Foreign Affairs Committee on June 3rd, 2010

[The Chair, Conservative, Dean Allison]

Pursuant to the order of reference of Wednesday, March 3, 2010, Bill C-300, An Act respecting Corporate Accountability for the Activities of Mining, Oil or Gas in Developing Countries, we'll commence. We are now at meeting number 21.

To all the witnesses today, I want to say thank you very much for being here. Some of you have come from close by and some from farther away. We thank all of you.

I'm going to ask you to try to keep your remarks to eight minutes. I realize that some of you have been told a different amount; I'm not going to cut you off, so do the best you can.

I want to get started as quickly as we can because we do have a lot of witnesses today. A few have said that they would be a bit late. We will probably start questions and then go back to them, should that happen to be the case, just to give everyone a chance.

It's good to see Mr. Stewart-Patterson back again. Why don't we just kick off with the Canadian Council of Chief Executives? You have Mr. Dillon along as well, who is the vice-president of regulatory affairs and general counsel. We'll have you start and after that we'll get to questions.

Mr. Stewart-Patterson, the floor is yours, sir.

[David Stewart-Patterson, Executive Vice-President, Canadian Council of Chief Executives]

Thank you very much, Mr. Chair.

Thank you, members of the committee, for inviting us here to testify and to discuss Bill C-300.

The Canadian Council of Chief Executives represents the heads of large globally engaged enterprises in every sector of our economy. We have spoken clearly and often about the importance of good corporate citizenship at home and abroad, and I think it's fair to say that by any objective measure Canadian companies are among the most socially and environmentally responsible operating in developing countries worldwide.

Far from promoting more responsible behaviour by Canadian corporations operating internationally, we fear that Bill C-300 would result in Canadian corporations either choosing not to make beneficial investments in developing countries or losing business to corporations based elsewhere that will not have the same regard for environmental, safety, and human rights standards.

The council's main concerns follow.

The legislation is based on a flawed premise, since it assumes that Canadian companies are not to be trusted in their international operations.

As yet, there is no internationally recognized set of standards against which Canadian practices can be judged.

By suggesting that unilaterally determined Canadian standards should take precedence over the laws and regulations established by sovereign nations, Canada would be engaging in a form of extraterritoriality that it consistently has rejected when attempted by other countries.

On a more practical note, the mere threat of a withdrawal of export financing from Export Development Canada or a loss of access to investment from the Canada Pension Plan Investment Board could easily jeopardize projects in developing countries. We know of no other national legislation that would seek to discipline the international activities of its resident corporations in this manner, and thus competitors in other countries would have an unfair advantage over Canadian companies.

The bill purports to screen out vexatious or frivolous claims, and yet it provides no effective mechanism for doing so. Any person can request an investigation, regardless of whether they're personally affected, and without having to supply any credible evidence of inappropriate behaviour by the corporation in question.

The filing of a single complaint sets the process in motion, and the mere fact of an investigation, regardless of its eventual outcome, would likely prejudice the Canadian company. In a bidding situation, a competitor could easily arrange for a complaint to be launched and then lobby the foreign government to exclude the Canadian company from the whole bidding process, on this basis: “Look, they're even being investigated by their own government, so how can you possibly do business with them?”

Undertaking an investigation under the act likely would require the assistance of the government of the developing country, which may or may not be forthcoming. In any event, Canadian ministers responsible would not have ready access to the resources or detailed expertise they would need to easily determine the merits of a complaint. And all of this would lead to unacceptable delays and prejudice to the Canadian company.

Let me be clear on one point. We believe that Canadian companies should always operate in a transparent and ethical manner, both internationally and at home, and we fully support efforts to improve the governance practices of all companies operating in developing countries.

The federal government has been engaged with responsible Canadian companies for some time in an effort to develop sound corporate social responsibility standards and their practical implementation. We should allow these efforts to continue rather than short-circuit them through misguided legislation.

I think it's fair to say that for many years Canada has been seen as a centre of excellence in the mining industry, both in terms of a significant number of Canadian champions competing around the globe and with respect to our ability to provide world-class financing of mining ventures anywhere. In an era when national brand is increasingly important, this legislation is likely to tarnish our well-deserved reputation for good corporate citizenship in the extractive sector. It could also imperil the brand of many other Canadian companies operating in developing countries, beyond those in mining and oil and gas. Therefore, I urge members from all parties to vote against this bill.

Thank you, Mr. Chairman.

[The Chair, Conservative, Dean Allison]

Thank you, Mr. Stewart-Patterson.

We're now going to move over to Laureen Whyte, from the Association for Mineral Exploration British Columbia.

Welcome. You'll have eight minutes, so the floor is yours.

[Laureen Whyte, Vice-President, Sustainability and Operations, Association for Mineral Exploration British Columbia]

Thank you.

