Source: https://bjil.typepad.com/publicist/2011/07/from-promise-to-practice-towards-a-functional-assessment-of-the-office-of-accountability-of-the-overseas-private-invest.html
Timestamp: 2019-10-23 06:26:17
Document Index: 568850900

Matched Legal Cases: ['§ 2', '§ 101', '§ 231', '§ 116', '§ 5', '§ 231', '§ 101', '§ 5']

Publicist: From Promise to Practice: Towards a Functional Assessment of the Office of Accountability of the Overseas Private Investment Corporation
« Extradite or Prosecute? Belgium v. Senegal | Main | Targeted Killing? Terrorists, Insurgents, and Pirates »
By Brian Cochran*
At the close of 2009, the Office of Accountability (“OA”) for the Overseas Private Investment Corporation (“OPIC”) released a ground-breaking report on activities since its formation.[1] To date, no independent review of the effectiveness of OA in meeting its congressional and internal policy mandates has been conducted, nor have OA outcomes been collectively scrutinized. In an attempt to rectify this deficiency, this paper critically analyzes OA’s contribution with the objective of increasing its effectiveness as a government agency and realizing its potential as a pacesetter for other international financial institutions (“IFIs”).
As Dr. Jean Aden, OA’s first Director, recently handed over the reins of leadership, her successor faces a unique opportunity to improve a young but critical office.[2] His success will depend, in part, on civil society’s willingness to independently verify OA’s activities and effectiveness.
This paper opens with background information on OPIC and OA before drawing on applicable laws, policies, procedures and guidelines to propose a ‘best practices’ standard for OA effectiveness. The paper then pieces together primary source material to construct the only known independent account of OA activities to date. Next, OA’s brief record is evaluated against the ‘best practices’ standard and suggestions for improvement are offered. Finally, the paper discusses the need for a credible and effective OA in the context of its importance to OPIC, and contends that a fully engaged and empowered OA can spark transparent and sustainable international financial practices more broadly.
Background: The Overseas Private Investment Corporation
As an agency of the U.S. government, OPIC supports the investment of U.S. businesses in developing countries by providing political risk insurance and project financing.[3] Congress created the agency through a 1969 amendment to the Foreign Assistance Act of 1961 (“FAA”), and it began operations two years later.[4] Today, OPIC maintains a $13B investment portfolio and supports a variety of projects in more than 150 countries.[5] OPIC claims to have contributed to more than $74B in U.S. exports, stimulating more than 274,000 U.S. jobs.[6]
Executive authority rests with OPIC’s President and a 15-member Board of Directors (collectively “Management”), all nominated by the U.S. President and confirmed by the Senate.[7] Representatives from six U.S. agencies, organized labor and business round out the Board.[8]
Congress must reauthorize OPIC’s budget every few years. [9] Controversy over OPIC’s existence twice led to one-year authorizations (1977 and 1996).[10] The current authorization began in 2009 and will expire in 2013.[11]
Background: The Office of Accountability
OPIC created OA in 2005 in response to a House Committee on International Relations directive.[12] In its vote to reauthorize OPIC, the Committee encouraged OPIC to “follow the best practices of [several IFIs] and work with all stakeholders to establish an accountability mechanism.”[13]
OPIC adopted this proposal. After reviewing the practices of other IFI accountability mechanisms (“AMs”) and consulting with civil society and industry representatives, the OPIC Board announced the creation of the Accountability and Advisory Mechanism in 2004.[14] The Board charged this mechanism with implementing the three main functions requested by the Committee: compliance review, problem-solving, and advisory services.[15] OPIC split these functions, giving the first two to the newly established and internally independent OA, and the latter to the Advisory Group, a sub-office created within the existing Office of External Affairs.[16]
OA became fully operational in 2005. Its first Director, Dr. Aden, came from outside OPIC. A former World Bank environment staffer, Dr. Aden brought extensive experience in environmental and social compliance issues related to multilateral lending.[17]
Unlike the Advisory Group’s broad policy work, OA’s compliance review and problem-solving functions are project-specific.[18] Both functions can only be triggered by eligible requests. [19] OA must also educate local communities about OA and its procedures.[20]
Standing to bring requests differs slightly between the functions. Requests for problem-solving may be submitted by “one or more members of a local community who are, or are likely to be, materially, directly, and adversely affected by an OPIC-supported project”; an authorized representative of the affected community; or a project sponsor (i.e., the entity receiving OPIC assistance).[21] Compliance review requests may be brought by individuals in the project area with “concerns about adverse environmental, social, worker rights or human rights impacts of an OPIC-supported project”; their authorized representative; or OPIC’s President or Board.[22] Any non-local representatives must provide “clear evidence that there is no adequate or appropriate representation in the country where the project is located.”[23]
OA must reject requests based on the following: anything outside OPIC responsibilities; issues already decided on previous claims; procurement decisions or selection of consultants; intentions to harass a business competitor or gain a competitive edge; allegations of criminal wrongdoing; or assertions that existing policies are inadequate.[24] Additionally, requests must be submitted during the period of OPIC support for a project.[25]
OA’s problem-solving function follows a distinct sequence. First, it conducts a preliminary investigation. [26] Once the facts are known, OA consults with the parties through dialogue, mediation, and additional fact-finding. [27] Next, OA shares its findings with OPIC’s President and the parties. [28] Finally, OA monitors implementation of mutually agreed changes.[29] OA reserves the right to terminate the process if it deems a positive outcome unlikely.[30]
In contrast, OA must consult with OPIC’s President before accepting a compliance review request.[31] Once accepted, OA conducts an investigation.[32] OA preliminarily determines whether OPIC complied with applicable laws and policies.[33] OA issues recommendations for any findings of noncompliance and reports its findings and recommendations to Management.[34] In its response, Management decides whether or not its actions constituted compliance.[35] It also determines which recommendations, if any, to follow, and provides its reasoning.[36] OA and Management reports are both circulated to the parties.[37] OA then monitors any follow-up actions, and submits annual progress reports on implementation to the Board.[38]
To fulfill its charter, OA can review project documents, interview OPIC staff, conduct site visits and hire outside experts.[39] OA must issue public reports in a timely manner, subject to confidentiality laws and complainants’ requests for confidentiality.[40] A senior level employee, the OA Director reports directly to the President and may present at Board meetings.[41] Her work must be integrated into OPIC’s overall decision-making under the governance of its President.[42]
Towards a Standard of Effectiveness
A host of applicable laws and policies govern OPIC and OA, both statutory and self-imposed. These standards form a baseline for evaluating OA’s effectiveness.
