People & Power
Banana giant Chiquita is one of an increasing number of large multinationals on trial
Corporations on Trial is a five-part series charting the rapidly growing number of law suits brought against multi-national corporations and reflects a growing anxiety about the power and influence of big business.
People & Power presenter and reporter, Juliana Ruhfus, explains the reasons behind the series and the importance of exposing the use and abuse of coporate power.
What has led to the recent increase in legal actionagainst multinational corporations?
One of the key changes is the coming of age of environmental and human rights activism.
Even though mass protests, boycotts, blockades and other forms of 20th century protest continue, there has also been a realisation that moral pressure and direct action alone is often not enough to get results.
How does the transnational nature of huge corporations give them the liberty to operate outside effective domestic regulations and why have governments not got together to address this issue more seriously?
Many of the lawyers we have spoken to argue that business has globalised but that the law has failed to keep up.
This is partly due to the fact that it is the nature of business to reinvent itself continuously while the law is more likely to be reactive, evolving as cases go to court.
But many activists also believe that governments ignore the issue because it simply is not in their interests to have tighter regulation.
Multinationals control huge sums of money – revenues that sometimes exceed those of entire countries.
They often tell politicians that tougher “anti-business” laws would lead to economic decline and higher unemployment.
This is particularly so, right now, when the world’s economy is in the midst of a recession.
Activists in East Java say the government is blocking investigations [GETTY]
In addition the close links that exist between economic and political elites inevitably lead to accusations of influence peddling and backroom deals.
For example, one of the legal actions we feature in our series involves an Indonesian gas company accused of having triggered the eruption of a mud volcano.
This business, Lapindo Brantas, is owned by the family of Abudurizal Bakrie, one of the richest men in Indonesia and the country’s minister for Social Welfare.
Bakrie’s company insist that the mudflow was caused by an earthquake and not the drilling.
But activists and lawyers who are seeking compensation for 40,000 victims of the eruption are claiming that the Indonesian government and courts are avoiding a real investigation of the causes because of Bakrie’s political and economic clout.
Why is it that countries where the doctrines of corporate law and the associated legal procedures are not well developed, are places where multinational corporations can sometimes act with impunity?
This is probably a problem which goes beyond the law.
Many of the worst abuses take place in the world’s poorest countries. These are often countries which generate most of their income from natural resource exploitation rather than manufacturing or services.
They have the least educated and least empowered populations as well as the fiercest concentration of economic and political power in the hands of small elites.
Consequently they usually post very high scores on corruption indices. This is a bad combination and easily exploited by deal-makers inside and outside the country.
Why is there such a big number of cases involving US companies?
Companies such as Chiquita are being sued for allegations outside the US [GALLO/GETTY]
This is not necessarily due to the fact that US companies behave worse than others.
Indeed it can be argued that it is because the US has legislation which allows lawyers to bring such cases in the first place.
For example the Alien Tort Claims Act (ATCA) allows cases to be brought in the US even if they involve US-registered companies committing abuses in other countries.
ATCA is a centuries old law which was originally created to bring pirates to justice when operating outside US waters.
Ironically it is now being used by lawyers to bring claims against US companies such as the Chiquita Brands fruit organisation – currently being sued for its involvement with illegal Colombian paramilitary organisations.
What other laws are used?
Lawyers are trying all sorts of legal strategies. They freely admit that it is a trial and error process – if one case does not make it into the courts they say they learn from the process and devise a new strategy.
For example, there have been a number of global warming related claims which have all been turned down by US courts.
Until recently they have declined to rule on climate change issues on the basis that such matters are the basis of political rather than legal disagreement.
So, in the Alaskan case featured in our series, we tell of the Native Alaskan plaintiffs whose village is disappearing into the sea due to global warming.
They teamed up with Steve Susman, a former defence lawyer for Phillip Morris, one of the world’s largest tobacco companies.
Susman is bringing is a “conspiracy charge”, alleging that oil and energy giants such as ExxonMobil, Chevron, Texaco and others funded “false science” projects which question the extent to which global warming is a consequence of human activity and therefore sowing doubt in the public conscience about the issue.
Alaska village is slowly overtaken by rising sea-level due to global warming [GETTY]
This, says Susman, has delayed an effective US response to global warming and has allowed the problem to worsen dramatically.
Lawyers for the the oil and energy corporations think otherwise and are fighting to get the case quashed before it reaches court.
But if it is heard, the implications and precedents it would set are very significant.
A similar strategy is being employed by the Palestinian villagers of Bil’in, which sits in the occupied territories and is divided by the separation wall being built by the Israelis.
