Corporations, investment and human rights in Burma

The enforcement mechanisms under the Organisation for Economic Development and Cooperation’s Guidelines for Multinational Enterprises (OECD Guidelines) are probably the most prominent mechanisms on various aspects of corporate responsibility ranging from human rights to environment. In a recent development, a hard-working U.S. non-governmental organisation Earthrights International brought, together with a number of other non-governmental organisations, the complaint before Korean National Contact Point relating to the involvement of Korean corporations in Shwe project in western Burma. This project aims to deliver gas from western Burma to Kunming in China through natural gas pipelines. Daewoo International leads the projcet with 51 percent control.

The National Contact Points are governmental department of each OECD Guidelines State Party responsible for implementation of the OECD Guidelines at a national level. The Korean National Contact Point is located within the Ministry for Knowledge Economy of the Republic of Korea. In this context, the Time magazine recently ran an article describing a number of conundrums surrounding the Shwe project in Burma. In their complaint, the non-governmental organisations alleged that:

Daewoo and Korea Gas Corporation (KOGAS) are linked to violations of the fundamental human rights of people in the project area, contrary to Burma’s international obligations and commitments. These abuses are expected to continue and increase in frequency, and Daewoo and KOGAS have not exercised sufficient due diligence over the proposed security services for the project, which will in one way or another be provided by the Burmese military (Tatmadaw) (at p. 28).

The complaint further alleged:

Daewoo and KOGAS are currently breaching Section III.1 of the Guidelines by failing to consult with affected communities and by failing to inform them about the project, despite having completed extensive exploration of the offshore gas fields and despite having already proceeded to the development stage of the project. Daewoo entered into a contract with the Burmese military regime in August 2000 and began test drilling in late 2003.240 At present, five years after test drilling began, there has been no consultation with local stakeholders such as SGM, with communities near the Bay of Bengal, or with communities living in the 24 townships across which the proposed pipeline route will traverse. (footnotes omitted, at page 38).

The Korean National Contact delivered on 27 November 2008 its final decision dismissing the complaint as unfounded. Given the seriousness of the allegations, it appears surprising that the Korean National Contact Points so dismissed the complaint without any proper legal reasoning and justification. In this way, the Korean National Contact Point argued that it ‘finds it hard to assume that the involved corporations breached the OECD Guidelines for Multinational Enterprises…[and] does not see a necessity to initiate an additional investigation or an arbitration.’(at p. 1). More specifically, the Korean government held that:

Unless there are special circumstances, the MKE will have difficulties in recognizing the mutual causality between the fact that Myanmarese government has violated, or is violating human rights, and that the multinational corporations are taking part in a specific project. (p. 4).

It has been argued that a number of the underlying weaknesses of the OECD Guidelines can be directly tied to their unenforceable nature. What is more, it appears that there is considerable disparity among the endorsing governments’ commitments to implementing the Guidelines. The decision by the Korean National Contact Point undoubtedly fails to meet the standards introduced by the recent decision of the British National Contact Point in Global Witness v. Afrimex. Considering the possibility of reforming of the Guidelines in the future, revisions may be needed to tackle this inconsistency, which could potentially undermine the effectiveness of the OECD Guidelines. What is striking is that the Korean government holds controlling rights in KOGAS and has granted Daewoo International financial assistance to pursue the project. Many criticize the OECD Guidelines for its vague wording and grand ambitions which have proved difficult to implement effectively. Despite the best intentions of its drafters, the OECD Guidelines cannot offer an effective answer in instances where complaints are raised against state-owned or subsidized corporations. Clearly, the Korean National Contact Point, or any other National Contact Point for that matter, cannot ensure the independence, transparency and impartiality of their proceedings where complaints are brought against state-owned corporations, which are government controlled. In other words, it follows from the decision of Korean National Contact Point that the Korean government did not have an interest to start with the objective investigation into allegation. Reasons for such reluctance remain unclear. A good way to remedy this drawback would be to seriously reform the OECD Guidelines so as to be clear how to proceed in similar situation and to make the Guidelines more binding. It seems that National Contact Points should be therefore developed in an independent body of a judicial or a quasi-judicial character. Additionally, a supervisory judicial mechanism would strengthen compliance and would monitor the proceedings before respective National Contact Point. Nonetheless, there is growing evidence that the Guidelines are becoming an important, and indeed the only, international tool for monitoring corporate responsibility for human rights. It will be seen where development takes us in the future decades.