Thank you for inviting us to join you, and I apologize; I've had the trip on which everything that could go wrong has gone wrong. I'm running.

I work with the Association for Mineral Exploration B.C. I work out of our Vancouver office. What I really wanted to do today is bring a perspective to you from the exploration community, primarily in British Columbia, but also nationally and internationally.

The Association for Mineral Exploration was established in 1912. We represent over 300 corporate and 3,000 individual members. These are primarily prospectors and junior exploration companies. We also have the exploration divisions of some of the senior companies in our membership.

Our areas of focus are primarily health and safety, aboriginal and community engagement, and policy development. We also have a large conference, Mineral Exploration Roundup, where we do technical work.

The context for our members is that in some ways it is quite daunting for folks who are working in a small office or perhaps on their own to try to understand operationally what the guidance is telling them to do. In terms of the international work that has been happening, we've had to make a lot of investment in understanding and providing guidance to our members on how they can implement operational practices that will meet the tests of health and safety standards, environmental management, social development impacts, and, now, human rights.

I want to share some of my own involvement in this. I have worked with first nations for almost 25 years, both in the community as a social worker and in development initiatives as an industry employee. I think the challenge and the opportunity can both be underestimated in terms of what the presence of industry can mean to a community, and it's primarily the examples of first nations that have raised a lot of questions for our members about what the expectations are of them internationally.

As for some of the things we've been working on in British Columbia, we have been working with first nations in an area where there is very little of the province that's covered by treaty, so we're working in very uncertain kinds of situations, in a lot of conflict situations, and where there is a lot of uncertainty about decision-making and reaching consensus within the communities.

We work with the Prospectors and Developers Association very closely as well, and we've been deeply involved in the development of e3 Plus, on which I know Tony Andrews has shared some details with you already.

We also are participating as PDAC moves to its field testing of e3 Plus, and we've engaged two first nations in B.C. to participate in the field testing with companies operating in their area. I think that the connection to what we do domestically should not be lost. There is an awful lot that we've learned here, and there are a lot of similar kinds of situations that we've developed some expertise in managing.

Internationally, I think it's been recognized by all that the real performance challenge is being able to bridge the governance gap that has been created by globalization. But the current international human rights objectives were framed in relation to the obligations of states, not businesses.

At a practical level, there is also a lack for us of an understanding of the breadth and coherence of response. What I mean by that is that understanding who is responsible for what in any given situation on the ground is very difficult for people to do.

The way we experience success is by collaborating with government, with communities, and with non-profit organizations. I can cite several examples in British Columbia where we've done that very successfully in remote communities.

We can't do it alone. Nobody can do it alone. I feel very strongly that the way people learn how to manage these situations is not through sanctions, but by learning. It's by learning from each other, by having the responsibilities and the criteria set out for them very clearly in operational terms, and by being able to go to somebody who can provide them with some guidance.

I just want to speak briefly about what we're doing here in Canada. We have been following the work of the UN special representative very closely. In my experience in working in communities on a personal level, I am very pleased to see the scope and the comprehensiveness with which the UN special representative is approaching this work. It fits with my own experience of success and with the kind of guidance that I've provided to my members and that has been successful for them.

I also believe that here at home in Canada we've been providing a lot of support to the CSR counsellor and doing what we can to contribute to the CSR strategy, the centre for excellence, and a number of other initiatives. We have a very large group of people participating deeply in all of these consultations and discussions.

I want to speak briefly to the provisions of Bill C-300 in particular. I believe that the punitive measures that would be aimed at Canadian companies would divert significant resources away from the collaborative process that is under way now. We've made a huge investment in that. We're seeing results.

I don't want to see my members taking their time and resources away from the work we're doing now, which is helping, to something that would put them in a compliance mode. The compliance mode for them would be to do the minimum required, to not integrate that into their own corporate culture, and to not discuss with other people what their practices are. It becomes an issue of liability for them, rather than one of learning from each other.

It's very hard for me as an association staff member to get my members to speak openly about the challenges they face. They don't like making mistakes. They don't like it when they have done something wrong. They can come to me now, and we can bring opportunities to them for sharing and learning among each other; if they're looking at sanctions as the first line of response, all of that will disappear and I will have no ability to engage my members in these initiatives.

I also want to say specifically about Bill C-300 that I don't believe the IFC and voluntary principles give us enough detail to justify sanctions. They're too general. They don't tell people what they need to do operationally. I believe that sanctions should be applied after efforts to improve performance have been exhausted, not before.

The loss of the opportunity to improve is a loss for communities, host governments, and the competencies of industries. The ability to work things out with the communities is a really valuable thing for those communities as well.

I also don't believe that the bill accounts for the level of resources that would be required to implement its provisions. I have a great deal of experience with what it takes to implement these things effectively.

Thank you.

[The Chair, Conservative, Dean Allison]

Thank you, Ms. Whyte.

We're now going to move to Mr. Nash.

