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.

[John McKay, Liberal, Scarborough—Guildwood, ON]

I have one final point: that is, the companies assert strongly that somehow Bill C-300 will be used to game them, that NGOs will assert claims, frivolous and otherwise, against the good reputations of these companies. Ms. Martin and Ms. Lissakers, has that been your experience with the national contact point with the OECD and various other entities that currently exist?

I suppose the final point, particularly with respect to the Amnesty International assertions, is that, effectively, your report is being dismissed as hearsay.

Could you, within the last 30 seconds, comment on those two questions?

[John McKay, Liberal, Scarborough—Guildwood, ON]

Ms. Martin, excuse me for a second. Unfortunately I have only seven minutes, and I'm down to three, and there is one other point I want Ms. Lissakers to address.

The issue has to do with Ms. George's assertion that Canada's companies will have reputational damage, that in effect they'll be forced to leave the country and seek a more hospitable jurisdiction for their activities. I'd be interested in your observations, given that you work rather closely with American legislators and you have a fairly broad international perspective as to where you think these Canadian companies that apparently don't want the inquiries that Bill C-300 might generate might go.

[Shanta Martin]

Thank you, Mr. McKay.

With respect to point four, that Bill C-300 would alienate developing countries and would impose the will of Canada on other countries, I don't see anything in the bill that actually specifies that or would result in that.

Basically, as I understand it, what the bill is intended to do is to make clear to Canadian companies that there are standards that they ought to abide by in relation to what they undertake in their operations overseas and that if they don't abide by those standards, there may be repercussions within the Canadian context. That effectively is outlining what Canada expects of its companies. It doesn't say it expects that the Government of Papua New Guinea will do X, Y, and Z. It basically says that there are international standards, that international human rights law does exist, that it is expected of states to require their companies to respect human rights, and this is one way of doing it. So I'm very unclear as to how that would actually be the case.

If I can just get back to this idea that the standards are not clear, what strikes me as anomalous is that on the one hand companies, including companies that are members of the ICMM, say they respect human rights, yet on the other hand say that the human rights expectations are too unclear to give them guidance. I don't understand how it can be one and not the other.

I think we need to refer to what the special representative has said in relation to human rights standards, that it is clear that companies can impact the full breadth of human rights. The legislation, as I understand it, proposes that the guidance elaborated by the ministers would be based on international human rights conventions to which Canada is a party and on international customary law. As I've mentioned, the special representative basically says there are few, if any, internationally recognized rights that business cannot impact. As such, it is entirely appropriate that any guidelines developed by the ministers would draw from international human rights law, including the international bill of rights.

There is significant guidance provided at the international level in the form of declarations, comments, jurisprudence, and recommendations from the treaty bodies, as well as from other mechanisms. It would also obviously be relevant to apply international labour law.

In response to that—

[John McKay, Liberal, Scarborough—Guildwood, ON]

Thank you, Chair.

Thank you, all four of you, for joining the issue. I thought each of you made some pretty significant points, and I think this is an opportunity to get some dialogue between opposing views.

Let me start with the testimony of Mr. Hodge. I agree with you, as far as the ombudsman is concerned. It's a pity that report wasn't picked up and implemented by the government. But we have what we have, and Bill C-300 seems to be the only thing to be able to move things forward.

I want to address several points that Mr. Hodge made and ask Ms. Shanta Martin to comment on them. The first has to do with his point number four, which is that apparently Canada would alienate developing countries by imposing a regulatory regime. It would be imposing our will--I think that was the point he was making.

His fifth point had to do with the standards in Bill C-300 being unclear, although I'm not quite sure how they could be unclear when they're set out in the guidelines. There's that, and the related point, which is that if Canadian companies withdraw they'll do more harm than good to the indigenous population.

I'd be interested in your comments, Ms. Martin, in light of both your general findings and how you would apply those arguments to Papua New Guineau.

[Shirley-Ann George, Senior Vice-President, Policy, Canadian Chamber of Commerce]

Thank you very much, Chairman Allison.

It's a pleasure to be back in front of this committee. As you know, we represent the broad base of Canadian business, with over 175,000 members.

It is a pleasure to appear before this committee again on Bill C-300. We have resubmitted the presentation that was given by our president and CEO last November. I will not take you through all of that again. Rather, my presentation today will outline the key reasons why our views on this bill have not changed since we last appeared. In fact, we feel more strongly than ever about the harm this bill would cause while at the end of day giving no more protection to people in developing countries where Canadian extractive companies operate.

