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Index
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CONTROLLING CORPORATE WRONGS: THE LIABILITY OF MULTINATIONAL
CORPORATIONS
Legal possibilities, initiatives and strategies for civil
society
Report of the international IRENE seminar
on corporate liability and workers' rights
held at the University of Warwick, Coventry, United Kingdom,
20 and 21 March 2000
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III NON-LEGAL MEANS: CAMPAIGNS AND ADVOCACY
Semi-legal and non-legal means of pressuring companies are also
very important, and can lead to economic punishment for companies,
which is a good deterrent. NGO activities such as working on standards
and codes, raising public awareness, solidarity with claimants,
research and evidence-gathering, advocacy with governments and
companies, can complement legal work. The various NGDOs and campaigning
organizations at the seminar represented a wide range of experience
of this kind of work.
- Public hearings
In 1999, as a result of the Howitt report and resolution
(see above, section II 4), the European Parliament decided to
hold public hearings where victims of abuses by MNCs could complain
publicly before MEPs and in the presence of representatives of
the MNCs, who would reply. The press and media would also be invited.
Hearings in the EP are decided on by presidencies, but are brought
forward by the parliamentary committees. It requires a lot of
lobbying to obtain an EP hearing, and so far only the Committee
on Development and Cooperation has agreed to hold a hearing on
MNCs. The big advantage of EP hearings is that the facts speak
for themselves, and that the mechanisms confronts industries with
complainants.
The Permanent Peoples' Tribunal on Global Corporations and Human
Wrongs, based in Rome, works on important test cases such as that
involving Union Carbide at Bhopal in 1984, which has been described
as the world's worst industrial disaster. It also holds periodic
Tribunal hearings to receive the testimony of those who have suffered
from the activities of MNCs. The present seminar preceded one such
Tribunal (also held at the University of Warwick, 22-25 March 2000),
at which a panel of 5-7 persons selected to represent the international
community, sitting in a public hearing, heard and examined evidence
against Freeport McMoran/Rio Tinto, Monsanto and Union Carbide.
Representatives of industry were not invited to respond at this
stage. PPT secretary Gianni Tognoni explained that this was deliberate;
historically corporations have refused to come to tribunals, so
the PPT organizers wanted to use this session as the start of ongoing
proceedings in which MNCs would be presented at the next session
with all the evidence gathered at this one.
- Shareholding
Corporations' main legal responsibilities are to their shareholders,
and they often insist on this when called to account for putting
profits before the welfare of workers and consumers or environmental
considerations. Holding a few shares in a company theoretically
gives the holder a limited say in how the company operates. Some
human rights and environmental organizations and activists have
tried to use shareholding in the past as a strategy for promoting
accountability of companies, but the companies can mobilize far
greater resources for influencing other shareholders than individual
small shareholders can. UNOCAL, for instance, has shareholder
resolutions pending against it for about US$400 million, but has
responded by writing to all shareholders calling on them to dissociate
themselves from the resolution.
- Codes of conduct and standard-setting
The formulation and promotion of codes of conduct and standards,
including the awarding of social or environmental labels such
as Rugmark (a social label for carpets produced in India and Nepal
without the use of child labour), is perhaps the most common NGO
activity aimed at making MNCs more accountable. While the effectiveness
of this strategy is debated (see below, section IV), one result
is that there is now a large array of codes of conduct, dealing
with the same broad issues. An interesting example of work in
this area is the set of Principles for the conduct of company
operations within the oil and gas industry elaborated by Bread
for the World. BfW realized that although there is no shortage
of codes there is a need for principles that allow such codes
to become operational, meaningful, and verifiable. The Principles
form a comprehensive list of regulations covering people's participation
in planning oil and gas extraction projects, sustainable development,
respect for indigenous peoples and their traditions, environmental
standards, including intergenerational equity, and human and labour
rights, and enjoining independent monitoring, auditing and verification
of codes of conduct and an independent and accessible mechanism
for receiving complaints.
- Advocacy with governments
In Britain, Oxfam and World Development Movement (WDM) are
pressing on the UK government to improve national law and policy,
in order to make it possible to sue corporations or put pressure
on them to abide by the law.
WDM, having been frustrated by attempts to promote voluntary codes
of conduct effectively, has shifted its focus towards promoting
enforceable regulations and their use as a complement to voluntary
codes. Here it is focusing on the UK government and especially a
review of company law. The key issue is the need to change the idea
that a company's legal responsibility is primarily to its shareholders.
WDM wants this responsibility extended not only to all UK stakeholders,
for instance employees, but also to overseas stakeholders.
The question of international regulation of MNCs is more complex.
WDM identified from international agreements a list of rights which
corporations can be expected to respect. However, states are often
unwilling to implement these rights, and WDM is still examining
whether corporations can be made directly responsible in for implementing
them. Even harder to regulate is the economic impact of MNC activity
in host countries, especially in the context of mergers and other
shifts in corporate ownership. To what extent can these aspects
be regulated by national or even international law?
More indirectly, WDM is challenging the power of MNCs through work
on the Biosafety Protocol, in which it aims to strengthen the power
of Southern governments to refuse to import genetically modified
(GM) crops, giving both consumers and producers some rights against
the companies which are pushing GM crops.
