Promoting Responsible Business Practice

We work closely with the Special Representative of the UN Secretary-General

Professor John Ruggie, who is tasked with examining the issue of corporate
responsibility and accountability for human rights. Professor Ruggie has
developed a policy framework known as Protect, Respect and Remedy, which
proposes the state’s duty to protect against human rights abuses by third
parties; the corporate responsibility to respect human rights; and the need for
greater access to effective remedies by victims of human rights abuses by
corporate entities. Professor Ruggie is currently preparing a set of guiding
principles on business and human rights. We believe that these should offer
a sure foundation for states and businesses to improve their human rights
performance and we contributed to the public consultation on the draft
guidelines during January 2011. We are keen to see the guidelines adopted
by the Human Rights Council in June 2011.

OECD Guidelines for Multinational Enterprises

The Organisation for Economic Cooperation and Development (OECD)
Guidelines for Multinational Enterprises provide voluntary principles and
standards of corporate behaviour in areas such as human rights, the supply
chain, employment and industrial relations, the environment, and combating
bribery. Governments that adhere to the guidelines are committed to
promoting compliance by businesses wherever they are operating, as well as
raising awareness of the guidelines and implementing the complaints
procedure through the setting up of National Contact Points.

In 2010, the UK National Contact Point considered five complaints about the
behaviour of UK and overseas businesses. Of these, one related to a trade
union dispute in India, which was successfully resolved through the UK
National Contact Point’s sponsored professional mediation. Three of the
complaints were related to business activity in the UK, and the UK National
Contact Point concluded that none of the three companies involved had
breached the combating bribery chapter of the guidelines. The National
Contact Point also rejected the final complaint, related to activity in
Bangladesh, at the initial assessment stage for lack of sufficient supporting
evidence. In addition, the UK National Contact Point published its first “follow
up statement” to a complaint against a company previously found to have
breached the guidelines. In September 2009, the UK National Contact Point
found that a UK company operating in India had breached various chapters,
including the human rights provision, of the guidelines. The “follow up
statement” reflected the company’s and the complainant’s responses on the
implementation of the recommendations made by the UK National Contact
Point to the company.

Negotiations are currently underway in the OECD to update the guidelines.

We want to see the guidelines expanded to include practical guidance to
assist companies respect human rights, including in their supply chain, and to
improve the effectiveness of National Contact Points and of the complaints
procedure across the OECD.

Voluntary Principles on Security and Human Rights

The Voluntary Principles on Security and Human Rights were set up in 2000
by the FCO and US State Department to provide guidance to companies in
the extractive sector on responsible business practices. The Voluntary
Principles advise companies how to engage with public and private security
providers, and how they should conduct effective risk assessments so as to
ensure their security operations do not lead to human rights abuses or
exacerbate conflict. The Voluntary Principles are supported by seven
governments; 18 multinational oil, gas and mining companies; and nine
NGOs, who meet annually to share best practice and monitor adherence to
the principles.

In March, the US assumed the chair of the Voluntary Principles. We

continued to play a leading role in supporting reforms to the Voluntary
Principles’ governance, administrative and financial arrangements. We also
provided increased funding to the Voluntary Principles Secretariat for
2010/11. We expect many of these reforms to be adopted at the March 2011
Plenary in Washington DC. The reforms will improve the effectiveness of the
Voluntary Principles. This should in turn help attract new interest and
membership, which should ensure a broader reach for the Voluntary
Principles and greater protection from the risk of abuse for people living in
fragile or conflict-affected states.

In 2010 we encouraged a number of governments, including those of Ghana,

Peru, the Democratic Republic of the Congo, Indonesia and Nigeria, to join
the Voluntary Principles. In Indonesia the Embassy supported the efforts of a
local NGO, the Indonesia Centre for Ethics, to raise awareness about the
Voluntary Principles with senior government officials, police officers and large
international companies. The Embassy has also funded a human rights
training package which will be provided to Indonesian Voluntary Principles
partners, including the security forces, industry, local government
administration and NGOs.

In the DRC, embassy officials participated in discussions with companies,

governments and civil society about implementing the Voluntary Principles in
the DRC, as well as the range of security and human rights challenges facing
the mining sector. Participants agreed to try to persuade the DRC
government to join the Voluntary Principles.

In Peru, embassy officials participated in a number of workshops and

meetings with Peruvian government officials from the ministries of mine and
energy, defence, and environment to discuss Peruvian membership of the
Voluntary Principles. We will continue to encourage the government of Peru
to join the Voluntary Principles.

The Kimberley Process

The Kimberley Process Certification Scheme was established in 2002 to
combat the trade in rough diamonds to finance armed conflicts, primarily in
Africa. With 75 participating countries the Kimberley Process covers an
estimated 99.8% of the global production of rough diamonds.
The UK Government Diamond Office and the UK Border Agency and
Customs are responsible for preventing illicit diamonds entering or leaving the
UK. In 2010 authorities seized a number of shipments of rough diamonds
deemed non-compliant with the Kimberley Process. The Government
Diamond Office also works with the UK’s rough diamond industry to provide
expert advice and oversight of industry compliance with Kimberley Process
minimum standards.

Experts estimate that since the Kimberley Process was established “conflict
diamonds” have reduced from 15% to less than 1% of the global trade in
rough diamonds. But significant challenges remain, particularly in certain
West African countries and Zimbabwe.