Bill C-300 would cut off companies from government resources when they are alleged--not proven, but alleged--to have behaved badly and when they most need help. Bill C-300 would leave the situation unresolved. It would leave the alleged parties no better off--and potentially worse off. It would leave the company in no position to take any measures to make things right if that were proven to be necessary. It would leave in tatters the reputation of Canada, the Canadian government, and one of our most important industries and economic contributors.

Also, we cannot ignore the impact of reducing the activities of our large extractive companies on the hundreds of smaller firms that serve them, including some companies that reside in your ridings. With the projects of larger companies curtailed, the spillover impacts on Canada will soon be felt.

Canada is a world leader in the extractive sector, and the Toronto Stock Exchange is the world’s largest mining sector capital market. Bill C-300 would change that. It would drive Canadian extractive companies, the vast majority of which do behave responsibly and are considered to be globally responsible leaders, to move their base of operations outside of Canada.

Their motivation would be not to escape the punitive measures of Bill C-300, but to allow themselves to operate on a level playing field with their international competitors. On this, they know they can compete. On an unlevel playing field, they know they cannot. Competitors will not have to be constantly looking over their shoulders to see where the next accusation is coming from.

Mining is similar to building a new highway across the middle of your hometown. No matter how much it's needed, and no matter how diligent you are in your preparations, there will be a group that will remain bitterly unhappy. And there are anti-mining groups who make hearsay accusations without the needed due diligence.

This bill provides a taxpayer-funded platform for organizations whose existence depends on their ability to make accusations against extractive companies and for those that wish to do mischief to Canadian companies. Our extractive sector companies’ international competitors could use the Bill C-300 process to damage the reputation of our companies and tie up their financing arrangements, as well as delay their entry into new projects and the takeover of existing ones.

Also, if Bill C-300 were passed, many Canadian companies would not take the risk of pursuing new ventures in countries with weak governance. This could be devastating to countries that depend heavily upon the economic contribution of Canada’s extractive companies.

In Africa, for example, Canadian mining companies had more than $19 billion in assets in 2008. These companies contribute many, many, many times more than the Canadian government does. The impact upon this region of the closing down of projects, or even their curtailment, would be hard and swift for the world's most vulnerable.

Canadian companies would also shy away from taking over operations where companies are behaving inappropriately and then bringing them up to international standards. Why would they do so when the prospect of penalties and reputation damage lies before them? And who would lose most? The very people that the bill means to protect.

Sanctions proposed in this bill could be very serious and potentially devastating for Canadian extractive companies and for their employees, both at home and abroad. It would also harm the projects and the people in the developing countries. To be cut off from EDC financing and political risk insurance, as well as being blacklisted for Canada Pension Plan investment, would mean the cancelling of projects and the cutting of jobs.

It is the view of the Canadian Chamber that Canada shows true leadership by working with companies to give them the tools to prevent getting into difficulties and, even more importantly, to continue working with them to help remedy the situation and preserve Canada’s reputation if they do. Cutting and running is not the answer.

Some have alleged that Canadian extractive companies want to cling to the status quo. This is not the case. Canadian extractive companies know the competitive advantage afforded to those with solid reputations for responsible conduct. What this is about is measuring companies internationally by the same existing high performance standards and not putting Canadian companies at a competitive disadvantage.

The standards that were cited by some of the other speakers are good standards. They were developed on an international basis and applied across all companies operating in those countries. They don't target companies from one specific country.

It's also about the reputational and economic harm of the process that invites allegations against Canadian companies without any risk to those who make them.

Bill C-300 is a classic example of a well-intentioned bill that causes massive unintended consequences. Because this bill was written by those who do not understand the extractive sector, it also will not achieve its purpose.

It is our recommendation that you take a step back and look at what should be done. This committee can meaningfully contribute to improving socially responsible behaviour. You can better understand the industry. My understanding is that this committee has not visited even one Canadian mining site in a developing country. You should go to see them. You should find out what's going on.

You could understand and contribute to international CSR guidance tools, such as the updating of the OECD guidelines for multinational enterprises that is under way today. You can review and support more CIDA projects to help build good governance in areas where Canada has mining interests. This would be a significant contribution. You can make sure that the CSR counsellor that was put in place--in part because this bill was tabled and the government responded by putting in place more than what they had originally intended--and the report that's given annually is important, by giving it your priority review each and every year and not forgetting it when you move on to the next thing, and by ensuring that the department provides adequate resources to that office. These measures will make a difference.

