Bill C-300 (Historical)

Corporate Accountability of Mining, Oil and Gas Corporations in Developing Countries Act

An Act respecting Corporate Accountability for the Activities of Mining, Oil or Gas in Developing Countries

The purpose of this enactment is to promote environmental best practices and to ensure the protection and promotion of international human rights standards in respect of the mining, oil or gas activities of Canadian corporations in developing countries. It also gives the Minister of Foreign Affairs and Minister of International Trade the responsibility to issue guidelines that articulate corporate accountability standards for mining, oil or gas activities and it requires the Ministers to submit an annual report to both Houses of Parliament on the provisions and operation of this Act.

[Mac Penney]

Thanks, Peter.

One of the many sanctions of the bill is the withdrawal of EDC financing. It's been said variously that this is a modest or a mild sanction. Somewhat paradoxically, however, proponents of the bill say that what makes this bill and the model approach to CSR superior to any alternative is that it has sanctions with real teeth. One of the toothy parts of the bill is meant to be the withdrawal of EDC financing.

I'd like to talk a little bit about the risk that creates for Canadian business, about how the way in which companies will actually operate to manage that risk will likely put the EDC on the sidelines for financing of Canadian projects overseas, and, paradoxically, how the bill in fact declaws itself because of the risk management strategy it will incent companies to follow.

The fact is that no extraction or development project or any joint venture between a Canadian company and another Canadian company, or between a Canadian company and a foreign company, can proceed without adequate and secure financing, and, in some cases, depending on the location, political risk insurance. Typically, Canadian companies will rely both on export development agencies, such as the EDC, and traditional commercial lenders, traditional banks, as sources for financing. The bill will clearly create a new financing risk by creating a sanction directly tied to one of those sources of financing, that being the Export Development Corporation. The severity of the risk will depend on a number of interrelated factors, such as the overall health of the credit markets and the creditworthiness of the companies involved. In constrained, risk-averse credit markets, such as those that our country and its businesses have experienced over the past year or so, access to credit agency financing becomes far more important and, in some cases, the most important source of financing, so loss of access or the threat of loss of access to this source of financing is a serious issue for business.

Because of these risks and uncertainties, Canadian mining companies and oil and gas companies overseas will find it difficult to rely on EDC financing for any of their projects. The risk created by this bill is that if we have EDC financing as part of a syndicate and we are found to be offside or inconsistent with these guidelines, which are yet to be developed, then we lose the financing. In that case, we're in trouble with our partners, and the project itself will be in trouble, because we don't have the secure financing to proceed.

To manage that risk, we'll have to turn elsewhere for financing, and the EDC may find itself riding the pine in terms of overseas development for Canadian mining going forward. The result is that either we'll have an investment that doesn't proceed at all, and Canada and the host country will be deprived of the value of that investment, or the project will be developed by a foreign competitor, or the project may proceed with the greater portion of its financing sourced outside Canada.

In all these cases, the project would fall outside the ambit of this bill in terms of the sanctions, since there's no EDC financing involved. Therefore we have now sidelined the EDC, defanged the bill, and done nothing to advance CSR. We see this as being a peculiar paradox inside the legislation.

I would also say that the bill would offer some threat--and I wouldn't want to overemphasize, but I'll just table it for the committee's attention--to Canada's status as a world leader in global financing. Recently the Toronto financial services working group reported that listings on mines, energy, and minerals in Canada create and support 7,000 financial services jobs. They've recommended a pretty ambitious goal: that Canada should try to achieve 70% of world listings in this particular market share by the year 2015. By their estimates--and these estimates were done for them by the Boston Consulting Group--a 70% share in this area would create an additional 4,000 to 6,000 direct jobs, create 10,000 to 15,000 indirect jobs, and generate GD impact somewhere between $1 billion to $1.5 billion.

We suggest to the committee that the sentiments expressed in Bill C-300 actually run contrary to, and would actually conflict with, what we see as a pretty ambitious goal to leverage an area in which Canada definitely has a competitive advantage and expertise.

We think that rather than signing on to the Bill C-300 approach to financing, Canada would be better advised to subscribe to and support, as the EDC does, the Equator Principles. These are principles of financing that were agreed to by multilateral and traditional lenders. Some 40 major institutions representing lenders that provide 80% of global financing in the sector subscribe to these, and as companies, if we want financing to do these projects, we have to ensure that we comply with those guidelines. We think the multilateral approach is a far better approach in this area.

With that, I'll ask Dina to conclude our presentation.

