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The Application of Human Rights Law to Private Sector Complicity in Governmental Corruption

Published online by Cambridge University Press:  05 August 2011

CECILY ROSE
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Abstract

This article examines private sector complicity in governmental corruption that violates economic and social rights. Although banks and multinational corporations typically play critical roles in facilitating the diversion of public revenues away from the provision of social services, the link between the private sector, corruption, and human rights violations remains underexplored. This article therefore examines this relationship and explores the viability of a standard for assessing the complicity of the private sector in such violations of economic and social rights. Ultimately, the state-centred nature of the international human rights system limits the utility of any complicity standard for non-state actors.

Keywords

complicitycorruptionhuman rightsnon-state actors
Type
CURRENT LEGAL DEVELOPMENTS
Information
Leiden Journal of International Law , Volume 24 , Issue 3 , September 2011 , pp. 715 - 740
Copyright
Copyright © Foundation of the Leiden Journal of International Law 2011

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References

1 M. Sepúlveda Carmona, ‘International Council on Human Rights Policy and Transparency International’, Corruption and Human Rights: Making the Connection (2009), 45; 1966 International Covenant on Economic, Social and Cultural Rights, (1966) 993 UNTS 3, entered into force 3 January 1976.

2 I. Tamm, C. Lucky, and S. Humphreys, Open Society Justice Initiative, Legal Remedies for the Resource Curse: A Digest of Experience in Using Law to Combat Natural Resource Corruption (2005), 9.

3 Ibid. Although corruption is a worldwide phenomenon that affects both developed and developing countries, this thesis focuses on the problem of corruption in resource-rich developing countries, particularly in Africa: Z. Pearson, Centre for Democratic Institutions, Human Rights and Corruption (2001), 3–4.

4 N. Kofele-Kale, ‘Patrimonicide: The International Economic Crime of Indigenous Spoliation’, (1996) 28 Vand. JTL 45; see also Tamm, Lucky, and Humphreys, supra note 2, at 9–10.

5 Kofele-Kale, ibid.

6 Tamm, Lucky, and Humphreys, supra note 2, at 10.

7 Ibid., at 11.

8 Carmona, supra note 1, at 2.

9 Thus, for the purposes of this article, the phrase ‘private sector corruption’ refers to acts of corruption, such as money laundering, that are committed by private actors in complicity with acts of corruption, such as embezzlement, that are perpetrated by the state; see section 3, infra, for the relationship between the private sector, corruption, and human rights violations.

10 Transparency International, Frequently Asked Questions about Corruption, available online at www.transparency.org/news_room/faq/corruption_faq. For a discussion of definitions of corruption, see Pearson, supra note 3, at 5–8. Difficulties formulating a universal definition of corruption stem, in part, from the complexity of the concept and the range of behaviours to which it refers. Much of the literature on corruption therefore adopts a minimalist definition that is ‘concise and broad enough to be of use in most instances of corruption’, ibid., at 6.

11 Ibid., at 7; Carmona, supra note 1, at 16; UN Global Compact, Principle 10, available online at www.unglobalcompact.org/AbouttheGC/TheTENPrinciples/principle10.html.

12 Carmona, supra note 1, at 15.

13 Ibid., at note 14; G. Moody-Stuart, Grand Corruption: How Business Bribes Damage Developing Countries (1997).

14 Carmona, supra note 1, at 18; Tamm, Lucky, and Humphreys, supra note 2, at 9.

15 Carmona, supra note 1, at 16.

16 2003 UN Convention against Corruption, 2348 UNTS 41 (hereafter, ‘UN Convention against Corruption’), Arts. 15, 16, 21 (bribery); Arts. 17, 22 (embezzlement), Art. 18 (trading in influence), Art. 19 (abuse of functions), Art. 20 (illicit enrichment). The Council of Europe's 1999 Criminal Law Convention on Corruption similarly criminalizes bribery and trading in influence, without defining corruption or stipulating that these acts amount to corruption. The 1999 Criminal Law Convention on Corruption, adopted by the Committee of Ministers of the Council of Europe on 27 January 1999, entered into force on 1 July 2002, (1999) European Treaty Series, No. 173; see also Carmona, supra note 1, at 17.