Although Israeli courts have declared the wall illegal and ruled it should be dismantled, little has changed on the ground; Israeli settlements have been built on Palestinian land and the barrier shows no signs of coming down.
Disillusioned with the Israeli judicial process, the Bil’in claimants realised that one of the construction companies that is building the settlements is headquartered in Canada
Upon realising that Canada has incorporated the Geneva Conventions into its national laws it was only a small step to bring an international human rights law case in Canada against the construction companies.
Who usually gets to sue corporations?
In the US especially you find a handful of lawyers who have expertise in these cases, usually those who take on group actions or class actions on behalf of large groups of victims.
But increasingly cases are now also brought under human rights law too.
There needs to be a good match between lawyers and claimantss. Some of the cases are real David and Goliath stories where the claimants are ordinary people -sometimes barely literate – who have taken the brave step of going on record against powerful multinationals
Chiquita admitted to paying $1.7 million to Colombian paramilitaries. What was this money being used for and how could the law suit brought against Chiquita pave the way for other companies to be investigated?
Between 1997 and 2004 Chiquita Brands International made payments to paramilitaries. Some of these were recorded as fees for “security” in their books.
These paramilitaries are now held responsible for the killings of tens of thousands of Colombians during the same period.
Chiquita claims that it was being blackmailed by paramilitaries who threatened to kill Chiquita employees and, therefore, the company had no choice but to pay.
The US authorities did not accept this explanation.
They said that since the paramilitaries were listed in 2001 as a terrorist organisation by the US government, Chiquita should be held responsible for making illicit payments to a terrorist organisation.
This case is particularly interesting for a couple of reasons.
Firstly, since Chiquita Brands admitted to the payments in a plea agreement and was fined $25 million by the US government, a number of US and Colombian lawyers are now bringing civil cases for compensation on behalf of family members of those who were killed.
Secondly because the Colombian Peace and Justice commission is ongoing and former paramilitaries are providing testimony in return for an amnesty or lighter sentence, some of these testimonies are now implicating other multinationals.
In April this year a case was filed against Dole, another fruit producing corporation – by the same lawyers who are bringing a case against Chiquita.
Why are corporations targeted in civil actions as opposed to criminal ones?
Many agreements between lawyers and claimants in civil law suits are carried out on a “no win, no fee” basis.
There are less financial risks in pursuing civil suits against companies
It is clearly a gamble, but if the plaintiffs are successful it could mean huge profits for lawyers, up to tens of millions of dollars in some cases.
Because they will get a pre-determined percentage of any compensation awarded to their clients, there is a further incentive to take the case.
The other reason is that criminal cases have a much higher evidence threshold and are much tougher to win.
However, in the case of Chiquita, Colombian lawyers are working on a criminal case against the Chiquita board members who authorised payments to paramilitaries.
Since Chiquita admitted making such payments in a US federal law case, the Colombian lawyers are calling for extradition of the American CEO’s to stand trial in Colombia.
They argue that since Colombia has long-extradited drug traffickers to the US it is now time for the US to oblige under the same extradition treaty.
Do the media play a vital role?
A huge role. Large corporations are concerned about their image and negative publicity arising from legal action can seriously damage reputations and adversely affect the profitability of their business.
A couple of lawyers we spoke to explained that they have “one big goal” and “many small goals along the way”.
The big goal, of course, is to win the case. The small goals vary.
Publicity for the victims’ causes or using the courtroom as a platform for freedom of speech where opinions can be expressed which would normally be libelous, this is where the media comes in.
How can corporations be made to abide by international law and be directly made accountable to those they harm?
Legal actions such as these are a step in the right direction.
They may have a cumulative, roller-coaster effect, building a powerful public consensus around the notion that companies should be held to account and that their influence should be checked.
This in turn could force business to act more responsibly, to correct past wrongs and to acknowledge that profit is not the sole measure of success.
But in the end, it may all come down to self interest.
Corporations may just realise that if they do not behave ethically they could be stripped of their revenues by the courts and have their businesses broken on the wheel of adverse public opinion.
And if there iss one thing large corporations understand and fear, it is the prospect of losing money.
Why did People & Power decide to feature a special on this topic and what do you hope to reach?
Corporations on Trial charts how activism has moved into the 21st century.
We speak to the lawyers who are on the legal frontline and are exploring strategies to create precedent cases.
Their aim is not only at getting compensation for their clients, but also at changing corporate behavior on a global scale.
If only one of the cases we feature is won by the claimants – or settled without going to court – this could have far reaching implications for the way other companies operate around the world.
People & Power’s special series of films, Corporations on Trial, begins on Wednesday May 20 with Dumping Ground, an investigation into how ordinary residents of the Ivory Coast are taking on one of the world’s largest oil traders.