In Zimbabwe, there were continued allegations of violence by Zimbabwean

security forces at diamond mining sites in the Marange region in 2010. The
UK has played an active role within the EU where we have consistently
argued for a robust EU response to Zimbabwe’s failure to comply with
Kimberley Process minimum standards. We continued our ongoing dialogue
with NGOs and the rough diamond industry to encourage Zimbabwe to
demonstrate concrete progress towards full Kimberley Process compliance
and to end the violence in the Marange diamond fields. Through the EU we
funded an independent Kimberley Process monitor to assess Zimbabwean
progress towards compliance. At an extraordinary meeting in St Petersburg
in July, we played a key role in helping the Kimberley Process negotiate an
agreement with Zimbabwe that imposed continued restrictions on exports, set
out clear benchmarks for progress and allowed for the setting up of a local
civil society monitor. A Kimberley Process expert review mission to
Zimbabwe in August reported that progress had been made but that much
remained to be done. Exports of diamonds from Zimbabwe’s Marange
diamond fields cannot take place until a resolution of Kimberley Process
negotiations with Zimbabwe. We will continue to seek a robust solution to the
impasse that encourages Zimbabwe to progress the Joint Work Plan agreed
at the 2009 Plenary.
Bribery and corruption
Bribery and corruption take money out of the hands of ordinary people, add to
costs, and result in poor-quality, poor-value infrastructure. They also threaten
the integrity of markets, undermine fair competition, distort resource
allocation, destroy public trust and undermine the rule of law. They are a
severe impediment to economic growth and a significant challenge for
developed, emerging and developing countries.

The Government is committed to promoting responsible corporate behaviour

amongst UK companies operating or considering operating overseas. We
expect British businesses, regardless of whether they receive UK Government
assistance or guidance, to respect local and UK laws in all their dealings. Our
embassies and high commissions provide information and guidance to UK
companies to enable them to do so. UK officials overseas are also required
to report allegations of UK involvement in foreign bribery to the Serious Fraud
Office.

A new Bribery Act received Royal Assent on 8 April, and will create a modern,
comprehensive scheme of bribery offences to replace the present complex
and outdated legislation. This will help build on the UK's good reputation. UK
companies are not immune to the challenges of overseas corruption but have
been assessed by Transparency International's 2008 Bribe Payers' Index as
less likely to pay bribes than many of their G8 competitors. The UK is also
playing a leading role in the international fight against bribery and corruption,
including work through the G20 to help China and Russia to hold their
companies to account. Despite having been criticised in the past for weak
bribery legislation, the UK has convicted a number of companies and
individuals for overseas corruption and was recently assessed by
Transparency International as one of the few active enforcers in the OECD
Working Group on Bribery. The Bribery Act is a clear signal of our
commitment to ensure that the fight against bribery and corruption supports
UK companies.
We are working to tackle international corruption and improve governance
through the G20, the OECD and the UN. We support the G20 Anti-Corruption
Action Plan, adopted by all G20 leaders in 2010, to encourage the
governments of emerging market economies to criminalise and prosecute
commercial bribery of foreign public officials by companies from those
countries. We also support the OECD Anti-Bribery Convention which
establishes legally binding standards to criminalise the bribery of foreign
public officials in international business transactions and provides for related
measures to make this effective. The OECD convention is the only
international anti-corruption instrument focused on the supply side of the
bribery transaction.

We also provide bilateral support to governments in their efforts to manage

corruption. In 2010 this included:

 working with the Ghana Anti-Corruption Coalition to produce a

guide to whistleblowing in Ghana;
 working with the government of Kenya to improve financial
management to address corruption;
 joint-funding, with DFID, Sierra Leone’s Anti-Corruption
Commission which successfully indicted and convicted two high-
profile cabinet ministers on corruption charges;
 playing an instrumental role in the creation of the G20 Working
Group on Bribery which commits G20 members to supporting a
common approach towards achieving an effective global anti-
corruption regime; showing collective leadership on bribery and
corruption; and engaging directly with the private sector in
developing and implementing practices to support a clean business
environment;
 running anti-bribery seminars and round tables at a number of our
overseas posts, including Moscow, Kuala Lumpur, Beirut and
Luanda, for British and local companies on the implications of the
Bribery Act; and
  providing regularly updated information to businesses on bribery
and corruption risks, via the Overseas Security Information for
Business service, which enabled companies to better inform
themselves about the risks posed by bribery in countries in which
they operate or may wish to operate.

Arms export licensing

The Government is committed to maintaining a responsible defence industry.
All arms export licences are rigorously examined on a case-by-case basis
under the Consolidated EU and National Export Licensing Criteria. The
criteria reflect an EU Common Position and thus ensure consistency across
the EU in the control of exports of the military technology and equipment listed
in the agreed EU Common Military List.

Consideration of Criterion 2 of the eight Consolidated EU and National Export

Licensing Criteria – the respect for human rights and fundamental freedoms in
the destination country – is mandatory for all export licence applications. If we
believe there is a clear risk that the proposed export might be used for internal
repression, the Government will not issue a licence. The UK’s economic,
financial and commercial interests are only taken into consideration if the
decision under the criteria is not otherwise clear-cut. If there is no basis under
the criteria to approve or refuse an application, consideration of other factors
is not relevant; in other words, these factors do not create a self-standing
basis for approval or refusal. Only when a decision is marginal do they add
weight.