[Mac Penney]

Mr. Chairman, honourable members, my name is Mac Penney, and I am with Kinross Gold Corporation. I'm joined here today by Dina Aloi, the vice-president of corporate social responsibility for Goldcorp, and by Peter Sinclair, a senior director of corporate social responsibility for Barrick Gold.

As representatives of three of Canada's largest international gold mining companies, we appreciate the opportunity to share with the committee some of our concerns with Bill C-300, a bill that we believe is trying to do a good thing but in a very bad way. As companies, we have a fundamental problem with this bill because it proposes a model for corporate social responsibility that, based on our experience in the field, we believe simply will not work.

In our experience, CSR requires a collaborative, flexible, and multi-faceted approach, which is antithetical to the model proposed in Bill C-300. The committee has already heard from the Department of Foreign Affairs and International Trade, Export Development Canada, the Canada Pension Plan, the Mining Association of Canada, the Prospectors and Developers Association of Canada, the Canadian Chamber of Commerce, and a number of legal experts who have spoken about the bill's many substantive deficiencies.

We agree with these submissions, which highlighted among other things the absence of due process, the lack of procedural fairness, the problem of extraterritorial application, constitutional deficiencies, duplication and confusion of rules and processes, the neglect of capacity building, lack of remediation, the impact of targeting Canadian companies, and the lack of consultation with the mining industry.

You will be relieved to know we do not intend to revisit all these points this morning, but we'll focus on some of the practical problems this bill will cause for Canadian companies that deal with CSR every day. Let me make three points to set the context for our presentations.

First, mining companies operate under a very high level of scrutiny and accountability. Mining itself is a very heavily legislated and regulated activity, subject to high levels of oversight by lawmakers, regulators, special interest groups, CSOs, and the media in both the developed and the developing world. Scrutiny and accountability are part of our operating reality.

Second, the companies appearing before you today and Canadian miners generally are recognized internationally as industry leaders in CSR. For us, CSR is a core competency, as important to the success of our business as operational efficiency and safety. CSR is vital to securing and maintaining our social licence to operate. Any member who wants to review our CSR records can consult our CSR reports, which are appended to our formal written submission to the committee.

You will find that our records provide concrete evidence that we agree that Canadian companies should be held accountable for their business practices in conduct abroad. We accept and support the promotion of sustainable development in international human rights, and our support goes well beyond good intentions and rhetoric.

Third, our comments today are based on our collective experience in meeting the complex social, legal, and environmental responsibilities and challenges that confront companies operating in many different countries at many different stages of development with different legal and political systems and different cultures and values. Collectively, we operate some 45 mines in 16 different countries on five continents and directly employ more than 36,000 people, so this is a business we know something about.

Based on that experience, we believe the relatively simplistic, one-dimensional, and punitive approach to CSR proposed by this bill will not work. We believe the bill to be fatally flawed in its conception and in its construction. We believe the bill is prejudicial and harmful in its effects, not only on and to Canadian mining companies but also to the countries and communities in which we operate. Critically, we do not believe the bill will achieve its stated objectives.

To illustrate these points and illustrate why, in our view, the bill is counterproductive, unamendable, and should not be passed into law, Peter will focus on the guidelines, which are at the heart of the bill, and how they will expose even the most socially responsible Canadian company to undue legal risk. I will touch briefly on the financing implications of the legislation, not only in terms of project financing, but the impact on the role of the EDC and the broader implications of the bill on Canada's status as a leader in resource finance. Dina will conclude by speaking to the unfair and unwarranted impact of this bill on the industry in general.

With that, Mr. Chair, I would ask Mr. Peter Sinclair to contribute to the conversation.

[The Chair, Conservative, Kevin Sorenson]

Good morning, colleagues. Good morning all. This is meeting number 42 of the Standing Committee on Foreign Affairs and International Development on Thursday, November 26, 2009. The orders of the day today include a return to our committee study of Bill C-300, An Act respecting Corporate Accountability for the Activities of Mining, Oil or Gas in Developing Countries.

As witnesses on our panel today we have, from Barrick Gold Corporation, Peter Sinclair, senior director, corporate social responsibility; from Goldcorp Inc., Dina Aloi, vice-president for corporate social responsibility; and from Kinross Gold Corporation, Mac Penney, director of government relations. As well, appearing from the law firm Fasken Martineau DuMoulin, we have Michael Bourassa, partner; Raymond Chrétien, partner and strategic advisor; and the Honourable James Peterson, counsel to that law firm.

We have invited the guests today to share the panel for the full two hours so as to accommodate as many questions as possible from our members. I invite each of you to make brief opening statements, and then we'll proceed to the first round of questioning.

I believe I have a point of order from Madame Lalonde.