Sir, you have eight minutes.

[Gary Nash, As an Individual]

Thank you, Mr. Chairman.

My thesis will be that Bill C-300 will create some serious issues for the government and will not be of net benefit to Canada.

To begin, I want to clarify that there are not 4,000 mining projects abroad. There are likely fewer than 200 in developing countries; I received this information the other day from a consultant friend of mine. In his case, he shows about 182 as of 2007.

The second point I would make is that exploration companies can be quite small, as you've just heard, and these companies, as far as I know, do not draw on EDC funds, nor do they receive investments from the pension plans. As a result, they're probably outside the context of the bill.

Therefore, the real target of this bill is mining companies with projects abroad, but there are some questions about that.

To what mining projects will the bill apply? Does it apply to foreign companies investing from their Canadian subsidiaries? Does it apply to foreign companies that happen to be listed on the Toronto Stock Exchange? Does it apply to joint ventures where Canadian mining companies have a greater, equal, or minority interest in the joint ventures? Will the joint venture partners also be investigated if you decide to pursue it?

To undertake a case-by-case review can be costly and lengthy. It could require in-depth, technical, on-site expertise, and obviously the cooperation of the host government, which may take time for a decision, as well as a fair and transparent process, with oversight, to ensure that the investigative and administrative processes are carried out properly.

Without sufficient resources to investigate and to meet the famous Treasury Board guidelines for contracting, it could take some years to resolve a complaint, given a significant number of complaints, which is likely with the passage of this bill. The longer it takes to decide, the greater the likely negative impact on the company's reputation, its market value, and its ability to move forward on other projects that do generate some community benefits.

What happens if the minister cannot meet the eight-month deadline? And even if it's extended, what then, in terms of the negative impact on the company? Will there be need for an investigation to determine if the complaint is frivolous, especially if the criteria are not specific enough to avoid this need?

With the announcement of a review, the public will generally assume that the company is guilty. The fact that the minister publishes in the Canada Gazette the decision of innocence or that the complaint is frivolous is of little value. Who reads the Gazette in the general public, in Canada, or abroad? And do journalists in the implicated countries or here always follow up on the story? If so, do they get it right? You must have some experience with that.

Ministerial decisions also provide an opportunity for politically biased decisions in accepting to review a complaint or possibly deciding that the infraction wasn't significant enough to inform EDC, because you will run into those types of things. Each situation can be said to contravene procedural fairness, and you've heard from a constitutional lawyer on this. To minimize bias, should not the parties implicated be allowed to comment on the information and analysis received by the minister, obtained during the review, and prior to the minister's decision? Should they be allowed to appeal the decision?

There is no provision for protecting a complainant from local interests that might be negatively affected by a guilty decision of the minister, and I can give an example of a circumstance like that. In some countries, it is possible that a complainant might be at risk not only from affected local interests, but also from his own government, if he were to write a letter of complaint to the minister. This is possible if the government favours the mining operation or if the government was complicit in ignoring the infraction or rejects the right of any foreign government to interfere in its domestic matters.

What is the implication for the Canadian government should the complainant be killed? And what about instances where corruption or blackmail is prevalent? Threatening to complain might be used to gain additional funding or a bribe from the company. How will the minister determine the real basis of the complaint or an interest that encouraged the complaint?

What about the corruption of judges in some developing countries? We know of some. What if the minister finds that the complaint was unfounded, but the judge, possibly as a result of corrupt practices, finds otherwise? If, as a result, the consequences for this company are serious, then will Canada intervene in support of the company?

As far as corruption is concerned, complaints might be used by the government in the country concerned to withdraw a mining licence from a mining company. I can give an example. Should this occur, especially if the minister gave credence for the complaint, what are the consequences for the Canadian government? Will the minister seek and obtain the agreement of that government before undertaking a review? If that government opposes a review by the minister, will the minister then dismiss the complaint? If not, what will it mean in terms of the relationship with that country?

If Parliament approves a bill that provides for extraterritorial application of Canadian law, what are the consequences if it conflicts with the provisions of the developing country's law or regulations—and there are examples—and if the domestic law was legitimately not intended to accord with international standards or guidelines?

How will the government react if another government also decides on a bill that allows it to undertake reviews of complaints against its mining companies? As you know, Canada has a good number of foreign companies operating, from South Africa to China, India, and Russia, etc. Would the Government of Canada welcome the involvement of the United Kingdom or China in such a review of a complaint against their companies in Canada? It opens up a real issue if many countries decide to copy this bill.

Suppose that a mining company obtains a court decision in the country of concern in which it is found innocent of an environmental infraction. Then, suppose that certain persons in that country, or even in Canada, are not satisfied with the court's decision and submit a complaint to the minister. Would that complaint be accepted for review or just automatically be rejected? The bill does not provide for that.

