Burma: Joint
Letter to President Obama on Reporting Requirements
August 12, 2013
The
Honorable Mr. Barack Obama
President
of the United States of America
The
White House
1600
Pennsylvania Ave, NW
Washington,
DC 20500
Dear President Obama,
We are writing to express our concerns regarding the
first public reports from U.S. companies under the Burma Responsible Investment
Reporting Requirements (“Reporting Requirements”). We commend the companies
that have complied with the July deadline for
timely reporting but are concerned that the reports exhibit serious
informational gaps. We call on your Administration to correct these oversights
and avoid setting a precedent allowing companies to avoid forthright
disclosures in future reports.
The Reporting Requirements were intended to help the U.S.
Government and U.S. businesses manage the impacts of investment and safeguard
human rights in Burma, as well as to provide the transparency that civil
society groups need in order to promote responsible investment. However, the
reports cannot assist in these efforts if companies interpret the drafting
language to avoid making full disclosures. In order to ensure that the
Reporting Requirements fulfill their intended purposes, we advise your
Administration to make clear that companies are expected to:
· Assume responsibility for due diligence on the impacts
of their investments,
regardless of whether they manage those investments in a manner that is
“passive” or hands-on;
· Disclose their Burmese partners; and
· Fully comply with the Reporting Requirements by
submitting summaries or copies of their policies and procedures under Question
5 on Human Rights, Worker Rights, Anti-Corruption, and Environmental Policies
and Procedures, Question 6 on Arrangements with Security Service Providers, and
Question 7 on Property Acquisitions.
Application of due diligence responsibilities to passive
investments
The U.S. investment sanctions – of which the Reporting
Requirements are an integral part – are predicated on the understanding that
investments in Burma may exacerbate human rights abuses, conflict, and
corruption and could frustrate U.S. foreign policy interests. They make no
distinction between the character of investments; rather, they apply equally to
hands-off ("passive") investors and those actively engaged in
managing their investments. Yet in three separate reports, two related investment
funds, Capital Bank and Trust Company and Capital International Inc.
(collectively, “Capital”) declined to report on their human rights, worker
rights, anti-corruption, and environmental policies and procedures,
arrangements with security service providers, property acquisition practices,
payments to the Burmese government, or even the general nature of their
investments in Burma. In fact, Capital provided no detail about the extent and
nature of these investments, and justified its failure to report on the grounds
that its investments in Yoma Strategic Holdings, Ltd. (“Yoma”) are merely
“passive.”
The fact that Capital believes it has no responsibility
to manage the impacts of its investments is especially disturbing because Yoma
has operations in plantation agriculture and real estate, sectors that are
notorious for land confiscation, labor abuse, and environmental destruction. If
all investment funds with a “passive” relationship to their Burmese investment
targets were to take the same position, U.S. capital could flood high-risk
sectors – such as extractives, plantation agriculture, and infrastructure
development – without providing the transparency needed to ensure that these
investments are not in fact harming U.S. foreign policy interests.
Your Administration should clarify that all investors
in Burma are expected to report thoroughly on their activities, even
self-declared “passive” investors. “Passive” investors – just like handson
investors – should explain in detail the nature and scope of their investment
and the due diligence, if any, they have conducted. International standards
concerning responsible corporate investment, including the OECD Guidelines for
Multinational Enterprises, which the U.S. has endorsed, demand human rights due
diligence from all companies that operate internationally, and apply equally to
active and passive investors.
Several national governments and the UN High Commissioner
for Human Rights have concluded that all investors – even minority investors –
should use their leverage with business partners to prevent and address human
rights abuses uncovered as a result of thorough due diligence. The
Administration must not allow the first public reports to establish the
precedent that companies may skirt detailed reporting by declaring their
investments “passive,” thus negating the very purpose of the Reporting
Requirements.