[Bob Rae, Liberal, Toronto Centre, ON]

--and they have serious ramifications for Canadian foreign policy. So I don't see how we can....

I'm glad to see my colleague, the parliamentary secretary for CIDA, stating today that the Conservative Party supports at least the intentions of Bill C-300, because I think we do have to go down a track, as a country, in saying we understand corporate social responsibility as being a very critical aspect of our activities in the world.

[Bob Rae, Liberal, Toronto Centre, ON]

First of all, Madam Evans, let me say that I wish you well in your work. We certainly don't see it as incompatible with whatever emerges from our discussions with respect to Bill C-300. I think your work is a vital part of the structure we need to create to get to a resolution of some of these significant issues.

You did point out in your testimony that in the two areas—one of them my colleague Mr. Patry has referred to, the consent of the parties, and the second one is the question of sanctions—if there were some modest changes to the bill that brought it into line with the language of the round table with respect to the process regarding sanctions, you would agree that it would be a fuller implementation of the round table recommendations than what the government has currently put in place.

[Marketa Evans, Counsellor, Office of the Extractive Sector Corporate Social Responsibility Counsellor]

Thank you very much.

Good morning, and thank you very much for giving me the opportunity to share my thoughts on this very important topic this morning.

My name is Marketa Evans, and about one month ago I took up the role of Canada's CSR counsellor for the extractive sector overseas. I'm not here to represent any position on Bill C-300; I represent neither the government nor industry nor civil society. I think my priority in my role is to contribute to an informed strategic public conversation that could capitalize on Canada's extractive sector dominance to make a more significant contribution to our human development objectives. I believe this positive potential has been largely untapped in any strategic or integrated manner. But I also believe there's actually a groundswell of support from a wide-ranging cross-section of Canadian stakeholders to make it happen.

In an effort to be most helpful to the committee I'll focus on two main points and then we can get to some questions. The first is who I am and a little bit about my mandate. The second is some issues for the committee to consider as it deliberates this bill.

First, I'll give you a little bit about my background and the role of the CSR counsellor.

I've never worked for the extractive sector in any capacity, nor have I ever worked in government. While I was employed at the University of Toronto, I conducted research on global corporate citizenship in general and on business-NGO engagement in developing countries more particularly. I examined in the course of that research and in some detail two case studies where Canada played a significant role. The first one was Talisman in Sudan and the second was the issue of conflict diamonds, which eventually resulted in the well-known Kimberly Process Certification Scheme. So my views here have been informed by my research work; by literally thousands of conversations that I have had with a very wide variety of stakeholders who generously shared with me their candid views and insights; by my students in a graduate course I taught for several years on this topic; by my involvement in the Devonshire Initiative, which is a co-created platform for NGOs and the Canadian mining industry to build trust and foster partnerships; and by visits to mine sites in emerging markets.

Most recently I was employed by one of the world's oldest and largest aid and development NGOs, one that works in almost 50 developing countries. So perhaps it won't be a surprise to you to hear that my benchmark of success in this role will be very clear: are the people in developing countries better off as a result of the presence of a Canadian company? In particular, the focus should be on the poorest, the women and the children, since not only do they bear the brunt of poverty, hunger, disease, and discrimination, but also because they are the most crucial change agents.

A few points frame my thinking on this. I didn't actually start off looking at the extractive sector. I was looking at business more generally, but I quickly came to realize that mining, metals, and energy are crucial to the realization of the millennium development goals. There is no improvement in basic living standards, no electrification, no water and sanitation, and no infrastructure without those industries.

Second, I realized that developing country governments are increasingly seeking out resource exploitation and investment as well as advice on how to best manage resources and revenue flows.

Third, private sector development is increasingly accepted as a crucial factor in poverty reduction and social development. Global best practice is moving very quickly to multi-party, multi-stakeholder work with, not for, the private sector. NGOs are seeing the potential benefit in shifting both the thinking and the practice of the extractive sector, and this is as evidenced in global partnerships now existing between CARE and Anglo-American, for instance, and Shell and International Alert, BirdLife and Rio Tinto, just to name a few.

But we all know that wealth creation is not sufficient. I believe Canada has an unprecedented opportunity to seize a leadership position in this sector and realize its potential as a constructive development actor. In mining alone, Canadian companies invest sums that are on par or exceed CIDA's investments in developing countries, and they have a long-term time horizon—10, 20, 30 years—conducive to making the kinds of changes that we need to see in developing countries.

The 2005 SCFAIT committee report, the round table's process, the advisory group report—all these contributed to launching what I believe is an important national conversation. The government took a long time to respond to the report, but much constructive progress was made in that two-year timeframe, even in the absence of a formal government response. You've already heard about most of these—the Voluntary Principles on Security and Human Rights, our participation in the Extractive Industries Transparency Initiative, the launching of the Devonshire Initiative, and e3 Plus.