- Advocacy with companies
As well as work on codes of conduct, some NGOs are carrying
out other forms of advocacy with companies. For Amnesty International,
the protection of economic and social rights has not been part
of the core mandate, but this emphasis is changing, and AI sees
that to remain relevant it must address the human rights impact
of globalization and free trade. The Business Group of AI UK (AIBG)
has a number of activities aimed at getting companies to be more
aware of the human rights implications of their operations, including
a letter campaign sensitizing companies operating in Indonesia
to the East Timor crisis. In situations where human rights violations
are prevalent, companies' activities can either contribute to
these violations or can protect human rights. AIBG outlines a
series of policies which companies can adopt in such situations
in its Human rights guidelines for companies.
Over the last year or so, AIBG has also been working on issues
of corporate governance, using the example of pension funds. Local
authorities invest huge sums of money in companies in this area,
and are concerned with accountability. Pension funds control as
much as a third of the Stock Exchange. A recent amendment to the
Pensions Act requires all pension funds now to declare whether or
not they have an ethical policy, and AIBG sees this as an opportunity
to get the major financial institutions which manage their funds
to develop their own ethical policies and criteria.
AI in the Netherlands has been involved since the 1970s in advocacy
with companies on human rights, and is currently working on terms
of reference for companies in this respect. However, as Gemma Crijns
pointed out, companies have proven ignorant of even the basic notions
of human rights and have only in the last few years become acquainted
with human rights instruments such as the ILO Conventions and OECD
Guidelines. AIBG is trying to develop terms of reference for companies
in the sphere of human rights, and is also asking AI members to
ask their pension funds about their activities.
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ADIDAS - NOT PLAYING BY THE RULES
Carole Crabbe of Oxfam Magasins du Monde (OMM - Belgium)
reported on an initiative being undertaken in the context
of the Clean Clothes Campaign (CCC) against Adidas. Based
in Germany, Adidas is the mother company to many subcontractors
in countries where low wages and poor working conditions
are common. Under pressure from public opinion in 1998,
it signed a very low-level voluntary code of conduct, which
says nothing about implementation, monitoring, or sanctions.
Adidas is a sponsor of the Euro 2000 football tournament.
In the runup to the tournament, CCC asked the Euro 2000
organizers to include in their contract with sponsors the
so-called FIFA code of conduct, which - although FIFA apparently
has not actually signed it -- is a much better code than
Adidas' own code and is based on ILO Conventions, with provisions
for implementation and sanctions. This has been done, which
means that all footballs and equipment made by Adidas and
bearing the E2000 logo must comply with the FIFA code.
Meanwhile, several violations of workers' rights in Bulgaria,
El Salvador, Thailand, and Indonesia have emerged, including
denial of freedom of association, paying less than minimum
wages, excessive working hours, making workers take pregnancy
tests, and prohibition of collective bargaining. In March
2000, OMM tried to present the cases to the Euro 2000 as
evidence of violation of workers' rights in the supply chain,
but they accepted no further responsibility. OMM is continuing
to draw attention to the violations, for instance by sending
a television team to one of the countries involved, but
would also like to move on the legal front against either
Adidas or Euro 2000.
Seminar participants discussed the basis and fora in which
these cases could be pursued at the home-state, regional
and international levels. Possibilities raised included
proceeding against the Bulgarian government for allowing
violation of ILO conventions in its jurisdiction, or against
Germany for allowing its citizens to violate those rules;
bringing a claim against Adidas in Germany, its home state;
or bringing a case against Adidas in Belgium on the grounds
of false advertising (using the Euro 2000 logo on its equipment
while breaking the FIFA code). However, a two-pronged process
was recommended, in which, if NGOs could get strong enough
evidence of the violations, lawyers could use it to identify
the most appropriate legal instruments and begin to apply
them.
Predictable problems were also raised. The agreement of
the workers concerned would have to be obtained before taking
the case forward, and they would be unlikely to favour any
action that would further endanger them. Might Adidas reply
that it cannot guarantee the quality of all its subcontractors
and suppliers? Would evidence have to be found that Adidas
is in fact using the FIFA code of conduct for publicity
purposes? Strong arguments would have to be found for targeting
Adidas specifically, so that other sports goods companies
such as Reebok and Nike would not seem to be let off the
hook. Is litigation advisable if it means that the company
might pull out of a country where it is a key contributor
to the local economy? And finally, what if Adidas starts
a libel action against the NGOs?
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- Awareness-raising, education and public campaigning
Most if not all of the NGOs represented at the seminar accompany
their advocacy and other work with public awareness-raising and
campaigning. It is important to build a critical mass of informed
public opinion calling corporations to account for their activities.
AIBG, Banana Link, Bayerwatch (Because
this campaign was sued by Bayer for it's name and lost it is now
called Coordination
against BAYER-dangers), and WDM were among
the NGOs present at the seminar who publish awareness-raising
and campaigning materials, including regular newsletters (Banana
Trade News Bulletin, Keycode Bayer, Human Rights and Business
Matters) to equip members of the public to call companies to account.
Weltumspannend Arbeiten of Austria is a specifically education-oriented
project working with organized workers and development issues
and the effects of globalization.
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