In its directions to OPIC, the House Committee cautioned that an AM should be transparent, responsive, accessible and independent.[43] Additionally, the Committee directed OPIC to look to several existing IFI AMs for examples of “best practices.”[44]
OPIC’s Board elaborated on the Committee’s principles. In establishing OA, the Board announced that OA should enhance “OPIC’s mission effectiveness” by being transparent, accessible, fair to all stakeholders, responsive to the concerns of local communities, cost-effective and consistent with “OPIC’s mission, statutory framework and culture.”[45]
Thus, to operate effectively, OA must align with OPIC’s governing legal regime. Most importantly, the FAA—in particular Sections 101, 102, 116-119 and 231-40—spells out OPIC’s guiding principles, policies, objectives, substantive standards and procedures. [46] Evolving considerably over time,[47] it frames the complex relationship between OPIC’s various agendas relating to the environment, human rights, labor rights, social development, U.S. trade and investment and U.S. foreign policy. The FAA also establishes OPIC’s relationship with other U.S. government entities, most notably the State Department and other development agencies.[48]
Responding to shifting congressional mandates and industry norms, OPIC policies have advanced considerably since its inception. The most notable developments in the OA era include an updated Environmental Handbook in 2004, the Anti-Corruption and Transparency Initiative in 2006, and the internal adoption of the IFC Performance Standards in 2009. In August 2010, OPIC updated its policies again with a new Environmental and Social Policy Statement.[49]
OPIC current mission is “to mobilize and facilitate the participation of [U.S.] private capital and skills in the economic and social development of less developed countries and areas, and countries in transition from non‐market to market economies, thereby complementing the development assistance objectives of the United States.”[50] OPIC supports the following “principal goals” of U.S. development cooperation policy:
[t]he alleviation of the worst physical manifestations of poverty among the world’s poor majority; [t]he promotion of conditions enabling developing countries to achieve self sustaining economic growth with equitable distribution of benefits; [t]he encouragement of development processes in which individual civil and economic rights are respected and enhanced; [t]he integration of developing countries into an open and equitable international economic system; [and] [t]he promotion of good governance through combating corruption and improving transparency and accountability.[51]
To meet these goals, OPIC seeks to ensure its processes “are environmentally and socially sustainable; are compatible with low and no-carbon economic development; respect the rights of affected workers and communities, avoid negative impacts and if such impacts are unavoidable properly mitigate or compensate for [such] impacts, and provide timely information regarding its activities to Project Affected People.”[52]
The foregoing policies, principles and procedures create a baseline for tracking OA’s effectiveness over time. Consistent with its statutory and policy mandate, OA should evince the following characteristics: accessibility, cost-effectiveness, independence, fairness, responsiveness, transparency, competence, reflection of industry best practices, and OPIC-compatibility. These terms must be defined in the context of OPIC’s governing legal regime. In addition to enhancing environmental and social standards, OA must adhere to OPIC political and economic objectives that incorporate U.S. foreign policy and international development goals. Although these factors are interdependent, they often appear contradictory. The need to protect business confidentiality, for example, may temper the call for transparency. Moreover, congressional reports and self-imposed OPIC policies do not carry the same weight as statutory obligations. Nevertheless, these guiding principles can be used to assess the extent to which OA operates effectively and the ways it has been deficient.
An Independent Account of Office of Accountability Activities
The following account has been pieced together from primary sources available on OA’s website. To date, OA has received five requests for action. The bulk of OA’s work product consists of the resolution of these requests, along with its outreach activities, as described below.
The Baku-Tbilisi-Ceyhan Oil Pipeline Project
Lodged in March 2006 by affected community members from Georgia and NGO representatives, OA’s first accepted request involved the Baku-Tbilisi-Ceyhan (“BTC”) Oil Pipeline.[53] The project’s owner and operator, BTC Company, received financing from a group of commercial lenders who, in turn, obtained OPIC project insurance.[54]
The request accused project sponsors of refusing to apply protective pipeline coating even though their substandard methods had already caused pipeline cracks in environmentally sensitive areas.[55] The request charged that project sponsors knowingly concealed this defect from OPIC, including by failing to report a summary of environmental monitoring data, and thus breached their contract.[56] The complainant also alleged that OPIC failed its monitoring and due diligence responsibilities and to act on default. [57] Demanding a compliance review, the request sought a cancellation of the project’s insurance, a determination that OPIC breached its environmental policy and an evaluation of OPIC’s due diligence and monitoring standards. [58]
On the positive side, the report found that OPIC had followed all “seven due diligence steps” for project support outlined in the Environmental Handbook and had discharged its due diligence obligations by collaborating with other lenders.[59] But, OA also concluded OPIC had not received all data material to due diligence, even though construction began prior to the completion of OPIC’s due diligence assessment.[60] Furthermore, the report found that OPIC failed its obligations under the Environmental Handbook and the project’s Environmental and Social Action Plan to provide an annual summary of environmental data and to validate the project sponsors’ self-reporting methodology.[61] The report recommended that OPIC review all data material to due diligence (not just data labeled “environmental”), renew project monitoring; receive summaries of environmental monitoring data, validate project sponsor’s monitoring methodology, and clarify when third-party environmental audits should take place.[62]
Management’s interim response concurred with OA’s findings of compliance but disputed or attempted to justify the rest.[63] As to considering all material data, Management claimed it had relied on information provided by outside experts, clients and other lenders to a “reasonable and appropriate degree.”[64] Management stated it had considered the project sponsors’ last quarterly report as an annual report, which, according to a strict contractual interpretation, did not require a summary of environmental data.[65] It also claimed that project sponsors’ had verbally validated their self-reporting methodology in pre-commitment talks.[66] Finally, it stated that the timeline for third-party environmental audits depended on the project.[67]
Management’s March 2007 draft response introduced a surprising twist. Noting a newly-formed inter-agency group would address compliance review, it announced OPIC would consider all data material to due diligence and increase monitoring for the duration of the project.[68] It also supported implementing existing agreements and honoring a directive from Georgia’s government to increase environmental monitoring.[69] It “clarif[ied]” that methodology need not always be validated and reiterated the interim answer concerning the timeline for third-party audits.[70] A Management update released in September 2007 added specific suggestions for increasing pipeline integrity monitoring.[71] Finally, it committed to ensuring that reports summarized environmental monitoring data and project sponsors’ methodology was validated.[72]
OA summarized its monitoring efforts in an October 2010 report. The report found that OPIC had largely addressed the issues raised in the 2007 Compliance Review. OPIC had reviewed all data material to due diligence for every applicable project except one.[73] Furthermore, OPIC had increased its environmental monitoring of the project and had adequately addressed the potential for pipeline leaks at the heart of the request.[74] In fact, Project sponsors’ had gone beyond Management recommendations by introducing advanced techniques to monitor pipeline integrity.[75] Nonetheless, project engineers had failed to consider water quality in environmentally sensitive areas, explaining that they considered such environmental effects outside the scope of their mandate.[76] Project sponsors had also spearheaded a multi-stakeholder initiative, the Pipeline Monitoring and Dialogue Initiative, with the participation of local community groups and NGOs.[77] OA found its recommendation for the inclusion of monitoring data in future projects had been met, though the BTC Project had yet to validate its methodology despite “substantial effort” by OPIC.[78] Finally, it noted that the 2010 Environmental and Social Policy Statement clarified when third-party audits should be conducted.[79] A November 2010 response to this monitoring report stated that Management would consider all of the issues raised by the compliance review closed after the completion of a few outstanding actions, including a review of project sponsors’ monitoring methodology and environmental baseline.[80]
The Coeur d’Alenes Mine Project
In April 2008, leaders of an affected indigenous community filed a problem-solving and compliance review request related to the Coeur d’Alenes Mine Project in Bolivia.[81] The project used cyanide leaching and gravimetric methods to produce silver and tin from one of the largest known silver deposit in the world.[82] Project owners, including a Bolivian state-owned mining company, acquired land surface rights from the requester community in 2004, but negotiations had failed to consider economic or physical displacement.[83] Additionally, project sponsors had not created an Indigenous Community Development Plan.[84] Requesters asked OA to facilitate dialogue and problem-solving with project sponsors and to review whether OPIC had complied with its Indigenous Peoples and Involuntary Resettlement policies.[85]
OA quickly ended the problem-solving request, as the requirement that both parties voluntarily agree to participate had not been fulfilled.[86] OA did not disclose which side refused.