As we have said, while it is well-intentioned, Bill C-300 cannot live up to those intentions. It would cause significant harm to Canada's world-leading extractive companies, the broader business community, and Canada's overall reputation and economic competitiveness.

The Canadian Chamber of Commerce asks each of you to vote against this bill.

Thank you.

I would be pleased to answer any of your questions.

[Robert Anthony Hodge]

Thank you.

Argument three is that on its own, the remote ruling of Bill C-300 focuses on the negative and provides no incentive for ensuring that the interests of the parties involved are addressed—community, host country, indigenous people, or company.

Argument four is that Bill C-300 will alienate a number of developing countries at a time when the kind of leadership Canada has provided over the years is needed more than ever before. This is because its approach is based upon a model of the world where Canada will seek to regulate the behaviour of extractive companies over the heads of host country governments. This will be seen as undermining of national sovereignty and of a “west knows best” mindset. Frankly, we would do better to put funding into strengthening the enforcement capacities of some host countries in areas like environmental and social regulation, rather than substituting our own judgments for theirs.

Argument five is that while standards drive ICMM members’ performance, the standards to which companies would be held accountable under Bill C-300 are unclear and subject to development within 12 months of the bill coming into force. This leads to considerable uncertainty regarding the scope of what companies may ultimately be held accountable to. To complicate the issue, the IFC standards and guidelines and the OECD guidelines for multinational corporations are both currently under review. As a matter of principle, it is difficult to support legislation where it is not possible for companies to understand the standards and criteria to which they will be held accountable.

In closing, here are a few suggestions and thoughts about moving forward. Canadian parliamentary process must, of course, run its course. However, regardless of the outcome, Canada should use this as a catalyst for discussion with mining countries from the political north and south, and with partners in business and civil society, in terms of effective encouragement of corporate social responsibility. Corporate responsibility has a number of facets—ethical, legal, and economic. All these need addressing in a systematic approach that encourages positive change.

So my message is not one of inaction. Within Canada the CSR round tables generated an agenda for action and these should be taken forward. Meanwhile, Canada has an opportunity to be a prime mover in the international debates about accountability and providing redress for those whose rights are infringed. But we do not strengthen our voice by acting unilaterally. Rather, with initiatives such as John Ruggie’s final report to the UN Human Rights Council and the ongoing revisions to the OECD guidelines and the IFC performance standards, there is an active agenda for progress.

Over the past 20 months,I have been privileged to be able to travel broadly across the world, meeting and interacting with individuals from many countries and cultures. I'm always struck by the special reaction when I identify myself as a Canadian. Canada has a special role in the world arena. There is a remarkable respect out there and an expectation that we work with others, that we do not impose our will on others. I hope the results of this discussion will be consistent with that respect and these expectations.

Thanks again for the opportunity to address you.

[Robert Anthony Hodge, President, International Council on Mining and Metals]

Thank you very much, Chair, and honourable members of the committee.

ICMM was created in 2001 as a change agent within the industry. Our charge as a secretariat is to work collaboratively with members to improve environmental and social performance, guided by the principles of sustainability. We are not a lobby organization.

We have 19 corporate members now and serve as an umbrella for some 30 mining associations around the world, through which we have potential reach to another 1,500 companies. Those companies are not bound by the core commitments that bind our 19 core members.

Of particular relevance to this discussion are programs that strengthen the socio-economic contribution of mining activities at local and national levels, our work on human rights and grievance mechanisms, and strengthening relationships with indigenous peoples. The ICMM and its members are also active partners with governments, including Canada's, and civil society in initiatives such as the voluntary principles on security and human rights and the extractive industries transparency initiative. I've given you other notes about ICMM on my submission.

I very much appreciate this opportunity to address you. I believe that this discussion in Canada around corporate social responsibility provides a special opportunity to bring positive change and a special opportunity for Canada to demonstrate leadership in the international arena. I agree that the performance of a small minority of mining companies has been unacceptable. This is not representative of the overwhelming majority of the industry.

At the same time, I am sorry that the response of the federal government to the consensus-achieving CSR round table process was so slow. One result has been a significant increase in the acrimony of relationships in and around the mining industry in Canada, to no one's gain.