If the minister finds the company guilty of an infraction and the infraction was known but ignored by the company, could the minister's decision lead to criminal or civil charges against the company in that country?

If the Canadian government decided in favour of a Canadian company, it might create some political opposition to Canada and to other Canadian interests in the country. If it favours the local or other interests and not the company, then, as you know, the government will have helped to injure the reputation of that company and its potential access to other opportunities that could have provided additional trade and benefits for Canada.

Also, since companies prefer certainty with regard to funding and insurance, this will encourage the company to seek support from other than EDC. This could cause a bit of embarrassment to the company, particularly given the fact that EDC often encourages the use of Canadian suppliers of goods and services.

The bill provides for complaints of a social/human rights nature, which need to be defined. Are we talking about family breakup, crime, working conditions, and hiring practices? But on the social side, to assess the impact on social changes in the community, a baseline study is required to know whether there is an increase in social problems that can be related to a mine. If there is more than one industry in that area, how will the minister distinguish who is at fault?

Overall, what will be the measurable standards based on human rights principles or guidelines? John Ruggie, Special Representative of the Secretary-General of the United Nations, has been working on this for nearly five years, and he is still working. Bill C-300 allows 12 months for the minister to establish corporate accountability standards pertaining to human rights guidelines. As you know, a guideline can have a number of different measurable standards.

As an alternative, I would agree with the prior advisory committee to the round tables that many issues need clarification and a proper analysis, some of which is detailed in my larger paper. An expert group could be established to consider the complications raised in the paper, as well as the necessary standards, procedural guidelines, and decision-making roles to improve corporate performance that maintains a positive image of Canada abroad. Again, details are in my paper.

Thank you, Mr. Chairman.

[The Chair, Conservative, Dean Allison]

Thank you, Mr. Nash.

We're now going to move over to some individuals from Harvard Law School. We have Tyler Giannini, Sarah Knuckey, and Chris Albin-Lackey.

Welcome, all of you. I believe you're going to split your time.

[Tyler Giannini, Lecturer on Law, International Human Rights Clinic, Harvard Law School]

Yes, that's what we're going to do.

Thank you, Mr. Chairman.

Thanks to the committee for having us back.

My name is Tyler Giannini. I am a lecturer on law at Harvard Law School and the clinical director of the human rights program. I am joined by Ms. Sarah Knuckey from NYU, the New York University School of Law, and Chris Albin-Lackey, from Human Rights Watch.

Sarah and I are doing a joint statement. She will begin our statement.

[Sarah Knuckey, New York University Center for Human Rights and Global Justice, Harvard Law School]

Thank you, Tyler.

Chair and committee members, in October 2009 we provided testimony to this committee on allegations concerning gang rapes, physical abuse, and killings by security guards that we documented during three separate fact-finding missions to Barrick Gold's PJV mine in Papua New Guinea. Subsequently, we submitted a detailed supporting document, including extensive appendices of police and autopsy reports, which we encourage you to review.

Our 2009 testimony provided information on why independent, transparent, and comprehensive investigations by Barrick or the government of PNG have not yet occurred and are unlikely to take place. In 2006 the PNG government investigated deaths surrounding the mine, but four years later, it has yet to release the findings of those investigations.

We also testified to the existence of an MOU between the government of PNG and the PJV under which police reservists are part of the PJV security force, raising serious questions about the independence of any investigations by the police of Papua New Guinea.

Today, we respond to some of the claims made by Barrick Gold in its subsequent testimony to this committee, which further demonstrate the inherent problems of leaving a company to investigate itself and emphasize the importance of a bill like Bill C-300, which could help fill an alarming accountability gap.

First, let me address gang rapes. In response to our October 2009 testimony in which we documented numerous allegations of brutal gang rapes by guards on mine property, Barrick stated in its testimony that, to its knowledge, “no cases of sexual assault [have been] reported to mine management” and said, “It is not possible for the PJV to investigate an allegation it has never received...”.

Committee members, this exemplifies a “hear no evil, see no evil” approach to human rights abuses. Through our investigations, we quickly discovered allegations of sexual violence. Barrick would have been able to do the same if it had conducted any investigations at all.

Sexual violence by PNG police across the country is well known, as is the reluctance of women to report rape. Senior Barrick officials have been aware of general rape allegations at the mine since at least August 2006. Given such knowledge, Barrick should have, at a minimum, taken steps to proactively prevent sexual abuses, including by installing surveillance cameras on the waste dump areas where women were raped, and in the guard patrol vehicles; by doing community outreach to women to inform them of their rights and how to complain; and by creating a reliable internal complaint mechanism.

Further, while Barrick seems to imply that the rape allegations we testified to are false because women have “numerous avenues” to report an allegation of rape, this grossly misstates the realities on the ground. Most of the women I met do not know to whom at the company to complain or are fearful of retribution, community disapproval, being arrested, or suffering further abuse from the police.