In response to the compliance review request, OA conducted investigations, which included a site visit with an anthropologist and talks with World Bank compliance advisers.[87] OA completed its review in February 2009, and reported that OPIC had failed to apply its Indigenous Peoples and Involuntary Resettlement policies as required by the Environmental Handbook.[88] The report noted that as a result of this failure, the complainants’ concerns may be more difficult, costly and time-consuming to resolve.[89] It outlined the reasons for non-compliance provided by OPIC staff. These staffers explained that OPIC had considered the Involuntary Resettlement Policy inapplicable because the project affected too few people, the payment of compensation demonstrated that displacement was “voluntary,” and, in any event, OPIC reserved the right to waive its policies.[90] They justified the decision not to apply the Indigenous Peoples Policy by stating that they did not consider the communities “indigenous” and, again, OPIC reserved the right to waive its policies.[91] OA refuted these arguments by referencing World Bank Group standards and found no authority for OPIC to waive policies it had incorporated and publicized.[92] OA recommended that OPIC develop procedures to document its considerations of policies and to strengthen its capacity to implement them.[93] It also encouraged OPIC to facilitate consultations between the parties.[94]
Management’s preliminary response, submitted in February 2009, noted that the project complied with all contractual conditions, had the potential for “high” developmental benefits, and had not received any public comments.[95] It stated that the Environmental Handbook did not require OPIC to apply the Involuntary Resettlement and Indigenous Peoples policies, although it neglected to address the appearance to the contrary.[96] It claimed OPIC decided not to apply the policies after careful consideration, including a review of the negotiated settlement and a visit to the project site.[97] The response also committed to facilitating conciliation between the parties and to strengthening environmental and social policies in the future.[98]
The final Management response, released in July, 2009, took a more circumspect tone. It detailed the results of an OPIC fact-finding mission and OPIC’s meetings with various project stakeholders and claimed that OPIC was working with project stakeholders to assist in conflict resolution and to develop and implement a community development plan.[99] The response heralded a forthcoming Environmental and Social Policy Statement and formally adopted International Finance Corporation (IFC) Performance Standards.[100] It also adopted new documentation and disclosure policies to better offer transparency and accountability in the implementation of OPIC policies.[101] Finally, it noted that it had authorized the Office of Investment Policy to negotiate contracts with outside experts that could be used in a timely and efficient manner to bolster the agency’s capacity to implement its own policies.[102]
Since its establishment, OA has rejected two requests. The first request, received in November 2005 and involving the cumulative impacts of a cement manufacturing project in Pakistan, OA rejected because it related to matters pending in Pakistani courts.[103] Another request, filed in February 2007, requested problem-solving to help resolve a dispute over a deposit related to an OPIC-supported housing project in Kenya.[104] OA found the “financial and contractual issues between the requester and the sponsor” outside its mandate.[105]
Recently, indigenous villagers and their representatives filed a problem-solving and compliance review request related to the Dam Hydroelectric Conversion Project in Mexico.[106] This request alleges sponsors failed to adequately consider environmental and social impacts, to consult with or compensate affected communities or to create an Indigenous Peoples Development Plan.[107] OA received the request at the end of November, 2010, and plans to visit the site and interview community members next month.[108]
OA’s outreach efforts have been three-fold: posting information on its webpage; conducting workshops and seminars in major cities where OPIC operates targeting civil society organizations; and collaborating with other IFI outreach efforts.[109] By mid-2009, OA had visited 13 countries across three continents, and conducted “high-exposure” efforts in four of OPIC’s top portfolio countries.[110] OA plans to expand focused outreach to five additional countries.[111] It collaborated with the IFC Compliance Adviser/ Ombudsman (“CAO”) and the Review and Mediation Unit at the African Development Bank to share best practices, strengthen networks and increase joint capacity.[112] In 2010, it hopes to work with the Independent Investigation Mechanism at the Inter-American Development Bank. OA has also publicized civil society tools useful for understanding its policies and procedures.[113]
Effectiveness of the Office of Accountability
OA’s activities can be compared against the standard of functionality described above: accessibility, cost-effectiveness, independence, fairness, responsiveness, transparency, competence, reflection of ‘best practices’ and OPIC-compatibility. Given the complex, interdependent nature of these characteristics, they are more usefully applied as guiding principles for assessment rather than strictly defined benchmarks. Furthermore, the official, publicly available record may not disclose the full range of OA activities. Thus, the following subsections analyze the shortcomings and successes of OA guided by these principles and make suggestions for improvement without attempting to apply them legalistically.
