was enough to convince Conduit that it should at least consider the consequences before barging ahead with construction that could irreparably harm indigenous groups and destroy their traditional ways of life.

A quick update on major developments in the case against Chevron in Ecuador: the Superior Court of Nueva Loja in Lago Agrio, Ecuador, issued its final judgment yesterday in the case of Maria Aquinda v Chevron, finding Chevron responsible for soil and water contamination and ordering it to pay more than $8 billion dollars for health impacts and environmental cleanup. Chevron has said it will appeal the decision. Chevron contests liability and obtained orders last week temporarily forbidding the plaintiffs from attempting to enforce the judgment while a New York federal court considers the company’s allegations of fraud.