Any of our business? Human Rights and the UK private sector - Human Rights Joint Committee Contents

Examination of Witnesses (Questions 340 - 353)



  Q340  Lord Dubs: Do the export credit guarantee people pay any attention to human rights at all?

  Mr Hayman: Not that I am really aware of, no.

  Q341  Lord Lester of Herne Hill: I ought to declare two interests. One is I am on the board of the Open Society Institute Justice Initiative which has similar aims about corruption and human rights to your own. Secondly, I did the Corner House case about the Export Credit Guarantee Department and the watering down of the anti-bribery standards that you just mentioned, Mr Hayman. In the light of what happened in that case, which indicates strong lobbying by the CBI, by British Aerospace, and by a number of other powerful bodies, to the Secretary of State for Trade and Industry to weaken the anti-bribery standards operated by the Export Credit Guarantee Department, is it really realistic given that that was the view of the Government and these large commercial organisations, to seek to use that Department to go wider than anti-bribery when even the anti-bribery strategy does not seem to be very strongly executed? If one extends it to human rights generally, is that really realistic in the unpleasant real world that we live in?

  Mr Hayman: That is an excellent question. If it did its job properly and enforced those standards then it would have a clear signalling effect to business and that would be something positive about this. I guess it would also provide some sort of affirmative defence for business to say I have attempted to do the best I possibly can, I have done my due diligence, and thus encouraging best practice. In many cases, such as for example Afrimex, it is not an ECGD recipient and it is not the only thing that drives business for the UK, so it is only going to have an impact where there are large mega-projects that need credits and guarantees. They tend to shop around for them anyway. I agree with you that its overall impact would be limited. It does have a small positive signalling effect. I have seen that in action a little bit from the World Bank and some of its work, particularly through the IFC, about standards in relation to disclosure and transparency of revenues from projects where they actually put a standard in that to receive funding from the IFC you had to be transparent about where you are paying the money and to whom it goes, effectively so the companies had to publish what they had paid to governments to enable them to track that money into the exchequers rather than into offshore bank accounts. It has some positive effects if you can engineer business processes to back up good practice and good governance. Ultimately I would say it would make those businesses more sustainable which may not necessarily be a bad thing.

  Q342  Lord Lester of Herne Hill: Can we look at the experience since the Corner House case. In your experience, has the Export Credit Guarantee Department now become more effective in operating the anti-bribery standards so that we have got that as a piece of evidence to show that what you are saying could be extended to human rights?

  Mr Hayman: No, I could not say there is any proof that it has become more effective, sorry.

  Q343  Lord Bowness: You called for better training and guidance for FCO and UKTI staff currently providing support to UK businesses including in conflict zones. Coming back to what is feasible, if you are going to ask the UK Government to conduct an assessment of the companies' human rights performance before it gives assistance, is it really feasible in a conflict zone for somebody in post with the FCO to conduct an effective assessment of the human rights compliance of a company before they give consular or other assistance? If they came to the wrong answer and decided they would not give assistance, is there not a grave danger that you might possibly be infringing the human rights of the individual employees of the company?

  Ms Joshi: I would suggest that this actually builds on the question about the government needing to have a joined-up approach. If we take the example of Norway, they have a Council of Ethics. Everyone is nodding their head so I think everyone is aware of the Council of Ethics. There is an assessment that that Council makes with respect to human rights and if money is given to certain companies, whether or not the Norwegian government would be complicit in supporting those companies. An investigation is carried out by the Council of Ethics, a decision is made, and I would suggest with the UK Government a similar type of approach could be useful where there is an investigation and assessment made and that feeds into the other departments such as the FCO. That could centralise where the actual investigation is occurring, how the assessment is being made, the expertise that is being used in coming to those conclusions, and then ensuring that the finding then feeds into the FCO as well as DFID as well as ECGD.

  Q344  Lord Bowness: I am very sympathetic to what you are trying to achieve but if you take a real situation of a company that is operating in a foreign jurisdiction in a conflict zone where it has not had the approval and ticked all the boxes down the line, and consular assistance is then needed for British citizens working for that company in that country in that conflict zone, are you actually saying that consular assistance should not be rendered to those individuals because we do not actually approve of the policies or have not approved of their employer's policies? Is that what we are saying: get out of jail yourself, in other words?

  Ms Joshi: No, we are not saying that.

  Q345  Lord Bowness: Good.

  Ms Joshi: We are not saying that consular assistance should be denied to UK citizens, but what we are saying is that the embassies can play a key role in terms of providing information and adviser support to companies operating in those conflict areas.

  Mr Hayman: Perhaps I could give an example of where the FCO could improve and smarten up its act as a helpful real world case study . A certain country in South East Asia (which will remain nameless so that I do not want to embarrass the UK ambassador concerned) was taking a British biofuels company to a plantation to encourage them to invest with inward investment, but effectively that plantation was completely illegal under the laws of the land. It was effectively expropriated by a member of the ruling elite because it is an entirely kleptocratic government run for its own business interests. It is a UK company which is being encouraged by them to invest and take that plantation over. That is deeply concerning and that is a real world case. That is the kind of thing where a sensitivity to, not simply promoting business but helping business to manage risks could be a very sensible approach. If you go to the FCO website you can get this great travel advice for private individuals. Can one conceive of something similar providing some form of sensible, practicable, implementable guidance for companies about where to invest and how to begin to manage those risks? Certainly we are saying in conflict zones like the DRC that would be a very simple thing to do and to take some measurable steps to saying hold on, this is a conflict zone, you need to be extremely careful about who you are dealing with given that practically the entire mineral extraction from this region is militarised.