Accountability Shortcomings
To date, OA activities have had mixed results. The most obvious shortcoming has been OA’s failure to fully implement its problem-solving function. OPIC gave project sponsors reciprocal standing to bring a problem-solving request in order to make the process more “fair” and “balanced.”[114] Any assumption of equality is illusory. Asymmetrical power relationships may lead to an allocation of a project’s benefits and detriments unfair to locally affected communities, and thus contravene OPIC policies and development objectives. The problem-solving mechanism was created to resolve just such an incongruity. [115] It provides a means for affected communities to ensure that projects consider their interests and concerns. Project sponsors have no parallel incentive to engage in problem-solving; in fact, to do so may lead to project disruptions, expose their wrongdoing, or otherwise put their project benefits at risk. The requirement that both parties voluntarily commit to problem-solving empowers project sponsors to unilaterally terminate a process fundamentally adverse to their interests.
As a case in point, the only problem-solving request accepted thus far one ground to a halt when one party refused to submit to the process.[116] While OA did not disclose who derailed the process, the incentive structure strongly implicates the project sponsor. Unless the incentives are realigned, the problem-solving mechanism will likely remain dysfunctional and reinforce a sense that the process is neither fair nor truly accessible. Additionally, the failure to disclose the identity of the non-consenting party or reasons for non-consent means that termination of a problem-solving request lacks all but the most cursory transparency.
By comparison, the compliance review process has proven relatively productive. Nevertheless, both completed reviews share a flawed pattern. First, requesters allege violations of OPIC policies. After an extensive investigation, OA reframes the allegations in terms of its findings and its interpretation of its mandate. Initially Management lauds findings of compliance and justifies any non-compliance by offering a narrow, legalistic interpretation of its duties. Next, a final Management response largely adopts the recommendations of OA, but in a way that avoids acknowledging any wrongdoing or directly changing its initial stance. Commitments made apply ostensibly to future projects. OA monitors implementation of any agreed to actions. Milestones in this process are documented and posted on OA’s website.
Obvious weaknesses in this process include the inability of OA to offer the last word on compliance or compel Management behavior. In another example of flawed incentives, Management has the power to reject findings of its own noncompliance. Even with a blatant violation of applicable policies, as existed in the Coeur d’Alenes Mine Project, Management avoided any admission of wrongdoing and set the scope and agenda for its compliance actions. In response to this lack of policy clarity or coherence, OA noted that resolution of the complainants’ grievance had likely been made more difficult, expensive and time-consuming,[117] all results counter to OA’s ideal characteristics. Additionally, the extent to which compliance review meaningfully responds to complainants’ actual concerns is questionable, as most commitments do not directly apply to the project that forms the subject of the request. This orientation is especially deficient given the absence of an effective problem-solving mechanism.
The overall accessibility of OA has yet to live up to its promise. In the first several years of its existence, OA has received only five requests, and even then has acted on only two of them. This is despite the hundreds of projects OPIC supported, which potentially affected thousands of people during that time.[118] The vast majority of project affected communities may simply be uninformed. Populations most vulnerable to disproportionate adverse project impacts—indigenous, uneducated, poor or otherwise marginalized communities—are those least likely to be reached by OA’s efforts. OA’s current strategy; focused on the internet and activities in major cities; has failed to make its services known and accessible to many project affected communities. Additionally, the requirement that non-local representatives provide “clear evidence” of inadequate in-country representation may discourage capable civil society groups from contacting potentially aggrieved persons and informing them of their rights.
Occasional dissonance between OA and the rest of OPIC casts doubt on OA’s OPIC-compatibility. In both conducted compliance reviews, OA evidenced unfamiliarity with OPIC policies and suggested substantive disagreements with Management. Additionally, the relevant document record posted online remains incomplete, and some documents have been redacted.[119] Apparently, OA’s transparency efforts have run up against countervailing interests to protect business information. These incongruities suggest that there may not be close coordination between OA and Management. Tension between an OPIC focus on economic impacts and an OA focus on environmental and social compliance may suggest overall policy incoherence.
Finally, OA may fall short of its best practices mandate. OA bears the closest resemblance to the IFC’s CAO.[120] Despite these similarities, OA differs from CAO in some important ways, such as in allowing project sponsors to request problem-solving, the fact that Management determines its own compliance and whether to accept compliance review requests, the “clear evidence” requirement for non-local representatives, and the fact that compliance review only looks to OPIC compliance, not to the project sponsor’s compliance.[121] Though these differences may be justified on grounds that they enhance OA’s compatibility with OPIC’s foreign policy and investment objectives, they may also serve to undermine OA’s effectiveness and, thus, other facets of its OPIC-compatibility.
Accountability Successes
Nevertheless, OA can point to many instances where it has met or succeeded the expectations set for it by the House Committee report and its authorizing Board directive. Local stakeholders now have a forum to respond to project impacts. At the very least, OA generally acknowledges and responds to requests. This has empowered project affected communities that may otherwise be entirely cut out of international development decisions impacting their lives.[122]
Additionally, while failing to generate clear admissions of wrongdoing or binding commitments to on-the-ground interventions, the compliance review processes undertaken thus far have yielded tangible benefits to OPIC, project affected communities and the general public.
Undeniably, OA’s compliance audits have resulted in substantial changes to the way OPIC does business. Notable advances include the adoption of IFC Performance Standards, the strengthening of monitoring data collection, and policy clarifications. These changes paralleled, and likely impacted, a significant strengthening of OPIC’s overall transparency, environmental and social policies since OA’s formation. OA consultations and the threat of an OA request has likely created incentives for improved due diligence and project monitoring.
Compliance reviews have made an unprecedented amount of information on specific projects publicly available. Published OA reports identify project sponsors, describe the project and detail the chronology OPIC involvement. Management responses further shed light on normally opaque operations. Much of this information would be otherwise unavailable.[123] Despite the incompleteness of the document record posted online, the compliance review process evidences great strides towards meeting OA’s mandate and OPIC’s transparency initiatives, while still honoring obligations to protect confidential business information.
The compliance review process has also engendered substantial impacts on the ground, despite an absence of binding commitments to do so. In the BTC Oil Pipeline Project, project sponsors increased monitoring of pipeline integrity even beyond Management recommendations; and in the Coeur d’Alenes Mine Project, Management agreed to facilitate conciliation and dialogue between the two parties. This last example suggests that compliance review may offer a backdoor mediation mechanism where problem-solving proves unavailing. On the whole, OA has been at least somewhat responsive to requesters’ concerns in conducting its functions, even if Management responses do not always explicitly reflect this guiding principle.
While instances of misalignment reflected in the exchanges between OA and Management may be taken to suggest that OA lacks OPIC-compatibility, a more convincing explanation in light of the record is that OA has revealed incongruities between OPIC’s stated mission and its actual conduct. By exposing these deficiencies OA has increased OPIC’s mission effectiveness, bolstered transparency of OPIC’s financing and oversight practices, and made OPIC more fair and responsive to project affected communities. OA’s willingness to question OPIC actions suggests that it maintains its independence from Management. At the same time, the fact that Management took substantial steps to improve its practices in response to OA prodding suggests that OA is well respected within the organization as a whole and that OA has performed its job with competence.