I have two overarching messages. One, we strongly endorse the notion of accountability. There is a role for appropriate mechanisms for resolving complaints and delivering remedies. Some of these may well be in the form of rules and binding standards. Two, the design as proposed in Bill C-300, however, will not serve to bring positive change as sought by the stated goal of the legislation.

I wish to put before you three key trends that affect the environment in which we are operating.

First, over the past two decades the world has seen a marked improvement in the way in which social and environmental implications of mining projects are managed, along with an acceptance of the concept of an unwritten social licence to operate based on early and ongoing engagement with affected communities.

Second, a significant and continuing shift has taken place in the global economy towards emerging markets in China, India, Brazil, and South Africa. These are major players, and they are frankly skeptical of initiatives that they perceive as western constructs unless they are part of the design process. They are no different, quite frankly, from anyone else.

Third, over the past four years a major process has been under way to construct a framework within which business impacts on human rights can be managed and accountability can be assigned. This work is led by the UN Secretary-General's special representative, Professor John Ruggie, whose “protect, respect, and remedy” framework has achieved a high degree of consensus in what previously has been a contentious area. His work on operationalizing the framework is due to be completed within the next year.

I have five arguments to make about Bill C-300.

First, our experience is that to be effective, any complaints mechanism needs to be embedded in a carefully and collaboratively designed system of dispute resolution. We are strongly supportive of Ruggie’s “protect, respect, and remedy” framework.

We have also learned that redress to concerns raised by citizens, communities, and others is essential at three levels. The first level is the local community and company level. This is always the first line of action, and the most effective. The second is the national level, and here Peru's ombudsman office, which includes 50 local offices to ensure connection to the community level, is a good example.

Third is at the international level, and I also mention the OECD guidelines for multinational corporations and the OECD national contact points; the compliance advisor and ombudsman of the International Finance Corporation; and the Multilateral Investment Guarantee Agency.

Recognizing the need to have an integrated approach, Ruggie’s work is pulling all of this together. Bill C-300 seems to be proceeding without cognizance of and out of step with this work and the internationally supported insights it embodies.

Bill C-300 risks being duplicative, perhaps undermining the above initiatives. In practice, will a hierarchy prevail if complainants register a complaint with all of these? If so, which will take precedence? If not, how should the Government of Canada or complainants interpret contradictory rulings? Bill C-300 answers none of these questions.

On argument two, the great majority of disputes are best resolved through mechanisms that have local ownership and where the means of investigating conduct are close to the affected community or region. The aggrieved people are more likely to feel properly involved, and the people or institutions involved in resolving the situation are more likely to understand the context and cultural dynamic that may be at work.

This raises the issue of what happens with marginalized groups that may be out of favour with a host government. This is a real issue, but whether or not Canada wishes to assume sole responsibility--as implied in Bill C-300--for protecting these groups and individuals is an issue that should be addressed explicitly.

[Technical difficulties]

[Shanta Martin]

I understand that my colleague Alex Neve, who’s the director of Amnesty International Canada, has already presented to the committee, so I don't want to go over old ground in terms of information he's already provided. What I would like to do is ground the discussion I would like to have with the committee around the international perspective in terms of, in particular, the position Canada finds itself in within this international context. Lastly, I'll just briefly comment on the benefits that would derive from the fact of inquiries being made by a Canadian government authority.

Turning to the first point, there's no doubt that Canada can and should introduce legislation that withholds public support to companies that fail to respect human rights abroad, and that doing so would be consistent with Canada's international legal duties. That includes the framework enunciated by the United Nations special representative to the Secretary General on business and human rights issues. According to the special representative, and I'm quoting here,

The root cause of the business and human rights predicament today lies in governance gaps created by globalization.... These governance gaps provide the permissive environment for wrongful acts by companies of all kinds without adequate sanctioning and reparation.

It’s in many respects in response to that predicament that the special representative has outlined a framework—the protect, respect, and remedy framework--which articulates the state duty to protect against human rights abuses from third parties, including by business; the corporate responsibility to respect all human rights; and the need for greater access to effective remedies for the victims of any human rights abuses.

Under international law, there’s no doubt that states are the primary duty-bearers, and given that this discussion is with parliamentarians, I'd like to focus my comments specifically on the pillar enunciated by the special representative, being the state duty to protect.