17 Carmona, supra note 1, at 17; see, e.g., 2000 United Nations Convention against Transnational Organised Crime, 2225 UNTS 209, entered into force on 29 September 2003; 1999 Civil Law Convention on Corruption, adopted by the Committee of Ministers of the Council of Europe on 4 November 1999, entered into force on 1 November 2003, European Treaty Series, No. 174, Art. 2; convention drawn up on the basis of Art. K.3(2c) of the Treaty on European Union, on the fight against corruption involving officials of the European communities or officials of member states of the European Union, adopted by Council Act of 26 May 1997, Official Journal C 195, 25 June 1997, at 1–11.

18 ICESCR, Art. 2(1).

19 Committee on Economic, Social, and Cultural Rights, General Comment No. 3, The Nature of States Parties’ Obligations, UN Doc. E/1991/23 (14 December 1990), para. 9.

20 Ibid., at 25–6, 43–4.

21 Arts. 11–13.

22 Committee on Economic, Social and Cultural Rights, General Comment No. 14, UN Doc. E/C.12/2000/4 (11 August 2000) (hereafter, ‘General Comment No. 14’), para. 52; 1997 Maastricht Guidelines on Violations of Economic, Social, and Cultural Rights (January 1997) (hereafter, ‘Maastricht Guidelines’), para. 14(g).

23 J. Bacio-Terracino, Anti-Corruption: The Enabling CSR Principle (2007), available online at www.business-humanrights.org/Categories/Issues/Other/Corruption.

24 UN Doc. A/HRC/14/27 (9 April 2010), para. 46.

25 See, e.g., OECD, OECD Guidelines for Multinational Enterprises: Text, Guidelines, Commentary, DAFFE/IME/WPG (2000) 15 (Final) (‘OECD Guidelines for Multinational Enterprises’), General Policies, paras. 1–2; Commentary, para. 4; UN Convention against Bribery, Foreword; 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, DAFFE/IME/BR(97)20 (entered into force on 15 February 1999) (‘OECD Anti-Bribery Convention’), Preamble; Maastricht Guidelines, supra note 22, para. 14(g).

26 UN Convention against Bribery, Foreword.

27 UN Global Compact, Principle 10, available online at www.unglobalcompact.org/AbouttheGC/TheTENPrinciples/principle10.html.

28 UN Global Compact, Overview of the UN Global Compact, available online at www.unglobalcompact.org/AboutTheGC/index.html.

29 Ibid.

30 Global Compact, Transparency and Anticorruption, available online at www.unglobalcompact.org/AbouttheGC/TheTENPrinciples/anti-corruption.html.

31 Ibid.

32 Ibid.

33 Ibid.

34 Ibid.

35 Tamm, Lucky, and Humphreys, supra note 2, at 9.

36 P. Alston, The ‘Not-a-Cat’ Syndrome: Can the International Human Rights Regime Accommodate Non-State Actors?, in P. Alston (ed.), Non-State Actors and Human Rights (2005), 22; C. Tomuschat, Human Rights: Between Idealism and Realism (2003), 320.

37 General Comment No. 14, supra note 22, para. 52.

38 OECD Anti-Bribery Convention, Art. 1(1).

39 Ibid., Art. 1(2).

40 UN Convention against Corruption, supra note 16, Chapter III.

41 But see Art. 57(3)(c) of the UN Convention, which concerns the return and disposal of assets, and mentions the possibility of compensating victims of acts of corruption (Art. 57(3)(c)).

42 A. Clapham, The Human Rights Obligations of Non-State Actors (2006), 263; J. Crawford, K. Parlett, V. Kuuya, and F. Paddeu, ‘Corporate Complicity in Human Rights Violations: A Discussion Paper’, presented at the Lauterpacht Centre for International Law, Conference on Corporate Complicity (December 2009), 78–9.

43 Clapham, ibid., at 264.

44 Ibid., at 261.

45 Ibid., at 263.

46 Despite the inapplicability of international criminal law to acts of corruption, it has been repeatedly argued, with no legal basis, that corruption amounts to a crime against humanity; see Kenya National Commission on Human Rights, Regional Conference on the Human Rights Dimension of Corruption, Nairobi Declaration (March 2006), paras. 2, 9, 27; Transparency International, 11th International Anti-Corruption Conference, The Seoul Findings (May 2003), at 1; and Udombana, N., ‘The Third World and the Right to Development: Agenda for the Next Millennium’ (2000) 22 Human Rights Quarterly 753, 784CrossRefGoogle Scholar; see also Kofele-Kale, N., ‘The Right to a Corruption-Free Society as an Individual and Collective Human Right: Elevating Official Corruption to a Crime under International Law’, (2000) 34 International Law 149Google Scholar, at 166.

