Examination of Witnesses (Questions 460
- 477)
TUESDAY 14 JULY 2009
MR MICHAEL
WILLS MP, IAN
LUCAS MP, LORD
MALLOCH-BROWN
AND MS
CARMEL POWER
Q460 Baroness Prashar: My question
is about creation of yet another quango. CORE and others have
recommended that they should establish a new UK Commission on
the Environment, Business and Human Rights? I would just like
to hear your views, whether you think that would be a good thing
or not?
Mr Wills: I think probably the
answer is no, I do not. You have rightly said that we have a lot
of organisations and there is very clear framework. We will look
at it in the context of the work that we are doing already but
my initial response is no, it is not a good idea. There are lots
of avenues for doing this already. We are making good progress;
this Committee is playing a valuable role in scrutinising these
issues and we are going to take it forward. We never say never,
but not right now and probably not soon.
Q461 Baroness Prashar: That is what
I expected. Any other views?
Lord Malloch-Brown: I agree with
Michael!
Chairman: Michael, if you would like
to go, please do.
Q462 Lord Morris of Handsworth: My
question is primarily to you, Ian. A key theme running through
the evidence we have received almost in a word has been "reform".
Some witnesses have called for further reform of the UK NCP, including
to increase independence from government and to extend its powers
of enforcement to include penalties and sanctions for misconduct.
What do you think of these recommendations for reform?
Ian Lucas: I think the difficulty
with sanctions and penalties is the issue to which we referred
earlier, about the principle that we want to deal with these issues
within an enforceable jurisdiction that we have. If we are talking
about conduct that took place in a different jurisdiction in order
to take effective action it really is necessary to pursue the
line of taking steps within the jurisdiction where that occurred.
If we get assisted in developing the capacity of the country in
which the incident occurred then that is the role that we play.
So I think that there is in a sense a kind of superficial appeal
to the idea of the extraterritorial sanctions—I think it
is impractical.
Q463 Lord Morris of Handsworth: International
provisions are not standard so there is a variation; it varies
country to country and jurisdiction to jurisdiction. What we are
talking about here is not what some other jurisdiction might be
doing but what is the UK Government's response.
Ian Lucas: But we have a general
principle that we will apply within our own jurisdiction the laws
of our own jurisdiction. We cannot apply our own laws in respect
of another jurisdiction.
Q464 Chairman: We do in relation
to various international law offences, do we not?
Ian Lucas: We do but within those
particular areas that you are describing there is a much broader
consensus in terms of international opinion than there is in the
area of human rights, where the perceptions are different in different
countries.
Q465 Chairman: The problem really
is the complete lack of a remedy for people who are on the receiving
end of some of the worst human rights abuses. You say that the
remedy has to be in their own country but in practice you have
a corrupt judiciary, an ineffective, weak government; you have
a powerful multinational; and you have people who are peasants
or worse right at the bottom of the pile who have no prospect
of getting remedy in their own country. That must he self evident
to most people.
Ian Lucas: There is implicit in
your question, if I may say so, a suggestion that it would be
somehow easier within this jurisdiction to secure a remedy. My
point is that in terms of evidence, in terms of enforcement that
would be extremely difficult to secure within the UK as well as
contradicting the general principle that we apply in terms of
extraterritorial means.
Q466 Chairman: The Americans manage
it with the Alien Tort Claims Act.
Ian Lucas: With respect, that
is a two-hundred year old Act that actually has not secured a
judgment.
Q467 Chairman: It has proved very
effective in concentrating the mind of businesses from the UK
and elsewhere and the fact remains that it has proved quite an
effective tool—going back to the point that Mark was making—about
getting companies to do proper due diligence before they start
investing in some of these operations, to make sure that they
have a defence.
Lord Malloch-Brown: May I just
add to Ian? It is not that one is just relying on action in the
national jurisdiction. Ian has made the case about how tough it
is for us to act through our courts on these kinds of things abroad.
The OECD guidelines are perhaps the primary example of the network
of these arrangements which are starting to govern corporate behaviour.
The Aquila G8 Summit just again referred to them as what they
expected of their Member State companies in situations of weak
governance operating in those countries. I think if shareholders
hold companies to account and are forced to report on them you
are going to get the levelling of compliance and improvement that
we want, but I think over time we are going to have to keep this
under continuous review because the fact is that extraterritoriality
is a terribly difficult thing to do. We only like to see it happen
in extremis but as companies become more global—whether
it is on issues of taxation or financial regulation—we are
starting to see moves towards more global answers; so I do not
think one can rule out that there will not be a move towards more
global answers here too. But we must not run before we can walk
and set up systems which will not secure convictions.
Q468 Chairman: We are already now
looking at the Draft Bribery Bill, which is looking at the activities,
I suppose, of UK companies overseas as much as anything else.
And we are following here the US Foreign Corrupt Practices Act,
I suppose, which in some ways we have modelled it on, to deal
with the problem of corruption in the developing world, to make
sure that if UK businesses are involved in that we can deal with
it in the UK, and that is quite right that we should do that.
