Business, Human Rights and Criminal Prosecutions of NGOs

As the social and political obligations of business enterprises have broadened over the last generation or so, and as business enterprises have more aggressively moved into the public arena, seeking favors form states in the form of favorable legislation and protection for business activities from the administrative and judicial authorities of states, these same business enterprises have begun to be held to higher, and public law infused, standards of conduct.   

(Pix (c) Larry Catá Backer 2013))

For the most part, the monitoring of compliance with business enterprise obligations--whether self imposed through corporate standards of conduct, or derived form national or international law or governance regimes-- has fallen to independent civil society organizations. (Backer, Larry Catá, Economic Globalization and the Rise of Efficient Systems of Global Private Lawmaking: Wal-Mart as Global Legislator. University of Connecticut Law Review, Vol. 39, No. 4, 2007).  These NGOs are essential to ensuring accountability by corporations to their stakeholder constituencies and to ensure conformity to the transnational norms and frameworks to which many of these enterprises purport to conform. In those governance spaces beyond the state, civil society actors play an essential disciplinary role.

But business enterprises have also used the rules of the domestic legal orders in which they operate to seek to defend themselves against monitoring elements of civil society--not by rebutting suggestions of failures to comply with applicable governance standard in the operations--but by invoking local law to attack the monitoring agencies themselves.  In the United States strategic lawsuits against public participation (SLAPP) suits became a popular mechanism for deploying law to constrain monitoring of the lawfulness of the conduct of the litigating enterprise.  (George W. Pring, Penelope Canan (1996) SLAPPs: Getting Sued for Speaking Out. Temple University Press. pp. 8–9).

With the internationalization of standards for business conduct, especially business conduct with detrimental effects on labor, human, social or environmental rights, civil society elements have become a crucial element in the enforcement of these emerging standards.  It comes as no surprise, then, that companies seeking to avoid the detrimental effects of exposure of their inability to meet international standards for business conduct, or in extreme cases, to avoid even an allegation of such breaches,  have become more aggressive in seeking to avoid the monitoring by civil society elements that plays a crucial role in enforcement of these standards.  One important method for protecting companies against civil society monitoring is by taking the SLAPP concept global.  

Fiona Haines, a professor of criminology at the University of Melbourne recently wrote about the use of these techniques to avoid scrutiny in Thailand.  What makes the report most troubling is the way in which state and enterprise appear to collude to produce a result, within a democratic state, that was once supposedly the hallmark of totalitarian and closed anti-democratic societies. Fiona Haines,  Crime and business: a cautionary tale in the Asian century, The Conversation, April 10, 2013. 

In Asia, journalists and human rights activists often find themselves on the wrong end of a criminal prosecution. For example, Thai activist Somyot Prueksakasemsuk has recently been sentenced to 11 years in prison and in another case with a closer link to Australia, there has been the jailing of another Thai man, Ekachai Hongkangwan, for selling an ABC Foreign Correspondent documentary. Both were charged under lèse-majesté laws (insulting the monarch).

But in this particular case, the government is using the criminal law to protect local business – not just itself – against its critics. The Thai government is not alone in this. The businesses concerned most often are large and well-connected with strategic international interests. The logic goes something like this: “if you damage the reputation of this large business you will tarnish the reputation of us the host nation".

At the extreme, this can lead to a charge of treason against an individual, even if the criticism exposes some significant wrong doing by the company involved. This was the situation for Stanley Adams, who found himself charged with espionage and treason by the Swiss federation in 1984 for blowing the whistle on illegal anti-competitive conduct by his former employer Hoffman-La Roche. (Fiona Haines,  Crime and business: a cautionary tale in the Asian century, The Conversation, April 10, 2013. )

Professor Haines focuses on the sad story of an NGO member conducting monitoring operations in Thailand. This person, Andy Hall of the United Kingdom, faces substantial fines and jail time for criminal defamation in Thailand as a consequence of the report he wrote about the working conditions of some Burmese migrant laborers in Thailand. (Ibid.). Professor Haines states that the report was prepared for Finnwatch, a Finnish NGO, and focuses on the treatment of Burmese workers employed by the National Fruit Company. (Ibid.). 

(Andy Hall from Andrew Drummond))

The Finnwatch statement on legal actions against Andy Hall can be read here (original) and in English HERE. Finn watch reported numerous statements of support for Mr. Hall in the days after the actions against him were commenced.  See HERE.  

In its statement the International Trade Union Confederation ITUC demands renouncing legal actions against Andy Hall, respect for freedom of speech in Thailand and protection of human rights defenders.

Service sector trade organisation UNI Global Union and construction and wood workers' international federation BWI campaign on behalf of Andy Hall and collect names for a petition to be sent to Natural Fruit and Thai industry groups.

Food, farm and hotel workers' global union UIF demands that companies that have bought raw materials from Natural Fruit assume responsibility over its human rights violations.