[Tyler Giannini]

Second, Mr. Chair, in its testimony, Barrick stated in regard to the police that “There has never been restricted access to the mine site”, and that our October 2009 testimony that police “indicated that their investigative efforts have been hampered by PJV security” is “simply untrue”. Barrick also stated that crimes on mine property are reported to the police and that “...PJV would conduct its own investigation...”.

In our written submission, we included documents authored by a police investigator claiming that he had been prevented from accessing the mine and obtaining the time sheets and duty rosters he requested. We spoke with this individual and showed him the documents. He personally authenticated the documents in our presence. Other police officers have similarly told us that they have been hampered from investigating and having access.

This clearly indicates the need for a thorough and independent—and I stress independent—investigation. To the extent that Barrick conducts its own investigations, they have thus far been done in an opaque manner. Barrick should release information on the nature and outcomes of its internal inquiries, information on how many guards were disciplined or dismissed, and for what reasons, and information on whether guards were referred for criminal prosecution.

Third and finally, there is the issue of abuses since 2006--in particular, killings. Barrick stated that “...there have been no fatal shootings by Porgera security personnel” since 2006. First, it's unclear what Barrick means by “security personnel”. However, the existence of witness statements, together with the previously referenced autopsy and police reports on the 2006 to 2008 period and killings, as included in our prior submissions, bring Barrick's statement into question and reinforce again the need for an independent investigation.

In conclusion, Barrick's responses to the serious allegations of gang rapes and killings since 2006, and the inadequacy of both government and corporate investigations to date demonstrate, as previously testified, that there's a vital need for a bill like Bill C-300.

We also strongly believe that human rights standards and the voluntary principles, as referenced in the bill, do give specific guidance that is clear and manageable for companies and adjudicators considering allegations. An alleged abuser cannot police itself, and there must be genuine independent investigation into allegations of human rights abuses.

[Chris Albin-Lackey, Senior Researcher, Human Rights Watch, Harvard Law School]

My name is Chris Albin-Lackey. I'm a senior researcher with Human Rights Watch. We investigate and document serious patterns of human rights abuse in more than 80 countries around the world.

Less than two weeks ago, I returned from a month-long visit to Papua New Guinea. I travelled there to determine whether previously reported patterns of abuse by security forces around the mine at Porgera are accurate and, if so, whether they're a continuing problem. In fact, those abuses are a continuing problem, and they are also a very clear example of why the modest but meaningful regulations set down in Bill C-300 are so important.

I spent the bulk of my time in Porgera in the communities around the mine. I interviewed dozens of people who had been apprehended while trespassing on mine property--mostly people who eke out a living by scavenging for gold-bearing rock on the vast waste dumps around the mine. I also interviewed officials from Barrick Gold, community leaders, government officials, police officers, and mine security guards. We'll publish a full report of our findings and recommendations later in the year.

During our research, I found that the mine faces enormous security challenges, exacerbated by the failure of the Government of Papua New Guinea to maintain law and order in the area. PJV directly employs a sizable private security force to protect the mine and its employees, and we don't dispute the need for guards at that site. Our findings also indicate that Barrick does appear to be taking at least some serious measures to try to exercise stricter oversight over their security personnel and to respond appropriately to abuses that are brought to the attention of company officials.

Nonetheless, I documented serious allegations of continuing violent crimes by some security officers in 2009 and 2010. We documented several recent cases in which security guards appear to have used unnecessary or excessive force when trying to apprehend illegal miners and other individuals who were trespassing on mine property, but the most serious recent abuses that we documented were several gang rapes allegedly carried out by mine security guards, many of whom previously served as police officers. These brutal crimes mirror patterns of abuse that are all too common among the ranks of Papua New Guinea's police force, in which sexual violence is widespread.

Most of the alleged rapes adhere to a common pattern. The victims were women caught trespassing on the mine property by PJV security guards. In each case, the perpetrators told the women that if they tried to complain about the rape, they would be arrested on trespassing charges that carry heavy fines or jail time.

Victims of abuse by PJV guards told me that they did not know of any viable way of reporting these abuses. The police are feared rather than trusted, a problem that's compounded by the fact that most of the victims were committing the criminal offence of trespassing at the time they suffered the abuses.

For victims of sexual violence, the situation is even worse. Many fear reporting rapes because of a powerful social stigma that can often ruin a woman's life. None of the victims I interviewed knew who within the company they could complain to if they wanted to, and it does not appear that Barrick has made adequate efforts to establish clear and safe channels for such complaints.

Despite some important measures taken by Barrick, our research shows that incidents of serious abuse are still slipping through the cracks and that those cracks may be very wide. Barrick itself has not been transparent about the specific efforts it is making. The company has thus far not been able to provide us with specific information about the measures it has put in place to control and respond to abuse and has not allowed us to meet with the company officials who are most familiar with these issues. We hope this will be resolved as our dialogue with Barrick moves forward.