As I've just said, states clearly have a duty to protect against human rights abuses by non-state actors, and that includes business. There are a number of means by which states can actually undertake this activity, and there are a number of documents that already exist that provide guidance to states to pursue this duty or to fulfill this duty. In many respects, to help states interpret how to fulfill that duty, the UN treaty-monitoring bodies have recommended that states take all necessary steps to protect against such abuse, including to prevent, investigate, and punish the abuse, and to provide access to redress.

Clearly, and certainly as articulated by the special representative, the state duty to protect has both a policy but also a legal dimension. While policies that encourage corporate responsibility for human rights do have a role, so too does legislation. In elaborating the state duty to protect, the special representative has noted--and here I'm quoting from the special representative's 2008 report to the Human Rights Council:

There is increasing encouragement at the international level, including from the treaty bodies, for home States to take regulatory action to prevent abuse by their companies overseas.

In the advance copy of his most recent report, which will be delivered to the Human Rights Council in the next week or so, the special representative further notes that all states have the duty to protect against corporate-related human rights abuses within their territory and/or jurisdiction. It is not limited alone to territory.

He explains that there is a critical distinction between jurisdiction exercised directly in relation to actors or activities overseas and domestic measures, such as Bill C-300, that have extraterritorial implications. The special representative also emphasizes that states should make greater efforts to ensure that companies based in or conducting transactions through their jurisdictions do not commit or contribute to human rights abuses abroad, and help remedy them when they do occur.

What does this mean in the context of Canada? Well, certainly Canada has positioned itself as an extremely influential player in the global mining sector, and it should ensure that this role is fulfilled consistent with Canada's international human rights obligations, including promoting respect for human rights by Canadian companies and holding them accountable if they do not.

If I might, I would very briefly quote from the Canadian government’s own corporate social responsibility strategy:

Canada is a particularly strong player in the global mining sector. Canadian financial markets in Toronto and Vancouver are the world’s largest source of equity capital for mining companies undertaking exploration and development. Mining and exploration companies based in Canada account for 43 percent of global exploration expenditures. In 2008, over 75 percent of the world’s exploration and mining companies were headquartered in Canada. These 1293 companies had an interest in some 7809 properties in Canada and in over 100 countries around the world.

There's no doubt that the extractive industries are well known for having extensive potential and actual impacts on human rights. These include the impacts on the rights to health and water and the rights of indigenous peoples to free, prior, and informed consent. It's very frequent that the rights of women are disproportionately affected within these contexts. Given that situation and in light of the comments of the special representative, it is entirely appropriate that Canada should introduce legislation that would lead to repercussions for Canadian extractive industry companies that fail to respect human rights in their operations abroad.

Given the level of Canadian-listed or Canadian-based extractive industry companies, it may not surprise the committee to hear that the proportion of cases received by Amnesty International regarding alleged human rights abuses associated with projects involving Canadian companies is very high.

I have already provided the committee with a number of reports, urgent actions, and other publications wherein Amnesty International has raised concerns regarding such human rights abuses. In the order of the list I've provided to the committee, the cases relate to mining operations involving the following Canadian companies, usually through--

[Technical difficulty--Editor]

[Karin Lissakers, Director, Revenue Watch Institute]

Thank you very much, Mr. Chairman and honourable members of the committee.

I'm very pleased to be provided time today to address the committee. I believe that Bill C-300....

[Technical difficulties]

There are many voluntary codes for multinational corporations, including the UN's voluntary principles on security and human rights; the Global Reporting Initiative; the Equator Principles; the sustainable development framework of the International Council on Mining and Metals--and we have Tony Hodge from ICMM here; and the Kimberley Process for diamonds--to name just a few. Of course many companies unilaterally adopt corporate guidelines but strive to meet international best practice standards throughout their global operations.

The extractive industries transparency initiative--EITI--has attracted the participation of more than 30 countries and the support of many more. Canada indeed became an EITI-supporting government last year, seven years after the EITI was launched. Forty-nine major petroleum and mining companies actively participate in the disclosure process under EITI, and the initiative has the backing of investors who manage more than $16 trillion of funds.

There are many reasons for this global movement toward new standards for extractive companies. First of all, the people in resource-rich countries no longer remain silent in the face of abuses of their rights. You have seen the protests against abusive labour practices or environmental damage, from Sudan to Peru to Ecuador. Because the people are more aware and more engaged, politicians are more sensitive. In the recent presidential election in Ghana, the strongest theme was perhaps the need for Ghana to set strict environmental and social and transparency standards for the management of its new oil sector.

