Thursday, September 02, 2021

Complicity--The Norwegian Pension Fund Global's Norges Bank Excludes Companies Connected to Business in Disputed Territories in Israel-Palestine and South Sudan

 


 
The Norwegian Pension Fund Global has announced that it will exclude 3 enterprises from its investment universe. These are companies whose operations bring them uncomfortably close to complicity in the unresolved conflicts over territories in Israel-Palestine and South Sudan. The determinations are interesting for their refinement of the understanding of complicity in conflicts in which the Norwegian state has chosen sides.

Elco Ltd and Electra Ltd were excluded for their role in road building to Jewish settlements in territories occupied by Israel after 1967 ("The Council takes the view that the construction of the roads in question falls outside the occupying powers right of use and has a negative impact on social and economic conditions for the population in the occupied area.").  

Ashtrum Group Ltd was excluded for involvement in the leasing of industrial premises linked to Israeli settlements in the West Bank ("The Council considers that the company’s letting of buildings constructed in violation of international law contributes to the continuation of an illegal state that their construction once initiated."). 

Oil & Natural Gas Corp Ltd was excluded for participating in the operation and control of oil resources which is determined to be a key driver of violence in the area, especially where they operated in cooperation with a state owned enterprise ("The Council considers that ONGC through its operations has accepted a risk of contributing to serious abuse committed to enable oil production in the country"). 

Whatever one's views of the politics in these conflicts (and such views tend toward the passionate), the decisions suggest the continuing development and refinement of concepts of complicity in the operation of enterprises across borders and in the assessment of their human rights impacts (and thus the scope of the responsibilities of enterprises). In the Israeli cases, the touchstone of course remains the same--the assessment of state policy against international standards as interpreted and applied by the SWF and its governmental oversight organs (e.g., Elco Ltd., Recommendation of Ethics Council ¶ 2.3.3; Ashtrom, Recommendation of Ethics Council ¶2.3.3) the furtherance of which is made possible by public-private partnerships in which the offending enterprise participates. These are straightforward analysis that embrace a broader reading of complicity tat effectively serves as the operational arms of a sanctions regime. Complicity, in this case, can be understood as an exogenous sanctions program.

In the case of operations in South Sudan, the touchstone is much more traditional:

The Council considers that the company does not have the necessary influence to prevent the military or NSS from committing further violence against the civilian population. Nor has the company given any indication that it can or will make changes to or terminate its business relations. The Council notes that although South Sudan has now embarked on a peace process, serious assaults on the civilian population are still taking place. The Council considers that as long as the company continues to collaborate with key parties in the conflict, there is an unacceptable risk of it contributing to such abuse. (Oil & Natural Gas Corp Ltd.Recommendation of Ethics Council, Summary).
The foundation is the determination that that "the UN Commission on Human Rights in South Sudan describes the country’s oil industry as militarised and strongly influenced by security interests." (Ibid., p. 6). The interconnection between the economic activities of the firm and the role of the state and its  security apparatus  in the perpetuation of human rights violations then complete the circuit. Critical in the analysis is evidence of foreign state condemnation and sanctions.

The inclusion of the companies on the US Entity List was commented on by the UN Commission on Human Rights in South Sudan in a report in 2019. The Commission wrote that the listing was a “stark reminder that these companies have been found, as a consequence of their business activities, to have caused or contributed to the ongoing armed conflict and the violations against civilian in their areas of operation.” With respect to ONGC’s response to the critical human rights situation in South Sudan, the Commission referred to sources indicating that ONGC “[has] not shown great concern for the legacy of human rights abuses linked to oil production in the areas where they have been operating.” During the press conference marking the publication of the report, one of the Commission’s members, Andrew Clapham, stated that: “If you are involved in oil extraction in that area and you are asked to assist one side or the other, you could be accused of complicity in war crimes.”(Ibid., p. 7; footnotes omitted).

 



Following recommendations by the Council on Ethics, Norges Bank has announced its decision to exclude these companies from the GPFG:

The Council on Ethics recommends that the companies Elco Ltd and its subsidiary Electra Ltd be excluded from the Norwegian Government Pension Fund Global (GPFG) due to an unacceptable risk that the companies are contributing to serious infringements of the rights of the individual in situations of war or conflict in connection with the construction of roads linked to Israeli settlements in the West Bank. The Council takes the view that the construction of the roads in question falls outside the occupying powers right of use and has a negative impact on social and economic conditions for the population in the occupied area.

The Council notes that Electra has recently won a tender for the construction of a major road project whose primary purpose is to serve Israeli settlements in the West Bank, and that the company has also previously built such roads. The Council therefore considers that there is an unacceptable risk that Electra will, through its construction activities linked to Israeli settlements in the West Bank, contribute to serious violation of the rights of the individual in situations of war or conflict. Elco contributes to the same through its ownership of Electra.

The Council on Ethics issued its recommendation on 15 March 2021. Norges Bank announced its decision to exclude the companies from investment by the GPFG on 2 September 2021.

Please find the Council’s recommendation here.

 

The Council on Ethics recommends that Ashtrom Group Ltd be excluded from by investment by the Government Pension Fund Global (GPFG) due to an unacceptable risk that the company is contributing to serious infringements of the rights of the individual in situations of war or conflict.

The Council’s recommendation is based on the fact that Ashtrom Properties lets industrial premises linked to Israeli settlements in the West Bank.

The Council considers that the company’s letting of buildings constructed in violation of international law contributes to the continuation of an illegal state that their construction once initiated. This form of contribution to international law violations constitutes, in the Council’s view, grounds for exclusion from the GPFG.

The Council on Ethics issued its recommendation on 15 March 2021. Norges Bank announced its decision to exclude the companies from investment by the GPFG on 2 September 2021.

Please find the Council’s recommendation here.

 

The Council on Ethics recommends that Oil & Natural Gas Corp Ltd (ONGC) be excluded from investment by the Government Pension Fund Global due to an unacceptable risk that the company is contributing to serious violations of the rights of individuals in situations of war or conflict.

ONCG is an integrated oil- and gas company engaged in production of oil in South Sudan. For years, a violent conflict has been underway in the country, during which the civilian population has been subjected to acts of extreme violence. Control of the petroleum resources in the country has been a key driver in the conflict. In this context, ONGC participates in two joint ventures with, among others, the South Sudan’s state oil company Nilepet.

The Council considers that ONGC through its operations has accepted a risk of contributing to serious abuse committed to enable oil production in the country. The Council also takes into consideration that actors who are directly or indirectly responsible for grave violations are providing services to the joint ventures and are responsible for the security at the oil fields that the joint ventures operate.

Please find the Council’s recommendation here.

 


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