We do recognize that a big part of the problem is that the Government of Papua New Guinea provides no meaningful law enforcement around the mine other than the current deployment of mobile police squads that are largely supported by the company itself. The government also exercises virtually no meaningful oversight or regulation of the company security force.

This means that Barrick, like other companies operating in Papua New Guinea, is forced to rely almost entirely on its own mechanisms to monitor and discipline company security personnel. The example of Porgera shows that in a challenging and largely unregulated environment this task is simply too great for companies to accomplish on their own.

While robust standards set by companies themselves are important, they must be accompanied by robust government regulation. If that regulation is not present where companies operate, then it should be present here at home.

Canadian companies that are serious about respecting human rights in their operations abroad should welcome the additional scrutiny and the additional guidance that Bill C-300 would provide.

Thank you very much.

[The Chair, Conservative, Dean Allison]

Thank you very much, Mr. Albin-Lackey, as well as Ms. Knuckey and Mr. Giannini.

Penelope Simons has just shown up. We weren't expecting you here till noon, but it's great to have you sooner. We can get you right into the routine.

Ms. Simons is an associate professor in the common law section of the Faculty of Law at the University of Ottawa.

Welcome. You have eight minutes for your presentation.

[Dr. Penelope Simons, Associate Professor, Faculty of Law, Common Law Section, University of Ottawa]

Thank you.

Thank you very much for inviting me to appear before the committee.

I'm an associate professor of international law and international human rights law at the University of Ottawa. I also teach corporate law. I specialize in the human rights impacts of extraterritorial corporate activity. I've been engaged in investigation and research in this area for over a decade.

I was a member of the Harker mission that was sent to Sudan in 1999 to independently investigate and report on the alleged link between oil development and human rights violations, particularly the allegations of forced displacement around the oil fields and oil-related development where Talisman Energy, a Canadian company, was operating.

I want to address today three key arguments against the introduction of Bill C-300 that have been raised in testimony. The first argument is that the standards imposed in Bill C-300 are too high and will affect the global competitiveness of Canadian extractive companies. The second argument is that Canadian companies are going to have to relocate to other jurisdictions because of the impact these high standards will have on competitiveness.

The third argument I want to address is one that was raised in testimony by Mr. Dade, from FOCAL. It is that if we impose such high standards on Canadian companies that they will be forced to withdraw from certain projects, Chinese companies will take their place, and, in the end, because Canadian companies do such good corporate responsibility work, the local people will be worse off under the regime of the Chinese companies.

In terms of the first two arguments, we heard these types of arguments in the 1970s when the government began to introduce environmental regulations. These are now law, and businesses continue. We heard them when issues arose requiring consultation with aboriginal people before undertaking extractive activity on their traditional territories. The requirement of consultation and accommodation is now entrenched in our constitutional law, and it is also now a requirement under the new Ontario Mining Act. The extractive industry has continued to flourish. It has continued to be very profitable despite these regulatory developments.

The first argument is that the standards are too onerous in Bill C-300 and that Canadian companies will therefore suffer a debilitating competitive disadvantage if Bill C-300 is enacted. The bill requires Canadian companies to comply with the IFC performance standards, with the voluntary principles on security and human rights, and with human rights provisions that are to be determined. These provisions are to ensure that these companies operate in a manner that is consistent with international human rights standards.

Well, Canadian extractive companies already have to comply with the performance standards. The IFC and the OECD countries' export credit agencies, including Export Development Canada, claim they already apply the performance standards to those companies seeking financial support.

All major Canadian extractive companies are funded by financial institutions that subscribe to the Equator Principles, such as the Royal Bank of Canada, Scotiabank, and Export Development Canada, and these institutions also claim to apply their performance standards to borrowers. The voluntary principles on security and human rights have been endorsed by the Canadian government and have also been adopted by major extractive companies, including Talisman Energy.

All companies that seek Export Development Canada's support will already be subject to human rights screening for the impacts of their project. EDC claims to take human rights into account in its decision on whether or not to fund a project.

In its “Taxation Issues for the Mining Industry: 2009 Update”, the Canadian Intergovernmental Working Group on the Mineral Industry stated, “Corporate social responsibility...activities are believed to be vital to ensure the competitiveness of industry”.

The other point that I'd like to make is that OPIC, one of the export credit agencies of our biggest trading partner, is now required by an amendment that was made to the Foreign Assistance Act in December 2009 to issue “a comprehensive set of environmental, transparency and internationally recognized worker rights and human rights guidelines with requirements binding on the Corporation and its investors”.

These standards are to be no less rigorous than the performance standards among others, so Bill C-300 is not such a great extension. This is happening in other places as well, and in particular in the U.S.

