By Nathan Willis, Southern Cross University
As ‘corporate colonisation’ extends its reach and grip over land, natural resources and ways of life in some of the poorest places on our planet, lawyers and academics along with grassroots activists are casting a critical eye over existing corporate accountability mechanisms and searching for new ways to ensure corporations based in wealthy countries take responsibility for their actions abroad.
Writing for this forum, Cynthia Banham considered developments in the Kiobel case, which limited the application of the US Alien Torts Statute (ATS) in respect of actions occurring outside the US. Banham noted that: ‘[d]epending on one’s point of view, the Kiobel decision represents either the gutting of a critical avenue for accountability for human rights violations, or it’s the welcome end to a popular but unworkable idea that US courts can be used to police human rights violations around the world.’
Building on Banham’s contribution, Jonathan Kolieb, considered the potential use of the Australian Criminal Code (Cth) to hold companies accountable for malfeasance abroad. Kolieb highlighted the need for political pressure to be applied to the Attorney General in order for such actions to proceed.
Here, I want to suggest another possible avenue for responding to criminal or otherwise unconscionable actions by Australian corporations operating overseas.
It may be fruitful to consider the role of the Corporations Act 2001 (Cth) and the directors’ duties contained therein. An immediate question arises: to what extent should company directors be held personally accountable in cases in which the corporation that they steward profits from serious human rights violations?
Section 181 of the Corporations Act makes plain the requirement for directors to act in the best interests of the corporation. This provision has been the subject of debate concerning whether directors’ duties should extend beyond shareholders to encompass all stakeholders, including those living in other countries. There has been some consideration of this issue from the bench, with judges such as Michael Kirby suggesting that ‘a national companies law today must operate in a regional and global context that inevitably has an impact on corporate governance.’
My thoughts on the topic are informed by my own research in Rakhine State, Myanmar, where the following facts are notable:
1. the Australian company, Woodside Petroleum, has an interest in gas reserves off the coast of Rakhine state;
2. a gas and oil pipeline has been laid from that location to Yunnan province in China;
3. gas has begun flowing through this pipeline;
4. land has been confiscated from local communities in order to facilitate this process; and
5. Rohingya refugees are fleeing the region. While the violence that they are fleeing is traced by most commentators to ethnic and religious conflicts, these conflicts have been fuelled by the land confiscations just mentioned. A further fact worth noting is that many of these refugees are now incarcerated in detention centres such as Manus Island that are run under agreement with the Australian government and at great expense to the Australian people.
Are we observing criminal behaviour, or activity that constitutes a serious breach of human rights, in this case? While many individuals along with corporate interests are profiting from the gas and oil pipeline that runs through Rakhine State, it is premature at this point to conclude that their investment in Myanmar in itself amounts to criminal behaviour.
It remains open to us to question the morality of Australia’s legislative framework for corporate governance. At the moment, it provides a form of risk mitigation for investors by allowing the creation of legal entities (corporations) that are not accountable for their activities abroad, including the impact of those activities on human rights. While it would be contentious for corporate interests to argue explicitly that Australian law should provide sanction for profit generating activities that lead, whether directly or indirectly, to serious human rights violations, this appears to reflect the current situation. Arguments opposing legislative reform are likely to follow a predictable course: if Australian companies are not allowed to profit from ventures that impact on human rights abroad, then other countries’ companies will simply step into the breach. If, on the other hand, Australian companies are allowed to invest in overseas projects that impact on human rights, there is a greater likelihood for just outcomes due to Australia’s commitment to a ‘fair go’ and its history of corporate social responsibility. And yet, is it ever conscionable to profit from human rights violations? Surely not.
It is time to seriously consider reforms to s.181 of the Corporations Act. Those responsible for corporate entities must be held to account for their companies’ actions abroad, with due regard for all stakeholders.