Large institutional investors such as public pension funds--you can take the sovereign wealth fund of Norway, the California pension fund, and so on--increasingly discriminate against companies with a reputation for social or environmental abuse. The governments of capital-providing countries do not want to appear to or actually condone or support abusive practices, because doing so damages the long-term national economic and political interest.

Thus, OECD countries develop common standards that are then applied statutorily in each member country, for example, outlawing bribery of foreign government officials by their own multinationals that are trying to advance business. A similar process takes place through the EU in setting standards. For example, its raw materials initiative seeks both to secure access to raw materials for Europe and to apply high standards to those investments.

Of course many large multinational corporations recognize that reputation risk is high. Following best practice is in fact better for the bottom line over the long term. It is clear that it's not just American, Canadian, European, or Australian companies that have come to that realization. We see now that Chinese extraction companies are seeking partnerships with top-tier western mining and oil companies. It is not because they need access to capital, but because they certainly want to learn the technology skills of those companies. We have also been told by a number of people that because they seek to enhance their own reputation in the international markets they want to be seen as first-class investors in extractive companies.

One of my legal team members at Revenue Watch just returned this week from an event hosted by the Chinese Academy of Social Sciences in Beijing, where the focus was on corporate social responsibility practices, particularly in extractive industries, and the EITI secretariat was invited to participate in the discussion.

Two weeks ago we were approached by a group of consultants who work in Russia who said that they had been approached by a number of large Russian mineral corporations that wanted to find out how they could do better on the corporate social responsibility front. They asked if we could help with some advice and with perhaps organizing some events.

So these ideas are taking hold, and the recognition that these good practices are essential to successful business is taking hold. Globalization means that the old model of a double standard for business maintaining one set of practices at home and another lower set of standards abroad is no longer viable. As the editor of the Oil & Gas Journal put it in an April 19 speech:

Here's a bedrock reality. For international oil and gas companies and service firms not owned by governments, the licence to operate isn't what it used to be. That condition changed and business as usual won't change it.

Many companies will argue that we should stick with voluntary principles. I believe that's one of the arguments that's been raised against Bill C-300. But that is not where the world is going. Voluntary principles are useful as a stage for developing consensus around what the good practices and standards should be. But once a majority recognizes the value of a public good—and that is what good practices are—a voluntary approach is impractical and inefficient. Moreover, I would argue that governments have both a right and an obligation to set rules for the use of public funds that reflect the norms and principles of their own taxpayers.

Even if you look at existing so-called voluntary initiatives, you will see that they have binding elements. The EITI, for example, is voluntary for countries but mandatory for companies operating in the implementing countries. The EITI has strict rules even for the implementing governments, backed up by a compliance review mechanism and penalities for non-compliance.

Voluntary standards that have been worked out among stakeholders in various fora become the benchmark for mandatory behaviour. The ICMM--International Council on Mining and Metals--sustainability framework is binding on each of its 17 member companies, with reporting and assurance procedures based on the Global Reporting Initiative's G3 sustainability guidelines, for example. This prevents free riding by companies that want the prestige of the ICMM brand but do not want to meet its standards.

The World Bank's investment arm, the IFC--International Finance Corporation--requires that companies with which it co-invests in extractive projects publish their payments to the government according to the EITI model, as well as following the bank's own environmental and social standards, of course. The U.S. government political risk insurance is available only to extractive projects in countries that have adopted EITI-like transparency standards for extractive industries.

The Initiating Foreign Assistance Reform Act of 2009 also requires that OPIC, which has many of the functions of Export Development Canada, adopt a comprehensive set of environmental transparency and internationally recognized work rights and human rights requirements that will be binding on OPIC and on the companies it supports. These standards may be no less rigorous than those of the World Bank, although it is a different standard.

On the transparency front, last week the U.S. Senate considered an amendment to the financial regulatory reform bill that would require all extractive companies listed in the U.S. to publish what they pay to governments, country by country and by type of payment. The amendment had the support of the administration and according to its sponsors had the support of well over half of the members of the U.S. Senate. The amendment was not moved on a technicality, but I expect it to be taken up by the U.S. Congress later this session.