Because many civil society organizations and others have emphasized the special importance of the human rights agenda in extractive industries, it is useful to flag once more the significant work of the UN Secretary General's special representative on business and human rights, Professor John Ruggie. He is now four years into his six-year mandate, and Canada was an early and strong supporter of what I believe has now become a serious and credible framework for moving forward on this crucial issue.

In early November, Professor Ruggie and I were present at a two-day consultation hosted in Toronto by Osgoode Law School. Many Canadian experts participated. My understanding from that consultation is that no state is currently proposing even voluntary human rights standards for business and that no guidelines for business exist at this time. The Ruggie framework, which was endorsed by the United Nations Human Rights Commission last year, concluded that the human rights obligations of a state do not translate literally for business. Business has responsibilities with respect to human rights, but these are different, and articulating them is the project of this phase of the Ruggie mandate.

I have a few quick words about my mandate. I'm appointed through an order in council for a three-year term. I report directly to the Minister of International Trade. Minister Day and I have agreed on the importance of keeping this role at arm's length from the government and from the department, and I take seriously the importance of establishing a credible, constructive office.

The order in council stipulates two elements of the role. The first is to review issues brought before the office by either NGOs or companies; the second is to advise all stakeholders on the implementation of the standards.

Much has been made of the fact that I am not called an ombudsman. I have carefully reviewed the recommendations made in the advisory group report, and I see little daylight between what was recommended in the report and my role.

The criticism that the role is toothless revolves around two elements. The first is the ability to compel participation in a review. The order in council explicitly states that both parties must agree to a review. I'm not sure how compulsory participation would operate in practice, but I have no particular position on such a requirement. My working hypothesis consists of two parts. In the first place, a quality review would be difficult to undertake without both parties' consent—and for such a review you need access to people, files, and premises. In the second place, significant incentives for parties to participate already exist. Being involved in the process means you have some say in the outcome, while the reputational fallout from failing to consent would need to be explained to investors, donors, and the media. Public reports are to be issued in all cases. Nevertheless, I could imagine some reasonable situations in which either an NGO or a company might be justified in declining participation, although I'm not aware of any actual cases right now.

The second critique centres on the lack of automatic sanction. I have no particular view on sanction. What I would need to understand more deeply is how and under what conditions sanctions can be an effective tool in prevention and performance improvement on the ground. In any case, I strongly recommend to the committee that sanctions should be as envisaged in the advisory group report—that is to say, measured, commensurate with transgression, allowing sufficient time and tools for remediation and action plans, as the culmination of a fulsome engagement process, and importantly, incremental to what is already in place. According to the advisory group report, only in cases where there was both “serious non-compliance” and a company that ignored remediation would there be a recommendation around possible withdrawal of financial and/or non-financial support.

I fully understand that some civil society organizations see the review process in the round table's report as a package deal, which is to say, an ombudsman with a tripartite review committee. But there's nothing in the order in council to dictate how the review process under the counsellor's office is to be established, and nothing to interdict the eventual creation of such a multi-stakeholder committee should one be desired or warranted. Indeed, there is a tripartite execute committee currently being established to guide and support the CSR centre for excellence.

I want to emphasize that there is no review process in place right now and there are no preconditions or preconceptions as to how it should be established or how it should eventually function. A serious, credible review process is one of my key priorities, and my commitment is to establish it in an open, fully participatory way, drawing on as much expertise as I can, benchmarking to existing review processes, and learning from those experiences. In my view, that process will be more productive and fruitful embedded in an enhanced conversation on a few other issues, to which I now turn.

The first is to ensure we have a full understanding of the problem. I think we've had some powerful case studies, some powerful indications of what is happening. In some cases these were instances that were quite specific and in some cases they relate much more generally to well-known linkages between resource exploitation and human rights abuses or environmental degradation. Some allegations go back 10 or 15 years.

I suggest we still have significant room for a diagnostic of why these events are happening. Are companies stupid, wilful, blind? Is there evidence to support the notion that the industry still has not gotten the message on CSR? Have they learned nothing? Is there evidence to suggest the problem is getting better or worse? A richer empirical diagnostic of the problem would ensure that we better understand root causes, lessons learned, dissemination techniques. We could get a better handle on our objectives and success indicators. In three, five, or ten years, what do we expect or want to be different? What results do we want and how would we measure progress? Such an approach would allow us, I believe, to chart a productive path forward and align our work on key elements that need to be tackled.

