World

Western interests sink attempt to regulate international business

Our Own Correspondent

Rabi' al-Awwal 11, 14252004-05-01

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The UN Human Rights Commission in Geneva debated a new code, the Human Rights Norms for Business, on April 8, in the face of strong opposition from companies and governments in the West and developing countries. The code, drafted by an expert commission, does not really go very far, as the ‘obligations’ it imposes on multinationals are, for instance, voluntary. Yet business lobbies, including the International Chamber of Commerce, and certain governments, such as those of the US, Britain, Saudi Arabia and Egypt, exerted strong pressure on the 53-member Commission not only to ignore the code but also to take the entire issue off the organisation’s agenda. Their objective – inspired by fear that the code might impose new responsibilities and penalties on multinationals – appears to have been substantially achieved: a fortnight later the commission called for further studies and postponed the debate for a year.

In a consensus resolution on April 20, the Commission asked the office of the UN High Commissioner for Human Rights to prepare a report on the scope and legal status of existing corporate human initiatives. According to the resolution, the Commission will "identify options for strengthening standards" at its annual session next year. Not surprisingly, businesses that had felt threatened by the prospect of new obligations welcomed the decision, no doubt feeling confident that next year’s debate will also be doomed. Their confidence is partly due to their influence over governments in both the developing and developed countries that comprise the membership of the UN Human Rights Commission (UNHRC) and that of the UN as a whole.

Contrary to popular belief, it is not only developing countries that are corrupt and manipulated by multinationals. Companies in the US and the EU, for instance, bribe politicians by funding their electoral campaigns, and many pay hardly any taxes, although they boast publicly of their huge profits. On the very day that the UN Human Rights Commission was debating the new code, the general accounting office of the US congress published a report showing how tax-avoidance has become ingrained in corporate America, and how the situation is getting worse. According to the report, almost two thirds of American companies paid no tax between 1996 and 2000, despite the fact that the economy was booming and corporate profits were reaching unprecedented levels. The report also pointed out that foreign-owned companies operating in the US are even less likely to pay tax. As Carl Levin, a Democrat from Michigan, commented, "When companies dodge taxes, it falls on average [i.e. ordinary] Americans to pick up the difference."

The Bush administration is unlikely to put an end to corporate tax-avoidance or other corrupt activities by US or foreign companies, because it has received from them enormous amounts of money to fund its activities, electoral and otherwise. In fact, it is preparing new legislation that will grant corporations new tax-breaks. Moreover, senior officials, such as vice-president Dick Cheney, have close contacts with companies that are currently being investigated for serious corruption because of revelations in the media. The Halliburton company, run by Cheney until 2000, is just one example: it is being investigated for fraud in Iraq, where it has secured many reconstruction contracts, and for overcharging practices in the US.

But it is not only in the US that multinationals take people – and indeed governments – for a ride. Corrupt practices that have the support of government officials are also rife in Europe. Shell, for instance, is in serious trouble for cheating its shareholders by issuing false information about its profits and the size of its oil reserves. In Italy, prime minister Silvio Berlusconi, who is a billionaire owner of companies, is facing corruption charges in Italian courts. And in France, Britain, Germany and Belgium there are frequent reports in the media of corporate and governmental malpractices.

Clearly, corruption is not confined to the developing countries, and the American and European companies that have links with them have no serious fear of their activities being curtailed or exposed by their governments, which are themselves implicated in many of these practices. And since these governments have strong influence on UN bodies, the chances of an effective human-rights code that controls their conduct being adopted by the Commission in Geneva next year are poor. In fact it is more likely that the issue will be taken off the Commission’s agenda altogether. The US, Britain, Saudi Arabia, Egypt and India are certain to work for the removal from the agenda of the norms next year as they did last month. As a US government spokesman said, "We are working with other countries to find a consensus for dealing with this issue outside the Human Rights Commission."

But even if the draft code is approved by the Commission in its present form, it will be too weak to counteract the corrupting influence of global companies on developing countries, or to prevent them from ransacking their resources and dumping goods on them that they do not really need. Human-rights activists and thinktanks in the West have criticised the code’s shortcomings, although the issue has hardly been addressed in developing countries. The Institute for Public Policy Research in Britain is one of the thinktanks that has dealt with the code at length, exposing its weaknesses and advocating far-reaching improvements.

In a report published in mid-April, the Institute called for the rules to be strengthened to hold the worst offenders to account, arguing that companies should be required to report on the human-rights impact of their international operations. Although the thinktank belongs to the ruling Labour Party, it has strongly criticised the government for not giving greater importance to the issue. The government’s efforts to promote corporate responsibility have suffered from a failure to make human rights central to its dealings with international companies, it said. The government is "particularly cautious and conservative" on the application of international human-rights law to companies, it added. According to the thinktank, globalization and the influence of international companies make a voluntary approach "outdated".

The issue is of great importance to Muslim countries whose resources are stolen, and institutions corrupted, by ruthless and predatory international companies enjoying the backing of their own governments. It is particularly sad that their media and organisations have been silent over the issue. Islamic organisations and media can make an effective contribution simply by maintaining public comment on the issue, if only to keep it alive. The UN’s various bodies will not come to the rescue, and the companies are too powerful to be curbed quickly, but giving in to them and keeping silent will serve the purposes of the exploitative, greedy, selfish, shortsighted, unethical anti-Islamic rulers in the developing and developed world.

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