So it is not much of a step to say that we should also be doing
the same in relation to some of these human rights issues. The
fact remains that if you have very poor people in the developing
world who have their land appropriated or poisoned by chemicals
emitting from a British company's plant, or at the receiving end
of a regime's security forces that have been contracted to a UK
company to defend their premises, or indeed in the case of certain
countries in West Africa perhaps even involved in executions—allegedly—is
it not about time that we provided a remedy for those people when
they clearly patently cannot get a remedy anywhere else? Or are
you happy to see British companies dragged through the US courts
because we do not have the balls to do it ourselves?
Ian Lucas: I am not happy for
the picture that you have described to take place. What I am pointing
out to you is that there is a much broader consensus, for example
on bribery, within the international community than there is upon
what the human rights that we would be compelled to take action
on actually are. There is a much broader range of agreement on
those rights than there is on the fact that bribery is wrong.
So it is a much more difficult step to take. What Mark has said
about the future is correct; it may be that in the longer term
these are issues that we may need to look at, but we have to recognise
that we are also making progress through operating the policy
that we are at the moment, and that that is bringing about improvement
too.
Q469 Chairman: So what would you
advise the poor innocent person whose parents have been poisoned
by the emissions of a UK company in the developing world, where
there is a corrupt judiciary and a weak government hand in hand
with a major multinational? What would you advise him to do?
Ian Lucas: As you have described
it that individual does not have a remedy.
Q470 Chairman: So it is tough luck,
is it?
Ian Lucas: I certainly would not
describe it in that way and I do not think it helps for you to
present it in that way because clearly that individual does not
have a remedy within the UK at the present time. You are suggesting
that somehow that person would have a remedy if we introduced
the Alien Torts Act—
Q471 Chairman: They would.
Ian Lucas: That is not necessarily
the case and for you to suggest that is not a helpful way of trying
to assist that person.
Q472 Chairman: It has worked in the
United States—
Ian Lucas: I am not sure that
it has.
Q473 Chairman: These scenarios have
actually happened involving multinational companies—some
not US companies have been on the receiving end of Alien Torts
Act claims in precisely those circumstances.
Ian Lucas: I am not sure that
it is quite that simple and quite that pat. I think it is for
us to try to work to improve the governance of countries where
the reprehensible behaviour that you are describing is actually
happening.
Q474 Chairman: I have no argument
with you that we need to do what we can to improve good governance
around the world—that is a given. But we have a long way
to go in doing that, before that is achieved.
Lord Malloch-Brown: Mr Chairman,
is it not the case that what you have yourself heard in testimony
to this Committee is that corporations are improving their performance.
I have to say I think there is a big difference between publicly
listed corporations and small privately owned mining companies,
but, nevertheless, the trend is the right way. But we are all
also agreeing that the kind of example you have described is definitely
still prevalent out there, so improvement prize but we are nowhere
near where we need to be. So the debate is how do you go that
next step? It is not about standing on the status quo and saying
that that is okay; it is about saying that we are doing better
than we used to do on this.
Q475 Chairman: That is the point,
is it not? I put this to BP and we have heard a lot from BP and
about BP and how they have really cleaned up their act, but things
still do go wrong—even in the best run companies mistakes,
problems and disasters will happen. The question is when they
do happen what do you do about it to put it right?
Lord Malloch-Brown: Equally in
the case of BP you can take two extreme cases: one was their use
of security companies in Columbia, something that was hugely damaging
to their reputation and was one of those events which made this
company really accept the importance of changing its corporate
behaviour. The second hit, if you like, on that scale that happened
to BP was in a market which is the most regulated, where there
is most legal redress and that is the pipeline and refinery problems
they had in the US, where it is said—and I believe it has
been affirmed in court judgments—that there was under investment
in certain parts of that operation. So it is a bit more complicated
than just saying that these things only happen in situations of
weak governance. Where they do I think there has been—
Q476 Chairman: I agree with that,
but the difference is that when things go wrong in the US there
is a remedy in the US courts; when things go wrong in Colombia
there is not. We have heard about how BP cleaned up their act
in relation to their security on the Baku pipeline and all the
rest of it and all very positive stuff, but things still go wrong.
So how do the people on the receiving end of these things go wrong
get around it?
Lord Malloch-Brown: Again, our
argument is that the combination of national improvements—because
after all the Bhopal people finally did get a remedy very late
and all the rest—plus this issue of getting these companies
signed up to these different standards and getting them to promise
their shareholders and board of directors compliance with them,
and having transparency in the reporting is for now a more effective
way of raising the standard than getting involved in an extraterritoriality
which is hard to sustain. That is, if you like, the root of our
argument. It is not to disagree with you on the fact that there
are a lot of problems out there; it is what is the best way of
addressing them.
Q477 Chairman: I think we have finished.
Do either of you want to add anything to what you have said to
us? We have one or two memos to come.
Ian Lucas: No thanks.
Lord Malloch-Brown: If I may,
the only thing I would say is that I think we owe you a comprehensive
memo on procurement, both national and European because obviously
I felt rather under-prepared on that issue but recognise that
it is a very major way of pushing this forward; so perhaps we
could come back with something suitable on that point.
Chairman: Thank you very much; the Committee
is adjourned.
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