Second, I would recommend we ensure that we have sufficient information to make informed choices about potential unintended consequences. With increasing demand for natural resources globally, it is to be expected that where resources exist they will be exploited, if not by Canadian companies, then quite likely by someone else. Perhaps a Canadian divestment would spur more artisanal mining, which is often characterized by the worst forms of child labour and significant environmental degradation. Perhaps the property would be taken over by a state-owned company, companies that tend to have poor human rights records. Perhaps the concession would simply be purchased by a company that was not subject to media, shareholder, activist, or government scrutiny. Or perhaps the Canadian company would simply be bought by a sovereign wealth fund, as has increasingly been happening.

You heard Amnesty International testify before you that it did not intend for Talisman to pull out of Sudan. I had been told that, off the record, during my research interviews by several of the NGOs that were involved in the campaign against Talisman, but it was the first I'd heard of it publicly. Companies are capable of significant change in attitude and performance, and Talisman is now ranked among the top 50 CSR companies in Canada. So I believe we should make a further investment of what the implications are of Canadian divestment.

Third is to more actively leverage our efforts and, to the greatest extent possible, work in tandem with like-minded countries, donors, agencies, etc. We want all citizens in developing countries to have a voice, not simply those who happen to be located in the vicinity of a Canadian mining operation. We want them to be empowered on all the issues they face, and for that we need to work much harder on citizen empowerment, particularly for marginalized or underrepresented groups, much harder on education, on fostering local government responsiveness, on reducing corruption, enhancing accountability, and so on.

This is one of the main reasons I've long championed a much stronger NGO voice in this conversation, not simply to move the thinking of the corporate sector itself but especially because NGOs are absolutely crucial to the progress on the ground on citizen empowerment.

Finally, I caution that reviews are not a silver bullet. In practice, they can be extremely expensive and difficult to conduct. Rarely do they seem to mark a once-and-for-all conclusion to any debate. Review mechanisms exist today and some sit idle. While we can certainly build a better mousetrap, even a carefully designed mechanism will not necessarily deliver a crisp, clean, easy answer on whether a company is in or out of compliance on any particular standard.

Both the government's CSR strategy and Bill C-300 reference the IFC performance standards that were established in April 2006 and form the basis for banks' Equator Principles. There are eight IFC standards, covering social, cultural, labour, community, biodiversity, environment, and indigenous issues. Each standard is supported by many recommendations covering assessments, management systems, training, community engagement, monitoring, and so on. The eight standards themselves run to 34 pages, and the supporting guidance notes are a further 170 pages.

Because the standards have been created to be used in a wide variety of environments and by a large variety of companies, each requirement contains areas of subjective interpretation. I'll just quickly cite one example to give you a flavour.

[Denis Tougas]

Absolutely. When I talk about the governments of the Congo, I'm talking about the central government and the provincial governments that have a mining branch that is also very active. In the case of Anvil Mining, if an intervention by the Canadian government contradicted the military court judgment, the Congo would no doubt have absolutely opposed it or would have been angered. However, as regards legitimacy and transparency, I think the government would be absolutely delighted.

I'm trying to think what example I could cite you. These negotiations have been going on for two years, involving 61 mining contracts, 6 of which are Canadian contracts. The discussions have not been public, although the signed contracts have been made public. That's where we've seen how unequal and unfair these contracts were.

We don't yet know the outcome of all these revelations, but we will know soon. What we do know for the moment is that there are questions that have not been answered. There's the fact that unconscionable contracts, which should have been completely redone, were renewed. We'll see what happens.

I previously contacted civil society groups, particularly the Conférence Épiscopale Nationale du Congo, the CENCO, a committee of which is monitoring this situation very closely, studying it and will be giving us its recommendation as to what we can do here.

I repeat, there is still a real struggle between the Congolese government and two companies. I'll name them for you: First Quantum Minerals Ltd. and Tenke Fungurume, which includes the Lundin Group of Vancouver. The struggle continues internationally. If Bill C-300 were passed, we obviously would have been able to use it and to have a Canadian viewpoint on the matter.

[Jim Abbott, Conservative, Kootenay—Columbia, BC]

If 60% of the world's mining companies are registered in Canada and a certain percentage of them said they didn't like Bill C-300 but still wanted to continue to work in Argentina and so were going to change jurisdiction and simply pick up and pull out of Canada, as far as their head office was concerned, then there really wouldn't be any net positive result, from your perspective, in Argentina, would there?

[Romina Picolotti]

No, no. I'm sorry I didn't express myself very clearly. It's not my language.