47 Clapham, supra note 42, at 263.

48 Ibid., at 261–4.

49 See H. Steiner, P. Alston, and R. Goodman, International Human Rights in Context: Law, Politics, Morals (2007), 137.

50 See American Law Institute, Restatement (Third), The Foreign Relations of the United States, Vol. 2 (1987), para. 702. This section identifies the following as violations of human rights that achieved the status of customary law: (a) genocide; (b) slavery or slave trade; (c) the murder or causing the disappearance of individuals; (d) torture or other cruel, inhuman, or degrading treatment or punishment; (e) prolonged arbitrary detention; (f) systematic racial discrimination; or (g) a consistent pattern of gross violations of internationally recognized human rights.

51 Ibid.

52 See, e.g., Art. 14 of the 1984 Convention against Torture, 1465 UNTS 112, which concerns the right to compensation for torture, and the Commentary to Art. 58 of the Articles on the Responsibility of States for Internationally Wrongful Acts prepared by the International Law Commission, which suggests that developments could occur in the field of individual civil responsibility.

53 International law could, of course, evolve so as to impose civil liability on individuals and non-state actors, but with few exceptions (such as the Rome Statute's victim compensation scheme), international law does not currently do so.

54 Crawford, J., The International Law Commission's Articles on State Responsibility: Introduction, Text and Commentaries (2002), 149 (3)Google Scholar (hereafter, ‘ILC Draft Articles, Commentary’).

55 Crawford et al., supra note 42, para. 81. It is possible, however, for a specific set of primary rules to set a different standard that does not require an element of intention or purpose.

56 ILC Draft Articles, Commentary, supra note 54, at 149, para. 4.

57 Ibid.

58 Ibid, at 149, para. 5.

59 Ibid.

60 Ibid., at 148, para. 1. By contrast, a state would bear responsibility for the internationally wrongful act under Art. 17, concerning directing and controlling another state in the commission of an internationally wrongful act, and under Art. 18, concerning coercing another state to commit an internationally wrongful act: Crawford et al., supra note 42, para. 85.

61 ILC Draft Articles, Commentary, supra note 54, at 148, para. 1.

62 Case Concerning the Application of the Convention on the Prevention and Punishment of the Crime of Genocide (Bosnia and Herzegovina v. Serbia and Montenegro), Judgment of 26 February 2007, [2003] ICJ Rep., para. 420 (hereafter, ‘Bosnia Genocide Case’); see also Crawford et al., supra note 42, para. 83.

63 Bosnia Genocide Case, ibid., para. 418.

64 Ibid., para. 419.

65 Ibid.

66 Ibid., para. 420.

67 Ibid.

68 Ibid., para. 421. The Court did not address the question of whether ‘complicity presupposes that the accomplice shares the specific intent (dolus specialis) of the principal perpetrator’, Crawford et al., supra note 42, at para. 84.

69 Bosnia Genocide Case, supra note 62, para. 422.

70 Clapham, supra note 42, at 266; Crawford et al., supra note 42, para. 107.

71 1998 Rome Statute of the International Criminal Court, 2187 UNTS 90, entered into force on 1 July 2002, Art. 25(3)(c).

72 Khulumani v. Barclays et al., (2007) 504 F.3d, 2 October 2009, at 277 (hereafter, ‘Khulumani’); Presbyterian Church of Sudan, No. 07–0016-cv, Slip Op., at 41–2.

73 Khulumani, ibid., at 277.

74 See Prosecutor v. Furundzija, Judgement, Case No. IT-95–17/1-T, Trial Chamber, 10 December 1998, paras. 245–249.

75 Keitner, C., ‘Conceptualizing Complicity in Alien Tort Cases’, (2008) 60 Hastings Law Journal 61Google Scholar; Crawford et al., supra note 42.

76 Keitner, ibid., at 87.

77 Crawford et al., supra note 42, para. 27.

78 Clapham, supra note 42, at 266.

79 Ibid., at 264–70 (arguing that ‘international law already applies to corporations and is developing the scope of their obligations not to commit or assist in human rights abuses’).

80 Ibid.; see also Ratner, S., ‘Corporations and Human Rights: A Theory of Legal Responsibility’, (2001) 111 Yale Law Journal 443CrossRefGoogle Scholar.

