MB Civic

Monitoring Canadian firms

Onus rests with shareholders to keep companies accountable

Calgary Herald
Monday, June 04, 2007

Shareholders need to put their mouths
where their money is, when they invest in
Canadian firms doing business overseas.
The onus for ensuring that Canadian
companies respect human rights in
developing countries falls on shareholders
because they, not government, hold the
most sway in private industry.

A report issued last week by the Montreal-based watchdog group Rights and
Democracy, on the effects of foreign
investment on human rights in the
developing world, includes two instances of
Canadian firms allegedly violating human
rights in the Third World.

One case involves the Calgary-based TVI
Pacific, which mines on the Philippine
island of Mindanao through a local
subsidiary. The report alleges that TVI
ignored indigenous groups who consider
the area sacred, in favour of pro-mining
groups that operate outside the bounds of
local society. Other allegations include
abuses by security forces hired to guard
the mine, forced evictions, blockades to
oust independent miners, water pollution
and discriminatory working conditions.

TVI, which co-operated with the report,
disputes the charges, saying opponents of
the mine were used to conduct local
research and lists a host of positive
accomplishments, but acknowledges the
company’s initiative to improve local living
and health conditions is a work in progress.

The second Canadian company with
allegedly dirty hands, according to the
report, is Nortel Networks. Nortel has been
providing telecommunications gear to the
Chinese government for a high-tech
Tibetan railway, which, according to a wide
variety of sources cited in the report, will
allow the Chinese government to further
squelch Tibet, and project military force
into south Asia. The gear itself is alleged to
be a component in a pervasive Orwellian
surveillance regime designed to nip
domestic dissent in the bud. Nortel would
not discuss the matter with Rights and
Democracy for the report.

Rights and Democracy’s recommendations
for change are idealistic, but unfortunately,
probably impractical.

In the case of the Philippine mine, Rights
and Democracy calls for bureaucratic
reform, local empowerment and joint
compliance-monitoring. In a perfect world,
such sound suggestions ought to have an
instant green light, but where are the
money and expertise to come from? The
Philippine government is debt-ridden and
not exactly a byword for probity. Expecting
TVI to stop work and bleed revenue until
the issues are resolved is not feasible,
either.

Rights and Democracy is quite right in
advising Nortel to assess the impact of its
technologies and to engage with local
communities. However, recommendations
for the Canadian government to restrict
the export of potentially abusive
technology to China and to pressure the
latter on human rights are doomed to fall
on deaf ears, given China’s huge trade
clout.

A better remedy exists at home.
Shareholders need to focus on ethical
investment and ensure their dollars are
being put to work responsibly. They can
monitor what their companies are doing
overseas, band together and speak up at
public meetings in order to hold executives
accountable, just like the activist
shareholders who forced Talisman Energy
to get out of Sudan. Firms have no choice
but to listen to their owners.

Canadian shareholders must think globally
and act locally to ensure their values are
also being played out overseas.