Finally, while OA’s form and function may fall short of some industry best practices, it has met or exceeded others. For example, OA’s standing requirements are more liberal than those for CAO, and its labor rights mandate may exceed those of peer institutions.[124]
Although OA has made substantial contributions to OPIC, the path towards progress has been stuttering and proven, at times, uncertain. Much room for improvement remains. As the new Director prepares to assume her role, she will have much to learn from the successes and shortcomings of her predecessor. The following offers several suggestions for improvement.
Most immediately, OA should work to implement an effective problem-solving mechanism as required by its authorizing directives. Backdoor efforts at mediation through the compliance review process are unlikely to be as cost-efficient, fair, effective or responsive to complainants’ concerns as direct consultation efforts supported by competent, neutral professionals. Financing contracts could include an agreement to submit to binding consultations in the event of a dispute between project sponsors and affected communities. Evidentiary requirements could also protect against fraudulent claims. Criticisms that such a right could undermine OPIC’s business objectives ignores congressional mandates tying OPIC’s economic activities to specific developmental impacts. Functional problem-solving is necessary to reasonably ensure that OPIC activities are in fact having such impacts.[125] OA should develop professional competency towards this end, and may need additional help from outside experts.
Moreover, the current critique-response dynamic does not take full advantage of OA’s potential to positively influence Management decision-making and risks creating a primarily antagonistic relationship between OPIC’s social and environmental responsibilities on the one hand, and its economic and political responsibilities on the other. Studies have demonstrated that “commitment-oriented” approaches that focus on joint problem-solving, information sharing and capacity building work better to improve institutional behavior with regards to environmental and social standards than a focus on violations alone.[126] Furthermore, increasing Management’s core social and environmental competency could mitigate the consequences of “group think” and other manifestations of irrational organizational behavior adverse to positive development impacts.[127] ‘Soft’ points of contact could also help educate OA about OPIC’s nuanced mission objectives and avoid the need for it to formally request clarifications. This more preventive approach could help preserve resources and increase OPIC’s mission effectiveness.
In order to facilitate its integration into OPIC’s overall organization, OA should periodically present to the Board and summarize its activities in OPIC’s annual reports to Congress. Regular, non-adversarial interactions should be encouraged to allow OA to informally help Management internalize environmental and social policies and incorporate them into decision-making. Given that Management has been willing to make substantial changes to OPIC practices already; it should retain the right to define compliance findings. While binding regulations are important,[128] voluntary commitments and soft law approaches can prove just as effective in practice.[129] The current framework retains flexibility, allowing Management to make substantial changes while saving face and protecting business relationships. A more rigid, punitive approach may undermine efforts to increase cooperation between OA and Management without substantially improving on-the-ground impacts. Of course, this analysis would change if Management responses prove less fruitful in the future.
OA should also work to minimize instances of “policy incoherence,” which can counter an organization’s effectiveness and efficiency and undermine the credibility of a government’s commitment to international obligations.[130] Towards that end, OA should coordinate with other relevant offices within OPIC, such as the Office of Investment Policy and the Advisory Group, and other related U.S. agencies, in particular the six additional agencies represented on the OPIC Board. Coordination should continue at the operational level, and OA should work to enhance the policy competence and compliance capacity of project sponsors.[131] To conserve resources, priority could be assigned based on the likelihood and severity of adverse project impacts. Additionally, collaborations with other IFI AMs and civil society groups could expand OA’s ability to assist project sponsors. Throughout all of its efforts at integration, collaboration, and coordination, OA must retain its independence and integrity as an agency watchdog.[132]
Finally, OPIC must improve its outreach efforts. The number of requests and OA’s capacity to handle them should more appropriately reflect the magnitude of OPIC activities around the globe. OA’s current approach—targeting big cities and the internet—has proven insufficient. Populations most at risk of disproportionate adverse impacts may live far from city centers and not have internet access. Instead, OA could require project sponsors or OPIC staff visiting project sites to distribute information on OA in the local language to affected community representatives. This approach would conserve OA resources and more systemically distribute informational material to at-risk communities. Additionally, OA should continue to collaborate with civil society groups and other IFI AMs to bolster its ability to reach stakeholders.
The Importance of a Credible, Effective Office of Accountability
This section details the reasons why an OA displaying the characteristics outlined above is essential for OPIC, important to the U.S. government and the U.S. public, and potentially significant to larger developments in international business practices.
Importance for OPIC
The most fundamental reason for a strong, effective OA is that OPIC’s statutory mandate compels it. Beyond the specific directives authorizing OA’s existence, statutory guidelines and substantive norms—many related to human rights, labor rights, developmental impacts, and the environment—bind OPIC activities.[133] Over the years IFI practices have been called into question by those who point out that, all too often, their developmental impacts have the exact opposite effect as that called for by their social mandates.[134] At their worst, IFI practices can impoverish local stakeholders, destroy critical natural resources, centralize power in corrupt government officials and exacerbate resource curses.[135] An effective OA can provide a check on narrow economic interests underpinning OPIC practices and hold its decision-makers accountable.[136] This, in turn, can improve outcomes on the ground and help ensure that OPIC’s social mandate avoids becoming a farce or alienating the very people it is meant to serve.
OA activities for the first time have verifiably allowed the “poor majority”[137] to take a meaningful part in projects that are, at their core, meant to benefit them. A dysfunctional OA may actually increase requesters’ frustration and sense of alienation. It may also legitimize impermissible behavior by coating it in a veneer of compliance, or erode OPIC’s “social license.”[138] As U.N. Special Representative on Business and Human Rights, John Ruggie notes,
A grievance mechanism can only serve its intended purpose if those whom it is intended to serve know about it, trust it and are able to use it. […] Poorly designed or implemented grievance mechanisms can risk compounding a sense of grievance amongst stakeholders by heightening their sense of being disempowered and disrespected by the process.[139]
An effective problem-solving mechanism and true stakeholder accessibility will prevent OA from becoming merely tokenistic, or even counter-productive, at the operational level.