As in many developing countries in the world—and I will set Congo aside, because really Congo is a different situation—those countries that are in the process of constructing democracy, in Argentina our institutions sometimes have not become strong enough to deal with these giant economic powers. This needs time.

What I understand is that the application of Bill C-300 will provide necessary help to these countries, because you control these companies at home. That will of necessity have an impact on how these companies behave abroad. This is what I'm talking about. I'm not talking about you coming to my country and taking over the jurisdiction to apply the law; this is not what I'm talking about.

What I'm saying is that applying this law in your own jurisdiction will necessarily have consequences in my jurisdiction. This is the case in many other areas too. If I control pollution on my side, that may have effects on your side: the application of the law in my jurisdiction will have a positive effect in your jurisdiction. That doesn't mean colonialism; it doesn't mean overriding jurisdiction. It's just the application of law in your own jurisdiction that has effects in others. That's normal, I think. It does not seem uncommon.

[Jim Abbott, Conservative, Kootenay—Columbia, BC]

Thank you to both witnesses for excellent testimony.

Ms. Picolotti, I'd like to enter into a quick question and answer so that we can get through a lot of material.

First, I'd like to point out that from the perspective of the Canadian government, we support CSR and the intent of Bill C-300. The intentions are valid and worthwhile. However, sometimes we end up with unintended consequences.

What is your expertise on Canadian law? And this is not.... I just want to qualify what it is we're talking about here.

[Denis Tougas]

Thank you.

I said that Canada's reputation was jeopardized. Yesterday, Canada was called neocolonial in a Kinshasa newspaper. I'll read you the headline: “Consequence of the mining contract reviews, Kinshasa taken hostage: Paris Club wants to impose unconscionable contracts.”

Then more than one article focused on the situation, and this appeared: How can Canada and the United States in the Club of Rome bring this kind of pressure, take the Congo hostage, because they are dissatisfied with the internal settlement between the government and the company?

I'm talking about the future, not the past. Bill C-300 would benefit the companies. Both the government and the communities on the ground would have outside recourse. You know it as well as I do that the governance of the Congo is not up to par; corruption is everywhere. This would make it possible to solidify Canada's efforts to support these businesses. I cited two cases, but there are a number.

Canada has taken a public position, and people have said that Canada was aiding and abetting something. If there was an organization such as that provided for by Bill C-300, a parliamentary organization or a Canadian organization could say whether the allegations are true or false. Canada would then have all the legitimacy to support these businesses more than it does now.

[Francine Lalonde, Bloc, La Pointe-de-l'Île, QC]

I'll take half a minute to say that what is going on shows that we should have taken much more time.

I'm going to start with Mr. Tougas. You described a situation that many Quebeckers and Canadians would not be able to believe is true if the witness who reported it was not extremely credible. This takes us back to a colonial situation that was denounced in every way when it applied to the development of the new countries of North America.

Explain to us how this bill would be advantageous. You finished your frightening presentation by saying that Bill C-300 would be an improvement.

[Denis Tougas, Coordinator, Table de concertation sur la région des Grands Lacs africains, Entraide Missionnaire Inc.]

Good morning.

Thank you for having me here this morning.

The purpose of my contribution is to demonstrate the benefits that would accrue from implementation of the complaints handling mechanisms proposed by Bill C-300, particularly its ability to assemble information from various sources, based on two specific cases in the Democratic Republic of the Congo, that have been mentioned here on a few occasions.

First, a few words on the expertise of Entraide Missionnaire, which represents many of the francophone Catholic missionary communities in Canada. Since 1988, Entraide Missionnaire has hosted an issue table on the Great Lakes Region. Its objective is to inform and sensitize the Canadian public and authorities to the complex realities of that country. The table focused more closely on the Congolese mining industry starting in 1997, during the first Congo war, when our Congolese partners asked us to inform them about the nature and objectives of the Canadian mining companies that were signing contracts with the parties to the conflict. Since then, together with our Congolese partners, we have been closely monitoring the changes in the mining industry in the Congo.

With regard to the Congo, I will merely remind you that the country was at war from 1996 to 2003, a war that nearly degenerated into a regional conflict when seven countries got involved in it. The wars resulted in millions of deaths, millions of refugees, millions of displaced persons and completely destroyed the country's political and administrative structures. Since the 2006 elections, the Congolese government has been trying to restore its authority and administrative services to the country as a whole, but has been unable to do so. It is in this context of violence and armed conflict, of major democratic deficit and widespread administrative disorganization that Canadian and other companies have come and established themselves in the Congo, at their own risk—a risk that they have not always been able, or wanted, to assess.