81 OECD Guidelines for Multinational Enterprises, General Policies, paras. 1–2.

82 United Nations Global Compact, Human Rights, available online at www.unglobalcompact.org/AbouttheGC/TheTENPrinciples/humanRights.html.

83 Ibid. The preamble of the UDHR provides that ‘every individual and every organ of society, keeping this Declaration constantly in mind, shall strive by teaching and education to promote respect for these rights and freedoms’. It may be argued that the phrase ‘every organ of society’ includes entities such as corporations and banks.

84 Ibid.

85 Crawford et al., supra note 42, para. 120.

86 Ibid., para. 121.

87 Open Society Justice Initiative, Corruption and Its Consequences in Equatorial Guinea: A Briefing Paper (2009), 3; see also A. Vines, Human Rights Watch, Well Oiled: Oil and Human Rights in Equatorial Guinea (2009), 46.

88 Vines, ibid., at 2.

89 International Monetary Fund, Republic of Equatorial Guinea: Staff Report 2006, Article IV Consultation (2006), 7, para. 1.

90 Vines, supra note 87, at 3.

91 Open Society Justice Initiative, supra note 87, at note 8; United Nations Millennium Development Goals Indicators, available online at http://mdgs.un.org/unsd/mdg/Data.aspx.

92 Vines, supra note 87, at 49.

93 UNICEF, The State of the World's Children 2009: Maternal and Newborn Health (2008), Table 1: Basic Indicators.

94 Ibid.

95 Ibid., Table 3: Health.

96 Open Society Justice Initiative, supra note 87, at note 8; United Nations Millennium Development Goals Indicators, available at http://mdgs.un.org/unsd/mdg/Data.aspx.

97 World Health Organization, Investing in Health: A Summary of the Findings of the Commission on Macroeconomics and Health (2003), 15; Department for International Development, Working Together for Better Health (2007), 23; Global Witness, Undue Diligence: How Banks Do Business with Corrupt Regimes (2009), 32; International Monetary Fund, Republic of Equatorial Guinea: 2008 Article IV Consultation – Staff Report, IMF Country Report No. 09/102, 24 (2009).

98 Vines, supra note 87, at 3; Open Society Justice Initiative, supra note 87, at 7; see also K. Silverstein, ‘The Crude Politics of Trading Oil’, The Nation, 6 December 2002; K. Silverstein, ‘Oil Boom Enriches African Ruler’, Los Angeles Times, 20 January 2003.

99 United States Senate, Permanent Subcommittee on Investigations, Committee on Government Affairs, Money-Laundering and Foreign Corruption: Enforcement and Effectiveness of the Patriot Act, Case Study Involving Riggs Bank, 15 July 2004, 38 (hereafter, ‘US Senate Report’).

100 Ibid., at 38, 64.

101 Ibid., at 40.

102 For further examples, see ibid., at 12–98.

103 Asociación por Derechos Humanos de España, Criminal Complaint Submitted to Central Pre-Trial Investigations Court, Instructing Judge Baltasar Garzón, 22 September 2008, at 17 (hereafter, ‘APDHE Criminal Complaint’); US Senate Report, supra note 99, at 55.

104 APDHE Criminal Complaint, ibid., at 12.

105 US Senate Report, supra note 99, at 3.

106 Vines, supra note 87, at 21.

107 Ibid., at 23; APDHE Criminal Complaint, supra note 103, at 13.

108 Ibid., at 17.

109 US Senate Report, supra note 99, at 1, 98.

110 Ibid., at 38.

111 Ibid., at 46–7.

112 Ibid., at 47.

113 Ibid., at 67.

114 APDHE Criminal Complaint, supra note 103, at 1.

115 Ibid., at 3.

116 Ibid.

117 Ibid., at 9.

118 See subsection 2.2, supra.

119 Vines, supra note 87, at 49.

120 Bosnia Genocide Case, supra note 62, para. 421.

121 US Senate Report, supra note 99, at 47.

122 Ibid., at 46–7.

123 Ibid.

124 See, generally, Independent Inquiry Committee into the United Nations Oil-for-Food Programme, Manipulation of the Oil-for-Food Programme by the Iraqi Regime, 27 October 2005; J. Meyer, M. Califano, and P. Volcker, Good Intentions Corrupted: The Oil-for-Food Scandal and the Threat to the UN (2006).

