11
JUL
2014

Risk Becomes Reality When Companies Fail to Respect Human Rights

Recent headlines are a reminder to companies operating in complex environments that failure to respect human rights can result in legal, financial, and reputational liabilities. There are very real risks and costs associated with not fostering a company culture and management processes that ensure that personnel are adequately vetted and trained on human rights standards. Human rights policies and procedures need to be endorsed and supported at the highest levels of management to be effective.

This is a lesson CACI International has had to learn as it continues to fight allegations that its personnel were involved in the torture at Abu Ghraib. On June 30, the U.S. federal court of appeals for the fourth circuit ruled that a civil suit against CACI could proceed. At the time the torture and other rights abuses occurred, CACI was providing interrogation and other services at Abu Ghraib. CACI has been staunchly fighting the suit for years which was brought on behalf of four Iraqis by the Center for Constitutional Rights.

The court of appeals’ ruling is significant for what it means for other companies accused of complicity in human rights abuses that occur overseas. The civil suit was brought using the Alien Tort Statute, which allows foreign nationals to bring suit in U.S. courts for gross human rights violations occurring outside of the United States. Last April in Kiobel v. Shell/Royal Dutch Petroleum, the Supreme Court ruled that “there is a presumption against extraterritorial application of the ATS, and that presumption can be overcome when the matter ‘touches and concerns’ the United States with ‘sufficient force’.” The appeals court ruling overturned a previous district court ruling that had foreclosed the possibility of a lawsuit because of lack of jurisdiction based on its interpretation of Kiobel. The court of appeals found that human rights abuses committed by a U.S. corporation under a U.S. government contract at a U.S.-controlled prison does “touch and concern” the United States sufficiently to allow the case to proceed.

Another company, Titan, now called Engility Holdings, which had provided translation services at Abu Ghraib, settled a lawsuit last year for $5.28 million that had accused its personnel of complicity in rights abuses.

The company formerly known as Blackwater is also back in the headlines. The company no longer exists after having changed its name to Xe, and then re-forming as Academi under new ownership. Academi recently merged with Triple Canopy under the ownership of Constellis Holdings, but will continue to operate as a separate entity. Despite the fact that Blackwater no longer exists, the company’s poor human rights track record continues to haunt Academi, which is in the position of having to frequently issue press releases distancing itself from Blackwater. Last month, the trial against four Blackwater guards began for their involvement in the shootings at Nisour Square in 2007 that left 14 dead and 18 others wounded. One guard is charged with first-degree murder and the other three face charges of voluntary manslaughter, attempted manslaughter, and gun charges. In 2010, Xe had settled a series of seven civil lawsuits brought against the company by families of victims who had been shoot by Blackwater guards at Nisour Square and elsewhere. The New York Times broke a story on June 29 that the State Department had begun an investigation of Blackwater’s operations in Iraq just weeks before Nisour Square, but that the investigation was dropped after the company’s top manager in Iraq allegedly issued a death threat against the lead investigator.

The failure of CACI, Titan, and Blackwater personnel to respect human rights have created real legal, financial, and reputational liabilities – for the personnel and for the companies. The human rights risks are high for companies operating in complex environments. For this reason, it is imperative that companies ensure that they embed respect for human rights throughout their global operations. Finally, while companies face liabilities if they do not ensure that their personnel respect human rights, so too do those contracting with companies when they do not exercise adequate oversight. State Department Under Secretary of Management Patrick Kennedy currently is facing Congressional scrutiny for inadequate contract management in the wake of the New York Times story. It is equally imperative that the clients of private security companies demand that their providers demonstrate respect for human rights before entering into contracts with them.

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