Here's the first case. In June 2000, when it became obvious that the illegal exploitation of natural resources was one of the primary reasons for the war, the UN Security Council established an expert panel to shed light on the links between the conflict and the exploitation of those resources. Until June 2003, the panel produced a series of reports identifying countries, companies and individuals joined together in “elite networks”, to use its expression, that were taking advantage of the climate of violence and insecurity to seize the Congo's wealth, and mining wealth first of all.

In addition to those “elite networks” directly involved in the conflict, the expert panel, in its second-last report of October 2008, identified nearly 100 foreign businesses, including seven Canadian mining companies, as being in direct violation of the OECD's guiding principles. In concrete terms, the expert panel accused those businesses of indirectly participating in the prolonging of the war and the resulting massive human rights violations, by continuing to do business with either a rebel group or the central government, and by paying mining concession acquisition fees, royalties or taxes, the proceeds of which were used to buy weapons.

In addition, based on supporting documentary evidence, it accused one of the Canadian companies of engaging in corruption involving persons close to the government in order to obtain certain concessions. In view of the outcry raised by this accusation made by an instrument of the United Nations, the Security Council extended the panel's mandate so that it could receive explanations from the companies concerned. In its final report, the expert panel classified the cases of 43 of those foreign businesses, including the seven Canadian companies, as “resolved”, while stating that that in no way invalidated the information previously obtained by the expert panel concerning the parties' activities.

In addition, the President of the Security Council called on all states concerned to conduct their own investigations into the expert panel's revelations. It also stated that all the “restricted but non-confidential” documents relating to the investigations would be available to states requesting them.

The Belgian senate held a parliamentary commission of inquiry and the National Contact Points of Great Britain, the United States and Belgium reviewed the cases of 13 of their companies cited in the report. Authorities so requesting obtained the documents claimed from the UN Office of Legal Affairs. In general, these initiatives revealed a significant degree of laxism on the part of the companies in their relationship with Congolese political and military authorities. In Belgium, the Senate commission's revelations led to judicial inquiries into corruption and money laundering. In three cases, the National Contact Points issued news releases to state that there was a problem. No action was taken in response to those news releases. As for the Belgian senate committee, most of the recommendations contained in its report were forgotten. The senate committee had no power of sanction.

Here in Canada, from 2002 to 2004, groups in Canadian and international civil society, as well as Congolese groups, asked the Minister of Foreign Affairs and the National Contact Point to obtain this documentation and pursue these inquiries in accordance with the Security Council president's recommendation. In 2005, our National Contact Point announced its decision to take no action in response to the expert panel's report.

For your information, for the 2008 fiscal year, the Canada Pension Plan held $297 million worth of shares in six of the companies cited in the expert panel's report. In 2004, the Canada Investment Fund for Africa granted $15 million to a company cited by the expert panel. Today, the figure is approximately $5 million.

Here's the second case, which is known to you, I believe. Anvil Mining and its Canadian staff are suspected of aiding and abetting crimes against humanity. In 2008, the Canada Pension Plan held $20 million worth of shares in that company. In October 2004, six or seven rebels took control of the City of Kilwa, near the Anvil Mining mine. Company employees were requisitioned by Congolese authorities to transport military personnel by aircraft and truck to retake the city. The company also provided food rations to soldiers and paid their wages. The city was retaken in 48 hours, but its inhabitants had fled.

The UN observation mission to the Congo conducted an on-site investigation, which established that more than 100 persons had been killed during the military operation, including 28 by summary execution. According to witnesses, the soldiers had plundered the city, made arbitrary arrests, raped women and tortured prisoners. The report also indicates that Anvil Mining provided logistical support for the operation. Witnesses stated that the company had not only transported soldiers, prisoners and wounded, but had also conveyed the bodies of civilians who had been killed in order to bury them in a mass grave.

In the House of Commons in June 2005, Roger Clavet, member for Louis-Hébert, put a question on this subject to the Minister for International Cooperation. To date, that question has not been answered.

A military trial was conducted in the Congo in 2007. Three expatriate employees of Anvil Mining, including one Canadian, were summoned to testify. The court acquitted the company and its three employees on charges on aiding and abetting crimes against humanity. Four Congolese citizens were sentenced to life in prison, but on charges unrelated to the massacre. Louise Arbour, UN High Commissioner for Human Rights, who was in the Congo at the time, said this: I am troubled by the court's findings that the events in Kilwa were the accidental result of combat, despite the fact that there was substantial eyewitness testimony at the trial and material evidence that serious human rights violations had been deliberately committed.

