Precedents for U.S. Companies Being Held Accountable For Human Rights Violations Committed Abroad

Recently, the U.S. cosmetics company Mary Kay Inc, based in Dallas, drew international attention for their Shenzhen China branch requiring their employees to sign a declaration to "not practise Falun Gong or promote Falun Gong." This is a clear violation of human rights. After reading several Clearwisdom.net articles, we felt compelled to bring up several court precedents of U.S. companies being held accountable for human rights violations committed abroad.

Since July 1999, former Chinese president Jiang Zemin, the "human rights scoundrel" as termed by Amnesty International, has placed the persecution of Falun Gong as the foremost priority of the country. He established the "610 Office" to carry out his policy to "destroy their reputations, bankrupt them financially, and eradicate them physically." His policies have forcefully permeated every segment of society and everyone's daily life with the goal of trying to force Falun Gong practitioners to give up their belief in "Truthfulness-Compassion-Tolerance."

According to conservative estimates, the persecution by the Jiang regime and the "610 Office" has deprived 70-100 million Chinese Falun Gong practitioners of their basic rights. The practitioners have been stripped off all of their freedom of speech and belief, and they have been forbidden to appeal to higher authorities as stipulated by law. As of November 5, 2003, there have been 816 confirmed cases of Falun Gong practitioners dying as a result of persecution. Clearwisdom is receiving reports of Falun Gong practitioners dying as a result of the persecution in China almost on a daily basis.

Because every facet of life is linked to the persecution of Falun Gong, including students' entrance exams, workers' employment, and everyone's housing, the family members of the millions of Falun Gong practitioners have been subjected to having a life of unstable income and even their families torn apart. Some have lost their family members forever.

Planning for overseas investment and business development requires a deep understanding of the local political, economic, cultural, social and demographic situation -- all of which make up the conditions for investment. Here we will share some information on this topic with our friends in the U.S. business community. We hope that while you are investigating business opportunities, you will fully taken into account the rampant human rights abuses happening in Chinese society, so that you will not become unwitting accomplices in such a persecution.

The prospect for financial gain is certainly important, but the moral reputation of the investor and the people they are investing in, as well as the sense of social conscience, should be carefully considered from a legal and practical perspective.

Number of Cases in the U.S. Where Courts Held the Companies Responsible under U.S. Law for Violations Committed Abroad

A recent case on point is Doe. v. Unocal. Plaintiffs in this case sought redress for the human rights abuses associated with the Unocal pipeline project in Burma. The plaintiffs are Burmese peasants who suffered a variety of egregious violations at the hands of Burmese army units that were securing the pipeline route.

Defendants include Unocal, a U.S. company and two of Unocal's top executives.

Unocal was building offshore drilling stations to extract natural gas resources from the Andaman Sea, and a port and pipeline for transport of the gas through the Tenasserim region of Burma to Thailand. In pursuit of this gas pipeline project, defendants, through Burmese military, intelligence and/or police forces, have used force and intimidation to relocate whole villages, forced the farmers living in the area of the proposed pipeline to provide their labour, and stolen the farmers' property. Defendants' conduct violates state and federal law, and customary international law, including the prohibitions against forced labour and forced relocation, rape and other torture, and other human rights violations.

In a landmark decision in 1997, a U.S. federal district court in Los Angeles agreed to hear Doe v. Unocal. The Court concluded that corporations and their executive officers can be held legally responsible under the Alien Tort Claims Act for violations of international human rights norms in foreign countries, and that U.S. courts have the authority to adjudicate such claims.

"Unocal knew that the military had a record of committing human rights abuses; that the Project hired the military to provide security for the Project, a military that forced villagers to work and entire villages to relocate for the benefit of the Project; that the military, while forcing villagers to work and relocate, committed numerous acts of violence; and that Unocal knew or should have known that the military did commit, was committing and would continue to commit these tortuous acts."

June 11, 2002 marked another precedent-setting day in the case against Unocal. The Superior Court of California, County Of Los Angeles, made a decision against Unocal, which made this case the first in U.S. history in which a corporation stood trial for human rights abuses committed abroad. The court also decided that it would apply California law.