It's becoming a significant competitive disadvantage for Canadian companies not to comply with high environmental and human rights standards. You remember the issue of Pacific Rim in EI Salvador; El Salvador has recently banned all metal mining in the country because it is concerned about the environmental impacts of the gold industry and other industries on their water supply. Bill C-300 will help to redress this bad press. These standards are already being complied with, so there is no reason for these companies to be saying that they're too high.

The second argument is that the competitive disadvantage is so great that Canadian companies will have to move to other jurisdictions. Companies do relocate their headquarters, and corporations often make changes to their structures or use complex corporate structures to avoid domestic regulation, so will the enactment of Bill C-300 cause large numbers of Canadian extractive companies to move out of Canada? This is doubtful, and it's doubtful for a number of reasons.

The first point is that Canada is home to over 75% of the world's largest mining and exploration companies, and this is not just by chance. There are important reasons that mining and exploration companies are headquartered or otherwise present in Canada. Canada is resource-rich in oil, natural gas, potash, uranium, nickel, copper, gold, and diamonds and has some of the highest mineral exploration activity in the world within its own borders.

Mining in Canada is a lucrative business. The corporate operating profits in the Canadian mining industry were at $9.1 billion in 2008; that's double what they earned in 2007. Mining companies are able to raise billions of dollars on the Toronto and Vancouver stock exchanges. These two exchanges are the world's largest source of equity capital for mining companies undertaking exploration and development.

The Toronto Stock Exchange and the Toronto Stock Exchange Venture Exchange list 10 times more public mining companies than any other exchange in the world. In 2009, these two exchanges traded 79.1 billion mining shares and raised $22.2 billion in equity capital. Canada's insurance, banking, legal, and engineering industries have specialized groups that are tailored to providing, respectively, insurance, financing, legal advice, and technical mining support to mining corporations.

Other resource-rich countries such as Australia and China are actually considering introducing resource taxes. China wants to introduce a 5% tax on crude oil, coal, and natural gas sales, and Australia is introducing a “super profits tax” on windfall profits of resource companies. Other countries in Africa, Asia, and Latin America have also considered windfall taxes and, in some cases, have actually implemented them.

Canada, on the other hand, has no such tax. On the contrary, Canada has a number of advantageous tax incentives to encourage investment in domestic mining. Flow-through shares, for example, allow investors to write off 100% of their exploration expenses being passed down, and the federal government's program of super flow-through shares gives an additional 15% tax credit for grassroots exploration.

As you can see, there are significant incentives for extractive companies to remain in Canada.

The final point I want to address is this argument that when Canadian companies pull out of countries, the Chinese will then fill the void and the people will be worse off.

In his testimony, Mr. Dade from FOCAL stated that it was a mistake to put pressure on Talisman to withdraw from Sudan and that Talisman had moved to address the human rights issue with a very rigorous and serious corporate social responsibility program. He said, “The investment is being controlled by the Chinese. The people in the communities are, if anything, worse off than they were before. This is a scenario that has a possibility of repeating itself throughout the hemisphere.” This is the argument of constructive engagement--better us than them.

First--I won't go into any detail, and I'm happy to answer questions on this--Talisman's self-regulation efforts in Sudan were very weak and deeply flawed. They claimed they had engaged the Government of Sudan and made progress on human rights issues, but there was no independent evidence to support this argument. In fact, the human rights situation deteriorated while Talisman was operating in Sudan.

The other point that's important is the distinction that needs to be made between corporate accountability and corporate social responsibility activities. Talisman claimed it was a force for the good, and this is misguided, okay? Its community development works, the hospitals, the schools, and the wells, those corporate social responsibility activities it was doing for the communities, were located in garrison towns. These were towns that were held by the government in rebel-controlled areas. They were not accessible to ordinary persons who were in or near the concessions and they contributed to the Government of Sudan's counter-insurgency strategy.

A company that claims to support human rights and to be guided by the Universal Declaration of Human Rights can't legitimately argue--at least out loud--that philanthropy can be an excuse for engaging in or being complicit in egregious violations of human rights. This is the point about the constructive engagement argument. Some situations exist where corporations can't be neutral actors, and no argument can be made that it's better to have a Canadian company there, being complicit in human rights violations, than to have another company. As a matter of good public policy, we need standards and an accountability mechanism.

I would like to address one more argument if I have time. This is the argument that Bill C-300, if it is enacted, will violate the sovereignty of developing states. As an expert in international law, I need to clarify this misunderstanding.

International law gives states extensive authority and capacity to regulate the conduct that takes place outside of their territory, that is, in the territory of other states. Canada may regulate the activity of its corporate nationals: any companies that are incorporated in Canada or headquartered in Canada.

In fact, Canada does already regulate the activities of its nationals extraterritorially in a variety of circumstances. It has done so in a number of circumstances: for instance, to implement treaty obligations, such as the convention against torture, the Rome Statute of the International Criminal Court, and certain anti-terrorism laws.