She pressed the court of appeal to weigh all the evidence and consider the rights of the 144 victims. Ms. Arbour's long-awaited appeal was unfortunately dismissed by the military court shortly thereafter. Starting in June 2005, Canadian, Congolese and international organizations demanded that the government conduct its own investigation into the incidents. Those demands were forwarded to the ministers concerned and to the National Contact Point. Similarly, following the court of appeal decision, most of those organizations asked the governments of South Africa, Australia and Canada to investigate the company and their nationals who had been involved in the incidents, as it had become clear that the victims could not be heard in the Congo.

In response, Canada's National Contact Point said that it had met with the company and had made it understand the Government of Canada's expectations: that it comply with the OECD's guiding principles, particularly its human rights recommendations. No investigation would be conducted.

Here are a few lessons I invite you to draw from these two cases.

In our view, both cases illustrate the benefits that would have resulted from the passage of Bill C-300 for the companies, the Government of Canada and the groups and individuals who felt they had been adversely affected by certain mining activities.

In both cases, the complaints were not frivolous or vexatious. Investigations were conducted and members of the authorities, such as the President of the UN Security Council and the UN High Commissioner for Human Rights stated their opinion on the validity of the accusations. And yet no authority in Canada took action on those complaints. No one was accountable for those decisions.

No one took action in response to those requests to conduct an investigation and thus to confirm or contradict the charges, undermine the position of the companies or that of the Government of Canada.

On the ground in the Congo, as a result of the pervasive corruption and lack of transparency with respect to the conditions in which mining contracts are signed, the legitimacy of those contracts is still in doubt. In the current context of extreme poverty for the vast majority of the population, that could mean additional costs for the companies to increase security for their operations against the local communities that are not benefiting from the exploitation of their resources.

Somewhat as the previous witness said, Canada is losing its reputation.

Canada's diplomatic personnel have been and continue to be very active in supporting Canadian companies in the Congo, despite persistent doubts about the integrity of their contracts and behaviour. On a number of occasions, embassy staff and, on occasion, the ambassador, have publicly supported the companies despite their disputes with either the government or the local communities.

Even more important, Canada is purportedly blocking settlement of the Congo's debt to the Paris Club. That debt of approximately $4 billion or $5 billion was incurred as a result of Mobutu's pranks. That settlement is necessary for the country to have access to the International Monetary Fund's Poverty Reduction and Growth Facility, which the country very much needs. And that is because one of the Canadian companies cited in the expert panel's report is dissatisfied with the outcome of the renegotiation of one of its mining contracts. The Congolese government has decided to cancel one of those contracts.

Without the investigations called for in Canada and internationally, one wonders on what basis the Government of Canada decided to give such strong support to companies denounced in a UN report.

For many more years, the Congo will continue to be a democratically weak country and to have governance well below what constitutes a suitable business context. Political tensions can be expected to rise as the 2011 elections approach. Social tensions in the mining sector resulting in strikes, demonstrations and the eviction of manual diggers and local communities are already present and could last a long time.

In this context as well, the Export Development Canada has already announced that it intends to support the project of Tenke Fungurume Mining, one of whose partners, the Canadian company Lundin, was also cited by the expert panel.

In conclusion, in this specific unstable business climate, passage of Bill C-300 would hold out a definite benefit.

[The Chair, Conservative, Kevin Sorenson]

Good morning, colleagues. I will call this meeting to order.

This is meeting 41 of the Standing Committee on Foreign Affairs and International Development, Tuesday, November 24, 2009. Our orders of the day include a return to the committee's study of Bill C-300, an act respecting corporate accountability for the activities of mining, oil or gas in developing countries.

As a witness on our first panel today we have, by video conference from Córdoba, Argentina, the president and founder of the Center for Human Rights and Environment, Ms. Romina Picolotti. We welcome you this morning to our committee and are very grateful to have you with us today.

Also, from Entraide Missionnaire Inc., we have Denis Tougas, the coordinator. Mr. Tougas has appeared before our committee before, I believe, on the Great Lakes region study we did in regard to Africa. Welcome back. It's good to have you back here with us this morning.

Sending his regrets this morning is Robert Ouellette, the editor and chair of the Sierra Club Ontario. He is unable to be here.

We look forward to your comments, Ms. Picolotti. We would invite you to begin by opening with your 10-minute testimony.

[Paul Dewar, NDP, Ottawa Centre, ON]

Basically you're saying that the remedy right now for people who have concerns with the conduct of Canadian companies is limited to non-existent.

Mr. Hunt, I'll maybe go to you on this. I note that right now there are cases in court with regard to that limitation. We have litigation happening. You were very clear on the fact that you think this would actually not only raise Canada's profile but allow Canada to shine up its reputation, if you will. You see us as being able to do that a little bit with Bill C-300.