  Q346  Earl of Onslow: You have joined the criticism of the operation of the current OECD Guidelines. What do you think is going wrong and what needs to change?

  Ms Joshi: With respect to the OECD Guidelines, since the revisions to the Guidelines were made in 2006 and based on our experience in filing the Afrimex complaint, we were actually very pleased with the process when the complaint went to the UK NCP. What we have seen of the problem is what has happened after the final statement. There has been no monitoring of whether or not the company actually complied with or responded to any of the recommendations made by the UK NCP. After the decision was made by the UK NCP in September 2008, Global Witness contacted the company in February of 2009 to ask whether or not the company had taken the recommendations into account and we also asked that the company to respond to information that we had that Afrimex was continuing to purchase from comptoirs associated with rebel groups. To make the long story short, up until that point there had been no follow-up activity done by the UK Government. We see that as a shortfall. In March 2009 Afrimex responded to the UK NCP, not to us, stating that they had stopped trading in minerals from Eastern DRC. To this date we have asked that the UK Government verify whether or not that is actually the case and there has been no verification that we are aware of.

  Q347  Earl of Onslow: Right. The CBI told us last week that they thought that review of the OECD Guidelines might be a positive thing, in other words more or less what you are saying. Do you think that you could keep the CBI on board if the UK Government accept your recommendation for increased powers of enforcement ?

  Mr Hayman: It is an excellent question.

  Q348  Earl of Onslow: Flattery will get you everywhere!

  Mr Hayman: One of the interesting things that has emerged is that it is not always helpful to businesses to operate in a legal void. This is one of the things that particularly pertains to conflict zones because companies can very easily get into trouble and end up having for example, an Alien Tort Claims Act case filed against them in the US, so perhaps clearer guidance in those sort of circumstance might actually be helpful. I know of some large international mining companies who have said, mostly off the record when you talk to them, that clearer guidance could be helpful. Going back to the issue about the rise of China, those mining companies see their ability perhaps to compete and win in future being based upon reputational excellence and providing a whole development package, so not just simply digging the stuff out of the ground and running away with it but providing and building roads and everything else, which is something that China does quite well at the moment. They see clearer guidance and the ability to show themselves to be accountable and good partners for development as potentially a part of that. This is an interesting area where actually there may be a more progressive coalition of change coming out of some of the more forward-thinking companies on this topic as well.

  Q349  Earl of Onslow: I seem to remember seeing some Panorama or Dispatches programme on a Chinese company's investment. I think it was in the cutely named Democratic Republic of the Congo where basically they put in everything themselves, everything was provided by the Chinese, from the laundryman upwards, and there seemed to be very little benefit to the local people, although there may have been some benefit to the government. Does that fit with your experience?

  Mr Hayman: Yes, that is a common image and in some cases that is the case and Chinese projects do very much come with an army of labourers who will then simply build everything themselves. That said, Chinese companies do build infrastructure very well, so in some countries you can point to clear infrastructural developments that China has been able to bring about as part of a package deal for natural resources, so I would not completely dismiss the entire model of not just digging mines but building infrastructure as well, but there is probably a better and more transparent way of doing this, and I think that is where international companies might be able to compete in future.

  Earl of Onslow: Finally, almost as an afterthought you have told us that you agree with CORE's call for a UK Commission for Business, the Environment and Human Rights. If the UK Government were to make the policy changes which you think are necessary what practical difference would the Commission make? I think it is reasonable to say that it is most unlikely to happen because (a) I suspect there is no room in this legislative session and (b) we are going to have a general election and I do not think anybody will be into building new quangos after the next election.

  Chairman: We would still like to hear what difference it might make.

  Q350  Earl of Onslow: That is completely fair.

  Ms Joshi: Answering your question and linking it to your question about the OECD, we do support revisions to the OECD but the OECD does have its limitations. It does not provide a remedy and also sanctioning powers do not rest with the UK NCP. We support the early stages and the principle of the CORE submission and we support further development and the ideas being fleshed out more.

  Mr Hayman: Just to say there are nonetheless short-term practical steps while we discuss the exact parameters of how that could go forward that can be taken now and which would have a measurable impact.

  Q351  Earl of Onslow: It does seem to me from reading this paper that there is a real and genuine problem. It is not just people empire building but seems to be a real problem.

  Mr Hayman: There is an absolute vacuum. If you look at the statistics of how many people have died in the civil war in the Congo, it is absolutely mind-bending. It is over three million people and you can see child slave labour directly: you can go there and witness children as young as eight digging almost with their bare hands out of the ground, and that stuff being bought and eventually traded by UK companies. That is a real fundamental problem.

  Q352  Earl of Onslow: And some of the UN forces have been shown to have not been behaving in a very pleasant manner.

  Mr Hayman: There has been a problem with the accountability of UN peacekeepers too, that is absolutely right.

  Earl of Onslow: Rape and getting involved in things. Right, okay.

  Q353  Chairman: Thank you very much indeed for your time. I think you have answered the questions comprehensively.

  Mr Hayman: Thank you very much.

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Prepared 16 December 2009