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In the interests of accuracy, the summaries of cases referred to under each Red Flag are based wherever possible on the available court documents or other public legal sources.

The contents and documents of this web site are intended for learning purposes only and do not constitute legal advice or opinion. www.redflags.info is not responsible for the content of external internet sites.

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The web of liability is expanding. The legal liabilities of a company operating internationally are not limited to the domestic laws in host countries. Laws at home and in third countries may also apply. This web site lists activities which should raise a 'red flag' of warning to companies of possible legal risks, and the need for urgent action.

The activities identified below are drawn from a review of existing international law and court cases in more than a dozen jurisdictions. Each red flag is hyperlinked to a summary of the relevant laws and a selected case or two. Additional resources for companies, governments, affected communities and researchers can be found here as well.

1.Expelling people from their communities

The threat or use of violence to force people out of their communities can be a crime under international law. A company may face liability if it has gained access to the site on which it operates, where it builds infrastructure, or where it explores for natural resources, through forced displacement.

A Japanese company was sued in Japan for its involvement in the alleged involuntary resettlement of people in Indonesia prior to the building of a dam. The case is now awaiting appeal after a lower court rejected the plaintiffs argument on the grounds that the harm was an internal affair within Indonesia.

2.Forcing people to work

Companies using people working against their will through the threat or use of violence may face liability. The use of such labour by a joint venture partner or state security forces may also pose a liability risk.

An American oil company was sued in the United States for the alleged use of forced labour by the Burmese military prior to the construction of an oil pipeline. The company challenged the claims in court. The parties ultimately reached an out of court settlement.

3. Handling questionable assets

Receiving funds which may have been associated with criminal activities exposes companies and individuals to legal risks. Holding, managing or hiding such funds, including funneling suspicious funds into legitimate financial channels, may result in prosecution and lawsuits.

In 2005, an American bank pled guilty in a US court and paid a $16 million fine to clear up criminal charges laid in relation to suspicious transactions involving the assets of Chilean dictator Augusto Pinochet.

4. Making illicit payments

Any significant off-the-book financial transactions may create legal liabilities under laws against corruption or bribery. Charges may be brought outside the country where the transaction takes place. Even where corruption is a common occurrence, a liability risk remains.

In 2003, an American company executive was charged in the US for allegedly arranging for $78 million in kickbacks to Kazakh officials in order to obtain oil and gas contracts in Kazakhstan. The accused is challenging the charges and the case is pending.

5. Engaging abusive security forces

The use of disproportionate force by government or private security forces acting on behalf of a company can create liabilities for the company itself. These liabilities may rise even where the actions of the security forces (e.g. killing, beating, abduction, rape) were neither ordered nor intended by the company. Legal risks may be greater where security forces have a history of abusive conduct.

A US oil company operating in Nigeria was sued in a US court after government soldiers engaged to provide security to the company allegedly shot demonstrators at an off-shore oil platform they had occupied and allegedly destroyed two villages following protests. The company challenged the claims and was acquitted by a jury.

6. Trading goods in violation of international sanctions

A company may be held liable for buying, selling or transporting products, commodities or assets originating from or going to a country, group or individual under international sanctions. The most common embargo is on arms, but increasingly sanctions are imposed on specific commodities, such as diamonds, timber, and on financial assets.

A court in the Netherlands temporarily imprisoned a Dutch businessman for alleged violations of UN sanctions against Liberia by arranging for arms imports. The conviction was overturned on appeal but the high court has ordered the appeal to be heard again.

7. Providing the means to kill

Businesses may face liabilities if they provide weapons or dual-use equipment to governments or armed groups who use those products to commit atrocities. This may be the case even where import and export regulations are fully respected.

A court in the Netherlands imprisoned a Dutch businessman for providing chemical components which the Iraqi military used against Kurdish civilians in 1988. The accused challenged the allegations. On appeal, the court confirmed the conviction, increasing the sentence to 17 years.

8. Allowing use of company assets for abuses

Company facilities and equipment used in the commission of international crimes can create liability for the company, even if it did not authorise or intend such use of those assets.