OPIC’s status as a U.S. governmental institution further necessitates true accountability and meaningful transparency.[140] Although largely self-funded, OPIC practices are backed by tax payer money, and, as a U.S. agency, it represents the interests of all Americans in its activities abroad. Because of this, OPIC has been subject to intense public and congressional scrutiny, most dramatically underlined by calls for its disbandment. [141] OA’s work can increase OPIC’s credibility among the general public and placate OPIC’s congressional overseers.[142]
Unsafe or unethical environmental and social practices by a client can expose OPIC, and by extension the American taxpayer, to unnecessary and excessive reputational, financial, political, and even legal risks.[143] In the BTC Pipeline Project, local stakeholders identified and mitigated the potential for a costly pipeline leak through an OA request. This proves that OA services can improve risk management in a way that benefits OPIC’s business goals.[144]
OPIC, at all times, should act in a manner consistent with the rights OA seeks to uphold, or it may undermine U.S. policy coherence. Incoherence, in turn, can damage state credibility and, ultimately, foreign policy. [145] Also, as a state agency, OPIC is not ‘unbound’ by U.S. obligations under international law.[146] Integrating an effective OA into OPIC’s organizational culture and coordinating its work with those of other comparable U.S. agencies can improve the coherence and effective implementation of U.S. policy. For OPIC to competently balance its complex social and business agendas it must act in concert with, not “isolation” from, OA.[147]
Finally, a strong and effective OA can help maintain OPIC as an industry trendsetter and the U.S. as a leader in international development. Accountability for IFI-funded projects has increased dramatically in recent years, with substantial consequences for all stakeholders and businesses. [148] As scrutiny increases, this trend will likely continue. Staking out a position ahead of the curve could give OPIC and the U.S. the moral authority and strategic position to help ensure that developments in IFI accountability most closely serve U.S.’s foreign policy, business, political and social interests. If OPIC could offer project sponsors a respected financial backer endorsed by civil society, it may even attract more clients.[149] Taking a leadership position that influences the industry’s trajectory could also help OPIC avoid collective action problems by putting pressure on IFIs that do not respect international environmental and social norms.
Importance beyond OPIC
Historically, foreign direct investment has critically shaped developments in international law, the character of interstate relations, and the effects of transnational business.[150] Arguments attempting to separate ‘pure’ economic decisions from human rights consideration[151] have grown increasingly outdated. IFIs now more than ever recognize the inescapable impact their practices have on human rights and the environment and assume responsibility for these effects.[152]
AMs are uniquely positioned to ensure that IFIs meet their responsibilities to promote net positive change. They can ensure the rights of stakeholders in the developing world and offer such persons meaningful participation in international development decisions, effects which might not otherwise be obtainable.[153] Furthermore, with mandates that combine social and business objectives, AMs are uniquely positioned to enforce the economic, social and cultural rights least protected under international law.[154]
Bilateral financial institutions such as OPIC increasingly dominate international development. Such institutions currently account for more debt and financing of risky projects in the developing world than any other category of institution.[155] Thus, making OA and similar entities effective is crucial to ensuring that international development respects fundamental rights, meets stakeholder expectations and promotes net positive effects.
OA has demonstrated that it can be an effective tool to enhance OPIC’s diverse social and economic mandates. Under the leadership of its first Director, OA significantly improved OPIC’s accountability to local stakeholders and the general public. Despite these advance[156]ments, OA still has a long way to go before it fully lives up to its mandate and the expectations of all of its stakeholders. Working towards this goal benefits OPIC, the U.S. government, the U.S. public, and the general development of responsible norms for international business.
Civil society has an important obligation to assist in this process. Only with independent critiques and oversight, can OA realize its full potential as an agent for positive change within OPIC and greater trends in global financial practices. This paper attempts to provide the first steps in this direction. It is hoped that others can build on this initial effort to provide an external account and assessment of OA activities.
* Brian Cochran is a second-year law student at Berkeley Law. He recently helped draft and submit a problem-solving and compliance review request to the Office of Accountability [hereinafter OA] regarding the OPIC-supported Cerro de Oro Hydroelectric Project through Berkeley Law’s International Human Rights Law Clinic.
[1] Overseas Private Inv. Corp. [hereinafter OPIC], OA Four-Year Report 2005-2009 (2010).
[2] Interview with Natalie Bridgeman, Executive Director, Accountability Counsel (Oct. 2010).
[3] Natalie Bridgeman, Accountability Resource Guide 61 (2009).
[4] Ctr. Int’l Envtl. l. [hereinafter CIEL], Securing Accountability at OPIC: A Citizen’s Guide 3 (2007).
[5] OPIC, Presentation at the International Association for Impact Assessment Symposium: Climate Change and Impact Assessment (Nov. 16, 2010).
[6] Press Release, OPIC, OPIC Reports Fiscal Year 2010 Net Income of $259.9 Million (Nov. 17, 2010).
[7] CIEL, supra note 4, at 3. The President also acts as OPIC’s CEO.
[8] Board of Directors, OPIC (Dec. 15, 2010), http://www.opic.gov/about/board-of-directors. Additional agencies include the U.S. Department of Treasury, U.S. Department of Labor, U.S. Agency for International Development, U.S. Department of Commerce, U.S. Department of State and the Office of the U.S. Trade Representative. Id.
[9] Harvey A. Himberg, The New Accountability Mechanism of the Overseas Private Investment Corporation: The Application of International Best Practices of International Financial Institutions, 1 7th Int’l Conf. Envtl. Compliance & Enforcement 307, 307 (2005).
[10] Id. at 307 n.3.
[11] S. 705, 111th Cong. § 2 (2009).
[12] H. Comm. Int’l Relations, H.R. Doc. No. 108-339, at 3-4 (2003).
[14] OPIC, Board Dir., BDR04(33), Accountability and Advisory Mechanism for OPIC (2004).
[17] OPIC, supra note 1, at 15.
[18] OPIC, supra note 14, at 2, 4.
[19] See Bridgeman, supra note 3, at 63-64 (summarizing necessary features for eligibility).
[20] Id. at 3. Management informs project sponsors of their problem-solving rights. Himberg, supra note 9, at 310-11.
[21] Bridgeman, supra note 3, at 62.
[24] Glossary, OPIC (Dec. 15, 2010), http://www.opic.gov/doing-business/accountability/glossary.
[25] OPIC, supra note 14, at 3. Defined as from the beginning of threshold consideration to contract completion. Id.
[26] Stages of the Problem-solving Process, OPIC (Dec. 15, 2010), http://www.opic.gov/sites/default/files/docs/problemSolvingChart.pdf.
[31] Stages of the Compliance Review Process, OPIC (Dec. 15, 2010), http://www.opic.gov/sites/default/files/docs/complianceReviewChart.pdf .
[39] OPIC, supra note 14, at 4.
[43] H. Comm. Int’l Relations, H.R. Doc. No. 108-339, at 4 (2003).