The International Accounting Standards Board is developing a new financial reporting standard for extractive companies. The international financial reporting standards will be binding on companies operating in 110 countries, including China and, indeed, Canada.

Finally, the most recent development on this front: the Hong Kong Stock Exchange has just issued new rules for minerals companies. The new rules require that as part of their listing minerals companies disclose, among other things, project risks arising from environmental, social, and health and safety issues; compliance with host country laws, regulations, and permits; and disclosure of payments made to host country governments in respect of tax, royalties, and other significant payments, on a country by country basis. They have to report that they have sufficient funding plans for remediation, rehabilitation, enclosure, and removal of facilities in a sustainable manner. They have to report on the environmental liabilities of their projects or properties; their historical periods of dealing with the concerns of local governments and communities on the sites of mines, exploration properties, and relevant management arrangements; and any claims that may exist over the land on which exploration or mining activity is being carried out, including any ancestral or native claims. These new rules for the Hong Kong Stock Exchange will take effect on June 3.

I believe that Bill C-300 is fully consistent with this global movement toward setting minimum standards for responsible extraction of non-renewable minerals. I would say that it falls short in only one area, and that has to do with transparency. I'm quite surprised and disappointed, frankly, that Bill C-300 does not address the transparency of payments to government. That is a central feature of many of the initiatives I've mentioned, and is widely recognized as a way to reduce social and political instability and corruption in resource-rich countries. Your government's money is supporting investment with Bill C-300, and its future readings will be amended to address this shortfall.

Overall, I would say that Canada, as the leading provider of capital to extractive industries and home regulator of a large section of the international mining industry, has a responsibility and an opportunity to lead rather than to lag the global movement toward establishing sound standards for extractive industries.

Thank you very much.

[The Chair, Conservative, Dean Allison]

Welcome to meeting number 19. Pursuant to the order of reference of Wednesday, March 3, 2010, we're going to continue our work on Bill C-300, an act respecting corporate accountability for the activities of mining, oil, or gas in developing countries.

I want to start off by welcoming those who are appearing via video conference.

I'm going to start with Karin Lissakers, who is with Revenue Watch Institute. She's coming to us from New York. Karin, thank you very much for joining us today. We're then going to move to my next teleconference. I have Shanta Martin, from Amnesty International. Sitting next to Shanta is Robert Anthony Hodge, who is with the International Council on Mining and Metals. We'll finish off with Shirley-Ann George, who is from the Canadian Chamber of Commerce.

If you can try to keep your remarks under ten minutes—I believe that's what the clerk probably asked you to do—we can get your opening statements in, and then we'll be able to go around the room and have some questions and answers. We'll take as long as we need. If we need the full two hours, that's great. If we go for an hour and a half, that will determine the number of questions that are available here.

Karin, thank you very much for being here from New York. I turn the floor over to you to give your opening comments for ten minutes.

[John McKay, Liberal, Scarborough—Guildwood, ON]

On May 25 you have five potential witnesses, one of which I think has already been a witness--the Chamber of Commerce. I could go back in my records.

I'm concerned about protecting that time because I want to go to clause-by-clause shortly thereafter. Will we still have a solid two hours for Bill C-300 on the 25th?

[Peter Goldring, Conservative, Edmonton East, AB]

Thank you very much, Mr. Chair.

Mr. Dade, in this paper, which I presume was by you, there's a comment where you observe that standards evolve.

We all want to improve and we look forward to standards eventually evolving. But there is a statement in here, which I presume is yours, about Bill C-300:

“...any other standard” is simply absurd. How would, or could, anyone deal with being held accountable now for a standard that...“will be determined later” and could constantly change?

Could you comment on that, please?

[Paul Dewar, NDP, Ottawa Centre, ON]

I guess that's the point. Where we are right now is this bill and I have concerns with the critique that if we were to bring this forward, somehow we'd actually be going backwards. I don't buy it. I don't see it from your presentation. I don't see how you can provide evidence on something that hasn't actually been brought into force.

You've looked through the bill. Certainly we've heard from people who say that it's not fair-minded and it would undermine.... But when we've had those folks come forward and say there would be a problem, we've also had other folks who say, in their legal opinion, it wouldn't. The point is that we are seized with it now, and for many of us--and I think for Canadians and Canadian companies--the time is now.