Indonesian villagers sued an American oil company in a US court, claiming they were tortured by Indonesian armed forces protecting the oil company’s facilities, and that come of the abuses took place on the company’s facilities. The company has challenged the claims. The case is pending.

9. Financing international crimes

Providing financial resources to those who commit international crimes may result in liability, if those resources substantially contribute to those crimes being committed. The risk of liability increases if the company persists in doing business with the violators, particularly once the violations are common knowledge.

A German businessmen who made contributions to the SS during World War II was convicted after the war of being an accessory to a criminal organisation. An indictment by an international tribunal is still pending against a Rwandan businessman connected to the Interahamwe during the 1994 genocide. In 2007, a US company pled guilty under US anti-terrorism laws for making a payment to a Colombian militia known to be a violent paramilitary organisation.

Red Flags now available as an iPhone app
This free iPhone app warns businesses about the risks of them being implicated in human rights abuses in high-risk areas. Download the app here: https://itunes.apple.com/gb/app/red-flags-liability-risks/id675208901?mt=8
Minera Aguilar Faces Allegations of Complicity
The mining company, which is currently owned by Glencore International AG, may come under scrutiny before an Argentinian court for collaborating in the unlawful detention and torture of 24 employees in 1976. The company allegedly provided a list of names, logistical information and vehicles to security forces of the Argentinian dictatorship which sought to silence oppositional voices of unionised workers.
Trafigura Executive Settles Out of Court
Oil trading group Trafigura has agreed to pay a €67,000 fine in return for the withdrawal of criminal charges against its co-founder and director, Claude Dauphin. He faced trial in the Netherlands for the alleged illegal export of hazardous waste to the Ivory Coast in 2006. In 2007, Trafigura paid €152 million in compensation to 30,000 claimants who had been affected by the toxic waste, but denied liability.
HudBay Former Head of Security Arrested
Guatemalan authorities have made the arrest amid allegations that company security personnel were involved in the killing of an indigenous anti-mine protester in 2009. Hudbay Minerals Inc. is currently facing three human rights-related lawsuits in Canada, alleging the involvement of private security forces under the company’s employ in the murder and rape of activists in Guatemala.
Qosmos Accused of Aiding Syria’s Regime
French prosecutors have opened a preliminary investigation into the alleged involvement of technology firm Qosmos in crimes committed by the regime of President Bashar Al-Assad. The probe follows human rights groups’ claims that Qosmos may have been supplying the Syrian government with surveillance equipment used against opposition forces.
The Lundin Group Under Investigation
The International Prosecution Chamber in Stockholm is investigating claims of company involvement in human rights abuses in Sudan between 1997 and 2003. The allegations posit that Sudanese troops forcefully displaced civilian population from Lundin’s areas of oil exploration.
General Motors Settles with Victims of Apartheid
The company was alleged to have produced parts of vehicles which were used by South Africa’s apartheid regime to raid homes and assassinate political activists. The harm suffered and claimed for related to human rights violations including murder, prolonged detention without trial, torture and rape. GM negotiated a ‘without prejudice’ settlement with the 25 claimants, agreeing to pay $1.5 million.
Criminal Complaint Filed Against Nestlé
The company and its senior management are accused of negligently failing to prevent the murder of a Colombian trade unionist in 2005. Luciano Romero was killed by paramilitaries after Nestlé’s local subsidiary, Cicolac, labelled him a guerrilla fighter. The complaint could set a legal precedent, as it is the first time that a Swiss company is facing prosecution in Switzerland for an alleged crime committed abroad.
Blackwater settles Iraqi killings case
Family members of Iraqi civilians killed by Blackwater security contractors in Baghdad in 2007 have reached a confidential settlement with the company’s successor, Academi. The lawsuit alleged responsibility for wrongful deaths as a result of Blackwater employees unjustifiably opening fire into a crowd and killing 17 civilians, including children.
Occidental Accused of Funding War Crimes
The complaint brought before a US court under the Alien Tort Claims Act alleges the company’s responsibility for the extrajudicial killing of three Colombian unionists in 2004. The deaths were inflicted by the Colombian military, to which Occidental provided monetary and material support as part of a $6.3 million security agreement.
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