125 Crawford, supra note 54, at 148.

126 It should be noted, however, that the account manager of the Equatoguinean accounts, among other misconduct, transferred US$1 million in Equatoguinean oil revenues from the E.G. Oil account at Riggs to an account at another bank that had been opened in the name of an offshore corporation controlled by the account manager's wife. On this basis, it could be argued that the Riggs account manager did share the intent of the government to embezzle funds for private use; see US Senate Report, supra note 99, at 4, 38, 62.

127 While such a scenario seems implausible, in this case, the Riggs Bank account manager of the Equatoguinean accounts actually did steal funds from the Oil Account; see ibid., at 4, 54–6.

128 One commentator has observed that Transparency International, which is self-consciously modelled after Amnesty International, ‘has tried explicitly to ride the human rights band wagon’; see B. Rajagopal, ‘Corruption, Legitimacy and Human Rights: The Dialectic of the Relationship’, (1999) 14 Conn. JIL 496. Yet, Transparency International has not always articulated a clear linkage between human rights and corruption; see, e.g., Transparency International, Human Rights and Corruption, Working Paper # 05/2008 (2008). In addition, Transparency International's basic information about why corruption matters provides only an anecdotal example: ‘Human rights are denied where corruption is rife, because a fair trial comes with a hefty price tag where courts are corrupted’; see www.transparency.org/about_us.

129 See M. wa Mutua, ‘The Ideology of Human Rights’, (1995–96) 36 Virg. JIL 589, at 590; see also Kennedy, D., ‘The International Human Rights Movement: Part of the Problem?’, (2002) 15 HHRJ 101Google Scholar, at 120.

130 Kennedy, ibid., at 108 (arguing that ‘[a]s a dominant and fashionable vocabulary for thinking about emancipation, human rights crowds out other ways of understanding harm and recompense’).

131 Publish What You Pay was founded in 2002 by a number of NGOs in response to Global Witness's report, A Crude Awakening, about the oil and banking sectors’ roles in Angola's conflict: see www.publishwhatyoupay.org/en/about/faqs. The Extractive Industries Transparency Initiative was launched in 2003: see http://eitransparency.org/eiti/history. The Revenue Watch Institute was first launched in 2002 as a programme of the Open Society Institute, and it became an independent organization in 2006: see www.revenuewatch.org/about-rwi/index.php. There has also been recent discussion of the need for greater transparency with respect to contracts between companies in the extractive industries and host governments: see P. Rosenblum and S. Maples, Revenue Watch Institute, Contracts Confidential: Ending Secret Deals in the Extractive Industries (2009).

132 By contrast, Transparency International, which was founded in 1993, does use human rights language, as noted in note 128, supra; see, e.g., www.transparency.org/news_room/faq/faq_ti.

133 Publish What You Pay, FAQs, available online at www.publishwhatyoupay.org/en/about/faqs.

134 Ibid.

135 Publish What You Pay, Mission, available at online www.publishwhatyoupay.org/en/mission.

136 Ibid.

137 EITI Fact Sheet, 1 (26 November 2009).

138 EITI, The EITI Principles and Criteria, available at online http://eitransparency.org/eiti/principles.

139 Ibid.

140 EITI, EITI Countries, available online at http://eiti.org/implementingcountries.

141 See Tamm, Lucky, and Humphreys, supra note 2, at 19–40.

142 Ibid., at 31.

143 UN Convention against Corruption, supra note 16, Art. 23.

144 Financial Action Task Force, available online at www.fatf-gafi.org/pages/0,2987,en_32250379_32235720_1_1_1_1_1,00.html.

145 Tamm, Lucky, and Humphreys, supra note 2, at 6.

146 See, e.g., 1996 Inter-American Convention against Corruption, entered into force on 3 June 1997; 2003 African Union Convention on Preventing and Combating Corruption, entered into force on 4 August 2006; and the Council of Europe's 1999 Criminal and Civil Law Conventions on Corruption, (1999) ETS No. 173.

147 15 USC 78dd-1 ff.; see also Tamm, Lucky, and Humphreys, supra note 2, at 20; P. Urofsky and D. Newcomb, Shearman & Sterling, LLP, Recent Trends and Patterns in FCPA Enforcement (1 October 2009).

148 Both the Department of Justice and the Securities and Exchange Commission have prosecuted, among others, Novo Nordisk A/S, Siemens AG, Fiat S.p.A., AB Volvo, Flowserve Corp, Akzo Nobel, N.V., Chevron Corp., and Ingersoll-Rand Co. Ltd: see Urofsky and Newcomb, ibid.