And to see this opportunity depart brings concerns that nothing is going to happen, frankly, because the government has brought forward a counsellor.... And I just have a couple of things on that. The counsellor isn't even set up to take in any concerns at this point. You know the process, right? She can take it in, but it takes two to dance. If the company says it doesn't want to take part, it doesn't have to. You're aware of that. So I don't see that as being helpful, and I think you'd probably be of the same mindset. If you're going to have a process, you must have a process.

Finally, on EDC, when we've asked.... I've asked at the committee and I've asked them in meetings if there has been one instance, just one instance, where they have investigated and found there were concerns among their partners, where they've actually said “you'd better do something or we're going to withdraw”, or where they've actually removed the funding. There were none, so apparently we don't have any problems and this is all some sort of weird conspiracy. I don't think you believe that, because you've intimated that there are some concerns and we need to deal with them.

Mr. Dade, if it's not this--and you've put forward what you think it should it be--isn't it possible to actually have a process that would conform with the general architecture we're talking about? You have concerns about BillC-300. Fine. But what about using this opportunity and this infrastructure to actually change it to adopt those principles you mentioned, to have EDC in the game, and to make sure that when Canadian companies go abroad, there isn't controversy?

Frankly, I think we're entering a time where litigation is happening anyhow. If we don't do something, we're going to be like big tobacco was, really. That's happening. It's already happening. You see it. Do you not see an opportunity here to actually take Bill C-300 and frame the architecture such that it would be helpful?

[Carlo Dade]

That's a very interesting point. You raise something of significance and potential significant impact.

Allegations that are handled at the point of origination of a financing entity or the entity that's working directly with the project, such as the International Finance Corporation or Export Development Canada, are viewed one way on the ground in the countries. This is tied to the project. It's tied to the specifics of the engagement, of the investment, of the company's actions.

When it is advanced to the level of minister, especially in the case of Canada and a government that's viewed abroad as Canada is, the charges take on a whole new realm: that there must be something there if the government is investigating.

We spoke about weak governance in several of these countries. There's an issue. If the local government brings charges, it's always assumed that it's political, that someone's uncle is getting back at someone else's uncle or something. But that's not the view with Canada. With Canada, it's viewed as, “My God, this is good governance, this is the seat and font of good governance, so if the government is investigating, there must be something serious here, and there must be something that rises to the level to change a charge”, It does damage, especially if other countries, our competitors in the U.S. and Australia, are relying on current best practice and current mechanisms, and we suddenly put this in.

The other problem with the bill is that the IFC has 15 people on staff in their compliance unit who investigate cases. The IFC does about 450 to 500 deals a year. Of those, I don't know what percentage are extractive. But the number of projects they potentially have to investigate and move on is handled by a staff of 15 dedicated professionals. With Bill C-300, you're looking at a counsellor who would be splitting her time between looking at what is the best practice and looking at this, with one foreign service equivalent working for her.

You have the potential to have these things drag on and on and on. And the longer they do, the more damage is done. For the activist NGOs, the NGOs that spin the stories we hear, this is a godsend: charges against the minister; this company has been charged 16 times; the minister is investigating 16 charges by this company; or these charges have been going on for years.

You have better mechanisms, more efficient and more effective mechanisms to be able to have people's voices heard, to have their complaints taken seriously by organizations with the resources to address them, to respond and to deal with them effectively.

Again, it puts us in a bad situation, and it doesn't improve things on the ground.

[Carlo Dade]

I was at the round tables too. I spoke and I put forward some ideas. I think it was in Montreal last November, if I remember correctly. I was one of the people invited to the round table. I remember—

there was opposition. What came out of the round tables was the enhancing of the Canadian advantage, the idea for a strong ombudsman, if I remember correctly, who would be well funded and equipped to be able to respond quickly and efficiently to the complaints. That, unfortunately, is not what we see here. There were also discussions about supporting the work that Canadian companies were doing on the ground, and I don't see that here.

I also know that the Prospectors and Developers were here and they were strongly opposed to this. Tony Andrews was one of the heads of the round tables, and I know that they do not support Bill C-300. So obviously something has broken down between the round tables and the submission of Bill C-300.

I understand the frustration, the need to do something, and we support that something needs to be done in terms of not losing competitive advantage, enhancing the positive aspects, and doing more to prevent, limit, and mitigate damage. We're fully in line with that. Our disagreement is that we don't think this will do it. I think in the private sector, from what I've seen of testimony in the committee—I do get the blues and look at them—they also appear to be opposed to it.