[44] Id. at 3-4. The Committee named virtually all of the IFI AMs created up to that point, including those from the World Bank Group. Id.
[45] OPIC, supra note 14, at 1-2.
[46] Foreign Assistance Act of 1961 22, U.S.C. 2195(a)(2) [hereinafter FAA]. §§ 101 and 102 lay out general U.S. foreign policy and development objectives and guidelines, while §§ 231-40 deal directly with OPIC. §§ 116 on Human Rights, 117 on Environment and Natural Resources, 118 on Tropical Forests and 119 on Endangered Species are incorporated by reference through the main provisions governing OPIC.
[47] For example, the most recently introduced reauthorization act will amend the FAA to introduce a terrorism bar and require OPIC to comply with the Extractive Industries Transparency Initiative [hereinafter EITI] and to disclose its methodology for measuring various impacts. S. 705, 111th Cong. Amending §§ 5(p), 10, 234B (2009).
[48] See Himberg, supra note 9, at 307 (“By statute, OPIC operates under the ‘foreign policy guidance’ of the U.S. Department of State and every transaction assisted by OPIC requires separate State Department Approval […].”).
[49] Significant changes include adoption of International Finance Corporation [hereinafter IFC] Performance Standards and EITI. See OPIC, Environmental and Social Policy Statement 2, 21 (2010). The statement also clarifies aspects of OPIC policy, such as when policies become effective and key term definitions. Id. at 25, 40-45.
[50] Id. at 1. This closely tracks the language of FAA § 231.
[51] Id. This reflects the congressionally mandated goals listed in FAA § 101.
[52] Id. at 1-2.
[53] OPIC, supra note 1, at 10.
[54] Id. BTC’s shareholders include: BP 30.1%; State Oil Company of Azerbaijan 25%; Chevron 8.9%; Statoil 8.71%; Turkive Petrolleri Anonim Ortakligi 6.53%; Eni 5%; Total 5%; Itochu 3.4%; Inpex 2.5%; ConocoPhillips 2.5%; and Amerada Hess 2.36%. Press Release, BP, BTC Celebrates Full Commissioning (July 13, 2006).
[55] BTC Pipeline Project Complaint, 2 (OPIC Mar. 1, 2006).
[59] Compliance Review of OPIC’s Environmental Due Diligence and Monitoring of the BTC Oil Pipeline Project, 9 (OPIC Jan. 2007).
[60] Id. at 10.
[62] Id. at 17.
[63] OPIC Management Interim Response to OA Report, 1-3 (OPIC Feb. 7, 2007).
[64] Id. at 1.
[68] BTC Pipeline Project—Update on Agency Response (OPIC Sept. 19, 2007), app. at 1.
[69] Id. app. at 2.
[70] Id. app. at 3.
[72] Id. at 3.
[73] BTC Monitoring Report—OA—October 2010, 5-6 (OPIC Oct. 2010).
[74] Id. at 8, 10.
[75] Id. at 10.
[76] Id. at 7-8.
[77] Id. at 8.
[78] Id. at 2.
[79] Id. at 12 (stating that third-party audits should be conducted within the first three years of project operation).
[80] Management Response to BTC Monitoring Report, 1-3 (OPIC Nov. 15, 2010).
[81] OPIC, supra note 1, at 8.
[85] Id. at 8-9. The actual complaint has not been made publicly available on OPIC’s website.
[86] Coeur d'Alene Mines Project Problem-Solving Request, 1 (OPIC Feb. 2009).
[87] OPIC, supra note 1, at 9.
[88] Compliance Review of OPIC’s Social Due Diligence of the Couer d’Alene Mines Project, 11 (OPIC Feb. 2009).
[91] Id. at 9.
[92] Id. at 6-7, 9-10.
[95] Preliminary OPIC Management Response to OA Report, 1 (OPIC Feb. 24, 2009).
[96] Id. at 2.
[98] Id. at 3-4.
[99] OPIC Management Response to OA Report, 1 (OPIC July 13, 2009).
[100] Id. at 1-2.
[101] Id. at 2
[103] OPIC, supra note 1, at 11.
[106] CR 1/2010—Mexico de Oro Hydroelectric Project, OPIC (Dec. 15, 2010), http://www.opic.gov/doing-business/accountability/registry .
[107] Accountability Counsel, Cerro de Oro Hydroelectric Project Request for Compliance Review and Problem-Solving (Nov. 30, 2010) (on file with author).
[108] E-mail from Jean Aden, Dir., OA (Dec. 7, 2010, 09:54 EST) (on file with author).
[109] OPIC, supra note 1, at 12.
[113] Id. (highlighting the CIEL “Citizens Guide”).
[114] Himberg, supra note 9, at 310.
[115] See H. Comm. Int’l Relations, H.R. Doc. No. 108-339, at 3 (2003) (expecting OPIC to continue reforms towards more accountability and accessibility for “all stakeholders” by creating an accountability mechanism).
[116] Coeur d'Alene Mines/San Bartolome Project Problem-Solving Request, 1 (OPIC Feb. 2009).
[117] Compliance Review of OPIC’s Social Due Diligence of the Couer d’Alene Mines Project, 11 (OPIC Feb. 2009).
[118] This figure is based on extrapolation of annual data. In fiscal year 2010, OPIC maintained 97 projects. Press Release, OPIC, OPIC Reports Fiscal Year 2010 Net Income of $259.9 Million (Nov. 17, 2010).
[119] For example, some complaints are not listed on OPIC’s public registry. Also, material contract provisions cited in the BTC complaint have been redacted from the version posted on OPIC’s website.
[120] Himberg, supra note 9, at 309.
[121] Himberg also notes these differences, except for the difference in representative standing and the authority of OPIC Management to accept or decline compliance review requests. Himberg, supra note 9, at 309-13.
[122] Many have noted that persons in the developing world often cannot enforce their human rights in the context of international business. See, e.g., Natalie L. Bridgeman & David B. Hunter, Narrowing the Accountability Gap: Toward a New Foreign Investor Accountability Mechanism, 20 GEO. INT’L ENVTL. L. REV. 194-207 (2008).
[123] This point has also been made by the Director of the OA. See, OPIC, supra note 1, at 3.
[124] Himberg, supra note 9, at 310, 312.
[125] John Ruggie, U.N. Special Representative on Business and Human, has proposed minimum requirements for a credible and effective non-judicial grievance mechanism. According to Ruggie, such a mechanism should be legitimate, accessible, predictable, equitable, rights-compatible and transparent. John Ruggie, Draft Report on Guiding Principles for the Implementation of the U.N. ‘Protect, Respect and Remedy’ Framework, Human Rights Council, 25-26 U.N. Doc. A/HRC (posted on Nov. 22, 2010). Ruggie adds that operational-level mechanisms should be based on dialogue and engagement. Id. Of course, the foreign policy and trade mandates of OA as part of a U.S. agency means that it should have other characteristics in addition to, or in place of, those given by Ruggie.
