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Why We Need to Work Toward Comprehensive Corporate Codes Enforceable Anywhere

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Canadian natural resource companies are among the world’s least socially responsible. Whether in mining, timber, or oil, they ravage the environment and intimidate or even kill local people standing in their way. A lot of their operations are in Latin America, where they work with “subsidiaries” to take care of the dirty work, shielding them from responsibility while eliminating problems. Up to now, the Canadian companies have not been held legally responsible for these actions. But a group of Guatemalan indigenous people are suing a company and there is hope that some sort of accountability may result.

Mrs. Caal has taken her case to the courts, but not in Guatemala, where Mayan villagers like her, illiterate and living in isolated areas, have had little legal success. She has filed in Canada, where her negligence suit, Caal v. Hudbay Mineral Inc., has sent shivers through the vast Canadian mining, oil and gas industry. More than 50 percent of the world’s publicly listed exploration and mining companies had headquarters in Canada in 2013, according to government statistics. Those 1,500 companies had an interest in some 8,000 properties in more than 100 countries around the world.

For decades, overseas subsidiaries have acted as a shield for extractive companies even while human rights advocates say they have chronicled a long history of misbehavior, including environmental damage, the violent submission of protesters and the forced evictions of indigenous people.

But Mrs. Caal’s negligence claim and those of 10 other women from this village who say they were gang-raped that day in 2007, as well as two other negligence claims against Hudbay, have already passed several significant legal hurdles — suggesting that companies based in Canada could face new scrutiny about their overseas operations in the future. In June, a ruling ordered Hudbay to turn over what Mrs. Caal’s lawyers expect will be thousands of pages of internal documents. Hudbay, which was not the owner of the mine at the time of the evictions, denies any wrongdoing.

Canadian law does not provide for huge American-style payoffs, even if the court rules in the plaintiff’s favor. But the Hudbay case is being watched carefully because it appears to offer a new legal pathway for those who say they have suffered at the hands of Canadian subsidiaries. A ruling in this case, experts say, could also help establish powerful guidelines for what constitutes acceptable corporate behavior.

“Up until now, we just have not had judicial decisions that help us consider these sorts of relationships,” said Sara Seck, an expert on corporate social responsibility at the Faculty of Law, Western University, in London, Ontario. “For once, the court is going to look at what really happened here, and that is important.”

The companies have fought off accountability legislation for years, seeking to continue their ability to do whatever they want to local people in order to get out the metal. They know what these subsidiaries do and they like it. The lawsuit is important and hopefully the new Canadian government can pass some legislation to create greater accountability. But it’s worth placing this in a broader context of the larger problems with globalization and with corporate accountability. First, this use of subsidiaries is part of the broader passion by corporations to shield themselves from responsibility while not giving up power or control. In this way, it’s just another, and dirtier, form of outsourcing, subcontracting, franchising, temp work, and other innovative ways corporations have figured out how to maximize profit while minimizing legal responsibility. By claiming they didn’t control the subsidiary, they can sow doubt about whether they should be held responsible. But of course that subsidiary didn’t act on its own. The Canadian mining companies know how Guatemalan paramilitary gangs, which is basically what this subsidiary is, have operated in indigenous villages for decades. That’s just common knowledge for anyone who knows the first thing about Central America.

Second, this case shows why we need to create more robust international law that holds corporations accountable for what happens with their operations no matter where they go and no matter how they set up their business. If a paramilitary operation is working for a Canadian mining company, the company and its executives need to be held legally accountable for everything that subsidiary does. If Walmart is contracting out with an apparel operator in Bangladesh, then Walmart must be legally accountable for all violations that take place in that sweatshop. If Hershey is contracting for chocolate from west Africa, then Hershey executives have to held legally accountable for any cacao they get that was picked by child labor. This sort of legal regime is the only way we can stop this global exploitation of the world’s poor by wealthy world corporations. Nations enact all sorts of legal regimes for labor law, environmental law, and import law. We already make all sorts of decisions about conditions to allow imports into the nation and how our companies may operate abroad. The U.S. for instance recently revised the Smoot-Hawley Tariff that closed the loophole allowing for prison-made products if there was no alternative to acquire that product, which had been blown open by companies operating in China and other nations. We used to allow American companies to harvest elephants for ivory and make all sorts of products with that. Now we don’t. These are choices we can make. The Canadians need to seriously crack down on its mining companies raping Guatemalans to move them off of land. Americans have just as much work to do. Articulating how we can stop these problems and tame corporations is the first part of the solution.

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