Another similar case is Wiwa v. Royal Dutch Petroleum (Shell).

Plaintiffs brought this lawsuit under the Alien Tort Claims Act for human rights abuses in Nigeria and also alleged violations of the Racketeer Influenced and Corrupt Organisations Act (RICO).

The particular abuses at issue are the November 10, 1995 hangings of Ken Saro-Wiwa and John Kpuinen, two leaders of MOSOP (Movement for the Survival of the Ogoni People), the torture and detention of Owens Wiwa, and the shooting of a woman who was peacefully protesting the bulldozing of her crops in preparation for a Shell pipeline by Nigerian troops called in by Shell. These abuses were intended to suppress the Ogoni people's peaceful opposition to defendants' long history of environmental damage and human rights abuses in the Ogoni region.

In a huge victory for the plaintiffs, the Court of Appeals on September 15, 2000, concluded that the United States is a proper forum. The Court also upheld the district court's ruling that jurisdiction over the defendants was proper and remanded the case back to the district court to rule on defendants' other objections to the suit.

In another major victory for the plaintiffs, on February 28, 2002, the court found that the plaintiffs' allegations met the requirements for claims under the Alien Tort Claims Act, in that the actions of Royal Dutch/Shell and Anderson constituted participation in crimes against humanity, torture, summary execution, arbitrary detention, cruel, inhuman, and degrading treatment, and other violations of international law. The court also found that Anderson could be sued under the Torture Victim Protection Act, which allows victims of torture to sue the perpetrators in federal court. Finally, the court found that the plaintiffs' RICO claims could proceed, because Royal Dutch/Shell's actions in concert with the Nigerian military satisfied the racketeering requirements of the act, and because they engaged in these acts in part to facilitate the export of cheap oil to the United States. The court ruled that none of the defendants' other defences were applicable, thus bringing the plaintiffs one important step closer to redress for the violations they suffered. The plaintiffs are now entitled to gather evidence by interviewing Anderson and other Royal Dutch/Shell employees, and by reviewing their documents.

Foreign Corrupt Practises Act of 1977 as amended

U.S. companies doing business in foreign countries are subject to U.S. law. FCPA is a good illustration of the responsibility of a U.S. company to be in compliance with U.S. law.

As a result of SEC investigations in the mid-1970s, over 400 U.S. companies admitted making questionable or illegal payments in excess of $300 million to foreign government officials, politicians, and political parties. The abuses ran the gamut from bribery of high foreign officials to secure some type of favourable action by a foreign government to so-called facilitating payments that allegedly were made to ensure that government functionaries discharged certain ministerial or clerical duties. Congress enacted the FCPA to bring a halt to the bribery of foreign officials and to restore public confidence in the integrity of the American business system.

The FCPA was intended to have and has had an enormous impact on the way American firms do business. Several firms that paid bribes to foreign officials have been the subject of criminal and civil enforcement actions, resulting in large fines and suspension and debarment from federal procurement contracting, and their employees and officers have gone to jail. To avoid such consequences, many firms have implemented detailed compliance programs intended to prevent and to detect any improper payments by employees and agents.

In 1988, the Congress directed the Executive Branch to commence negotiations in the Organisation of Economic Cooperation and Development (OECD) to obtain the agreement of the United States' major trading partners to enact legislation similar to the FCPA. In 1997, almost ten years later, the United States and thirty-three other countries signed the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. The United States ratified this Convention and enacted implementing legislation in 1998.

The anti-bribery provisions of the FCPA make it unlawful for a U.S. person, and certain foreign issuers of securities, to make a corrupt payment to a foreign official for the purpose of obtaining or retaining business for or with, or directing business to, any person. Since 1998, they also apply to foreign firms and persons who take any act in furtherance of such a corrupt payment while in the United States.

The FCPA also requires companies whose securities are listed in the United States to meet its accounting provisions. See 15 U.S.C. § 78m. These accounting provisions, which were designed to operate in tandem with the anti-bribery provisions of the FCPA, require corporations covered by the provisions to make and keep books and records that accurately and fairly reflect the transactions of the corporation and to devise and maintain an adequate system of internal accounting controls.