[126] See, e.g., Richard Locke, Matthew Amengual & Akshay Mangla, Virtue out of Necessity?: Compliance, Commitment, and the Improvement of Labor Conditions in Global Supply Chains, 37 Pol. & Soc’y 319, 319 (2009) (finding that “commitment-oriented” approaches outperformed “compliance-oriented” approaches based on an extensive study of a major global apparel company and its suppliers).
[127] See Unknown Author, Note: Organizational Irrationality and Corporate Human Rights Violations, 122 Harv. L. Rev. 1931, 1932 (2009) (discussing reasons for and consequences of irrational organizational behavior, and arguing that such behavior can cause organizations to violate human rights even though doing so is not in their self-interest).
[128] See Dorothy Thornton, Robert Kagan & Neil Gunningham, When Social Norms and Pressure Are Not Enough: Environmental Performance in the Trucking Industry, 43 Law & Soc’y Rev. 405, 405 (2009) (arguing that certain markets need strong regulatory pressures to make significant improvement in environmental performance likely).
[129] The voluntary versus binding debate may be exaggerated, as voluntary regulations often becoming binding, such as through contract incorporation, or binding in practice. See, e.g., Joe W. (Chip) Pitts III, Business, Human Rights & the Environment: The Role of the Lawyer in CSR & Ethical Globalization, 26 Berk. J. Int’l L. 479, 485 (2008).
[130] See John Ruggie, Consultation on Operationalizing the Framework on Business and Human Rights: Prepared Opening Remarks, 2-3 (Oct 5. 2009).
[131] Manufacturers need to promote capacity and competency down the supply chain to promote compliance. Supra note 133, at 336. The same principles apply by analogy to clients of institutional investors at the operational level.
[132] To ensure independence, among other virtues, Bridgeman proposes the creation of a new “Foreign Investor Accountability Mechanism” entirely independent of any existing IFIs. Supra note 129, at 207. While this approach may bolster the independence of IFI watchdogs, it risks further distancing those most competent in environmental and social issues from IFI management decision-making.
[133] See, e.g., supra note 49 (discussing where binding environmental and social standards can be found in the FAA).
[134] See, Ian Gary & Terry Lynn Karl, Bottom of the Barrel: Africa’s Oil Boom and the Poor 2 (2003).
[135] Several reports critical of IFI lending practices have noted these effects, most dramatically in the context of oil and natural gas extraction projects. See, e.g., id.; Scott Pegg, Can Policy Intervention Beat the Resource Curse? Evidence from the Chad-Cameroon Pipeline Project, 105 AFRICAN AFFS. 1, 8 (2005) (describing how World Bank Group practices facilitated an oil pipeline project that the private sector would have otherwise found too risky).
[136] See Bridgeman, supra note 129, at 207-13 (discussing the potential for positive effects by IFI AMs generally).
[137] OPIC, supra note 52, at 1.
[138] Robert A. Kagan, Neil Gunningham & Dorothy Thornton, Explaining Corporate Environmental Performance: How does Regulation Matter?, 37 Law & Soc’y Rev 51, 83. (2003) (finding social pressures can strongly influence organizational behavior).
[139] Ruggie, supra note 132, at 26.
[140] Ruggie notes that Export Credit Agencies, representing not just commercial interests but the broader public interest, have heightened responsibilities to protect human rights in business decisions. John Ruggie, Protect, Respect, Remedy: A Framework for Business and Human Rights, 12, U.N. Doc. A/HRC/8/5, 12 (2008). While, OPIC is technically a development bank, it evinces comparable obligations to the broader public interest.
[141] See, e.g., Brett Schaefer, OPIC: Myth & Realities, The Heritage Foundation, June 26, 1997.
[142] For example, a recent Senate Report commended OPIC for establishing the OA. S. Rep. No. 111-107, at 3 (2010). The pending FAA amendment would make OA mandatory. See S. 705, 111th Cong. § 5 (2009).
[143] Ruggie, supra note 132, at 10.
[144] Private sector sources have noted benefits of social risk management for business. See, e.g., Sheila M.J. Bonini, Lenny T. Mendonca & Jeremy M. Oppenheim, When Social Issues become Strategic, Mckinsey Q. 2006 No. 2, 31.
[145] In one particularly stark example of policy incoherence, OPIC and the controversial Freeport-McMoran gold-mining project in Indonesia severed ties after public scrutiny of the project intensified; but then Freeport-McMoran found support through another partially U.S.-taxpayer-funded organization, the World Bank’s Multinational Investment Guarantee Agency. Janice C. Shields, OPIC, Foreign Policy Focus, July 1, 1999.
[146] Exec. Order No. 13107, 63 C.F.R. 240 (1998) codifies this customary obligation.
[147] See Ruggie, supra note 137, at 2 (stating that, all too often, government economic or business focused agencies work in “isolation” from and largely uniformed by that same government’s human rights agencies and obligations.)
[148] Pitts, supra note 133, at 485.
[149] Foreign investors that do not uphold minimum human rights standards may attract unfavorable scrutiny. For example, Chinese investment practices in Africa have caused worker resentment. Barry Bearak, Zambia Uneasily Balances Chinese Investment and Workers’ Resentment, N.Y. Times, Nov. 20, 2010.
[150] Steven R. Ratner, Corporations and Human Rights: A Theory of Legal Responsibility, 111 Yale L.J. 443, 452-59 (2001).
[151] For prototypical arguments, see Martin Wolf, Sleep-Walking with the Enemy: Corporate Social Responsibility Distorts the Market by Deflecting Business from its Primary Role of Profit Generation, Fin. Times, May 16, 2001.
[152] See, e.g., Roberto Daniño, The Legal Aspects of the World Bank’s Work on Human Rights: Some Preliminary Thoughts, 2006 World Bank L. Rev. 295 (2006) (discussing the ways in which human rights has been increasingly incorporated into the World Bank’s institutional framework).
[153] Bridgeman, supra note 129, at 194-207.
[154] David Kinley & Junko Tadaki, From Talk to Walk: The Emergence of Human Rights Responsibilities for Corporations at International Law, 44 VA. J. INT’L L. 931, 999 (2003-2004).
[155] Amol Mehra, Public Financing—Export Credit Agencies, RightRespect.com, Aug. 5th, 2010.
Posted at 11:37 PM in Vol. 8, Spring 2011 | Permalink