But it has also extended its criminal jurisdiction where no treaty obligation was in place. So before the protocol to the Convention on the Rights of the Child came into place, Canada had already regulated the engagement of Canadian nationals abroad in sexual activities with children and in child prostitution. That had already happened.

In addition, common law civil liability also applies extraterritorially, so this is an absolute possibility under international law. Enacting this bill does not violate the sovereignty of developing states.

One final very short point is that the argument has been made in witness testimonies on Bill C-300 that the investigation mechanism will promote vexatious and spurious claims that companies will not be able to refute. Companies are already being tried in the court of public opinion, because there is no effective forum for assessing the validity of these claims. Companies need a credible and objective forum to promote dispute resolution and to help them to avoid and resolve conflict. Bill C-300, the mechanism that is proposed, could provide such a forum.

Thank you very much.

[The Chair, Conservative, Dean Allison]

Thank you very much, Ms. Simons.

Now we are going to start our first round, with seven minutes for both the questions and the answers.

Let's get started with Mr. McKay for seven minutes.

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

Thank you, Chair.

I thank all of you for joining the debate. I appreciate that all of you are on the same panel. Hopefully we can go back and forth with a few ideas.

I also want to thank Mr. Stewart-Patterson for in effect giving a pithy summary of the corporations' position. I thought it would be most useful if I asked those who promote Bill C-300 to respond to some of the assertions you've made in your paper.

For the first assertion, I will direct my question to Professor Giannini: the legislation is based on a flawed premise that assumes that Canadian companies are not to be trusted in their international operations. You made a rather interesting point about companies that investigate themselves. Can you expand on that point, please?

[Tyler Giannini]

Thank you, Mr. McKay.

The belief that Canadian companies can't be trusted I think is an overstatement, and it oversimplifies the situation here. I think that Canadian companies, in fact, with guidance from international law and human rights, would be better ambassadors internationally.

In fact, one of the key things here is that the standards of international law are manageable. One of the things that was referenced earlier was the voluntary principles. Two specific documents were referred to: the UN Code of Conduct for Law Enforcement Officials and the UN basic principles on the use of force. These provide specific guidance on what excessive force would mean.

Within that sort of context, what this means is that companies would know that this is the standard: we need to use necessary and proportional force, but not excessive force. That's something that people who look at standards would be able to look at. Lawyers within companies would be able to make those sorts of decisions.

With those sorts of decisions, you would then be able to be better ambassadors about where to draw the line as a company, what's accessible, and what is not. Mining can be a productive way of developing a country and we all understand that. We're not saying that mining cannot be a very useful part of a development scenario.

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

I have to caution professors who go on and on--

[Tyler Giannini]

Yes, of course. I saw that.

[Voices]

Oh, oh!

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

Let me direct my next question to Professor Simons. It has to do with the “guilty before trial” argument, which I think you addressed in the latter part of your remarks.

But the companies here are worried that, somehow or other, if an allegation is made, they're tarred, feathered, hung, drawn, and quartered, and it's all over for them. Could you address that, please?

[Dr. Penelope Simons]

Well, I certainly understand the companies' concern about this. The point is--and I did make this point already--that they already are being tried in the court of public opinion. Providing a mechanism whereby you can have proper investigation, proper procedures, evidence put forward, and a chance for the company to refute allegations that have been made would obviously enhance their ability to make their own case.

In addition, the problem of spurious and vexatious claims is something that is always addressed in legal forums. For example, courts routinely dismiss these types of claims in civil cases. I think this is a very important... It's important to have a place, as I've said, where these allegations can be heard and due process can be followed.

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

Thank you.

To go back to Professor Giannini, there's a view that there is no internationally recognized set of standards for corporate social responsibility against which Canadian practices can be judged. Could we have your comments on Mr. Stewart-Patterson's views?

[Tyler Giannini]

Well, I believe that the standards here do in fact provide the preciseness that we need. Would that precision...? For example, the code of conduct asks who would fall within the jurisdiction and the basic principles provide that as well. In the context of the Porgera mine, we're looking at a situation in which the police are working in collaboration with the mine itself.

In that sense, you have officers of the law, whether appointed or elected, who are exercising police powers. They are susceptible to those standards. So in that situation, these standards kick in. It can be done.

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

I'll direct the next question to Laureen Whyte.

Your essential argument is education but no sanctions. Your company and the people you represent don't want to lead with liability, if you will; I think that was the phrase you were concerned with.

Tell me what you think about this statement:

...The development of policies and guidelines for measuring serious failure by a company to meet CSR standards, including findings by the Compliance Review Committee. In the event of a serious failure and when steps to bring the company into compliance have also failed, government support, financial and/or non-financial for the company should be withdrawn.

That's directly from the round table report. Do you agree with that statement?

[Laureen Whyte]

Perhaps I should clarify. I wasn't arguing that there should be no sanctions at all--