Thai State Enterprises Worker's Relation Confederation SERC has asked for support for Andy Hall from ITUC and the International Labour Organisation ILO. SERC has also published its own statement in which it demands Natural Fruit to drop legal actions against Andy Hall.

Human rights organisation Front Line Defenders considers the legal actions as an attack against human rights defenders and freedom of speech.

Migrant Forum Asia demands an investigation on Natural Fruit’s actions and renounces the legal actions.

Members of the European parliament Satu Hassi and Barbara Lochbihler have submitted a written question to the European Commission on the human rights situation in Thailand’s export industries and the legal actions against Andy Hall.

MEP Sari Essayah has submitted a written question to the European Commission on the human rights situation in Thailand’s export industries and the legal actions against Andy Hall.

Thai Food Processing Association, an industry organisation, considers Finnwatch's report important and commits to improving migrant workers' position in Thailand's export industries. (Finnwatch,  Wide international support for Andy Hall, April 9, 2013).

But of course the damage was done, National Fruit made its point, and  the chilling effect of such suits appears to be proving important.  On the other hand, it is possible that such actions might themselves breed counter defamation and criminal actions on the part of enterprises and the state authorities colluding with them who, under appropriate circumstances, might themselves be subject to the same laws and sanctions. This is a a potentially dangerous strategic gambit.

For the corporate actor, response may be complicated as a consequences of the complex regulatory environment in which they may operate.  Transnational corporate actors are increasingly enmeshed in polycentric governance structures--(1) the domestic legal orders of states in which they operate; (2) contractually framed regulatory systems applied through supply and value chains; and (3) international "soft" law frameworks (e.g., Guiding Principles of Business and Human Rights); and (4) international private or hybrid frameworks (e.g., ISO 26,000).  Yet the thrust of all of these systems does not produce any incentive toward an aggressive attack on those market and regulatory based actors who are part of the process of transparency and accountability.  Indeed, attacks like those described by Professor Haines, suggest a disrespect for the system through which these enterprises simultaneously seek to invoke to enhance legitimacy, market share, profitability and enhanced shareholder value.  In a sense, then, responses that invoke, for example criminal defamation rules of host states, especially those with a clear objective of constraining transnational accountability actors, could be understood as themselves detrimental to the financial condition of the enterprise and approval of such tactics might constitute a breach of the fiduciary obligations of boards of directors. This possible construction could be proven if, for example, it could be shown that as a result fo the action the enterprise's ability to access financial markets (equity and debt) has been harmed (and made more expensive) or  where sales and market share are reduced.  In addition, such enterprises might find themselves subject to complaints made to the National Contact Point of home or host states under the Organization for Economic Cooperation and Development (OECD) Guidelines for Multinational Enterprises.     

That does not mean that in the face of reports, such as that made by Finnwatch, an enterprise is without options. But rather than attack the messenger, the enterprise ought to engage with the report itself--something that will not disappear however much the enterprise seeks to invoke law to destroy outside monitors.  Such enterprises ought to meet such reports directly.  It might vigorously defend their practices--a tactic enhanced through the cultivation of transparent operations at the production level (and something encouraged through the Guiding Principles of Business and Human Rights). (Cf. Transparency International,  Transparency in corporate reporting: Assessing the world's largest companies, 10 July 2012). Alternatively, enterprises might choose to use such reports as a form of complaint that ought to be investigated, and where verified, re mediated.  Transnational enterprises can use these complaints as an opportunity to work with their supply chain partners to enhance business operation, and with governments to enhance coordinated action to ensure compliance with local law.

Professor Haines argues: "Local research of this kind is also essential to ensure compliance with local laws, not only international standards. Indeed the Natural Fruits case largely revolves around that company’s compliance with local Thai law. The pressure of international NGOs can be important, but ultimately a state must protect its own citizens with its own laws." (Ibid).  Quite true.  As important, perhaps, is that international frameworks for corporate governance rules may be severely threatened when companies seek to disrupt the operation of such system through the deployment of local law to avoid accountability. Ironically, the reputation of these companies, especially those that acquire a reputation for aggressively using domestic law to avoid international obligations, may well dam themselves by their own conduct.  Such aggressive activity may, for example, constitute the sort of unethical conduct that would remove an enterprise for the investment universe of influential sovereign wealth fund investors.  (See, e.g., Backer, Larry Catá, Sovereign Investing and Markets-Based Transnational Legislative Power: The Norwegian Sovereign Wealth Fund in Global Markets (November 18, 2012). Consortium for Peace & Ethics, No. 2012-11/11) 

It appears, if these illustrations are true, that Western enterprises, especially those operating in western style democratic states, appear to be embracing somewhat successfully a sort of Leninist operating style that they found inconvenient when practiced for the popular good by states easily branded as antidemocratic.  Irony indeed.