Identification of Burmese partners
For the Reporting Requirements to incentivize positive,
responsible investment behavior, companies must disclose the names of their
local partners, subsidiaries, and subcontractors. This information, if reported
publicly, can empower your Administration and civil society groups to have more
productive exchanges with companies, thereby assisting U.S. investors to
mitigate the adverse impacts of their investments. However, companies are
interpreting the Reporting Requirements as if they did not contemplate this
outcome. Hercules Offshore, a company involved in offshore oil and gas
activities that submitted the most detailed of the initial five reports,
explained that its due diligence procedures included its local suppliers and
subcontractors. However, and despite the fact that the Reporting Requirements
ask companies to disclose the names of all companies covered by their reports,
Hercules declined to identify its local supplier.
Your Administration should insist that companies publicly
identify their Burmese partners in order to support civil society monitoring of
U.S. investments. Due diligence necessarily covers suppliers, purchasers, and
contractors, particularly in Burma, where corruption and human rights risks
remain high. Neither civil society organizations nor the U.S. Government can
monitor such risks unless investors disclose the identities of these related
entities.
Publication of policies and procedures
In order to allow civil society organizations and the
U.S. Government to trouble-shoot U.S. companies’ investment relationships and
manage problems before they occur, investors have been required to provide
concise summaries or copies of their policies and procedures related to human
rights, the environment, labor, land acquisition, and corruption. If companies’
procedures are vague or inadequate, they may run an unreasonably high risk of
contributing to human rights and other abuses in Burma. Moreover, without
adequate information about these policies and procedures, constructive
engagement with individual investors becomes much more difficult.
The report submitted by Crowley Marine Services does not
fulfill this requirement. Rather, Crowley states only that the company
“maintains” policies, without explaining, describing, or attaching them to the
report. Your Administration should require Crowley to submit summaries or
copies of relevant policies and procedures. Otherwise, Crowley's report may set
a negative precedent that the Reporting Requirements can be ignored without
consequence.
Tracking reporting obligations
Finally, our organizations are interested in the extent
to which the Administration is tracking U.S. companies’ investments in Burma in
order to ensure reporting when they reach the $500,000 threshold. Has the State
Department received all the reports it expected to receive to date, and how
will it proceed if it suspects that a report has been unlawfully withheld? We
believe the U.S. Government should have an established mechanism to monitor the
overall level of U.S. investment in Burma and to require investors to submit
reports. Investors should not be able to conceal their investments.
Thank you for your consideration of these
recommendations. Our organizations are pleased that the Reporting Requirements
have gone into effect, and we hope that your Administration will take the
necessary steps to establish a precedent of thorough and high-quality reporting
by U.S. companies. As always, we are grateful for the continued engagement by
senior leadership in your Administration on these critical issues.
Signed
by:
Access
Actions
Birmanie – Belgium
AFL-CIO
Altsean-Burma
Burma
Campaign UK
Burma
Environmental Working Group
Burma
Partnership
EarthRights
International
Fortify
Rights
Freedom
House
Global
Witness
Human
Rights Foundation of Monland
Human
Rights Watch
Institute
for Asian Democracy
International
Labor Rights Forum
International
Trade Union Confederation
Investors
Against Genocide
Jubilee
USA Network
Karen
Human Rights Group
Karen
Environmental and Social Action Network
Karenni
Civil Society Network
Land
Core Group of the Food Security Working Group
Orion
Strategies
Physicians
for Human Rights
Responsible
Sourcing Network, a project of As You Sow
United
to End Genocide
US
Campaign for Burma
CC:
John
Kerry, U.S. Secretary of State
Jacob
Lew, U.S. Secretary of Treasury
Susan
Rice, National Security Advisor
Ben
Rhodes, Deputy National Security Adviser for Strategic Communications
Uzra
Zeya, Acting Assistant Secretary of State, Bureau of Democracy,
Human
Rights and Labor, Department of State
Daniel
Russel, Assistant Secretary of State, Bureau of East Asia and the
Pacific,
Department of State
Cheryl
Hesse, Capital Guardian Emerging Markets DC Master Fund, Emerging
Markets
Growth Fund, Inc., and Capital Guardian Emerging Markets Restricted
Equity
Fund for Tax-Exempt Trusts
Charles
Lestage, Hercules Offshore, Inc.
Mark Miller, Crowley
Marine Services, Inc.
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