UNethical - Village Magazine

7 6 April 2016

INTERNATIONAL

ost right-thinking Irish people think

the UN is progressive, scrupulous

and transparent. They may think

the Security Council is compro

mised by geopolitics but the

intiatives emanating from the General Assembly

are benign. All that worthy peace-keeping, pro-

gressive resolutions ending wars. Climate.

Children. Education.

We need then to take at look at the world's

largest corporate sustainability initiative, the

UN-managed Global Compact: “a call to compa-

nies to align strategies and operations with

universal principles on human rights, labour,

environment and anti-corruption, and take

actions that advance societal goals”.

The self-ﬁnancing UN Global Compact has

attracted 13000 corporate participants and other

stakeholders in over 170 countries (including

Smurﬁt Kappa and Business in the Community

in Ireland) with two objectives: "to mainstream

[10 worthy] principles in business activities

around the world" and "to catalyse actions in

support of broader UN goals, such as the Millen-

nium Development Goals (MDGs) and the

global Sustainable Development Goals (SDGs),

or Global Goals, which include a historic pledge

in September 2015, to end poverty everywhere.

Impressively, this is no empty commitment, you

might think: companies have been delisted from

the Global Compact because they did not comply

with the obligation to report on progress, and the

Compact has introduced a differentiation pro-

gramme allowing businesses to distinguish

themselves by going further than the minimum

requirements.

The UN Global Compact’s Ten Principles are

derived from: the Universal Declaration of Human

Rights, the International Labour Organisation’s

Declaration on Fundamental Principles and

Rights at Work, the Rio Declaration on Environ-

ment and Development, and the United Nations

Convention Against Corruption.

The Global Compact, however, is not all it

appears. Although it can be seen as a reaction

to climate change, the Enron debacle and the

global anti-capitalism movement, it is also the

creature of the business-fetishising wing of the

UN, itself generated by some of the most right-

wing inﬂuences in international affairs and their

longstanding detestation of the UN.

For example the Charles Koch-funded Cato

Institute, a leading neo-liberal/libertarian think-

tank, and the Heritage Foundation were

assiduous critics of the UN in the 1990s. They

adopted a similar ideological strategy, empha-

sising the primacy of unfettered market freedoms

and calling for unilateral US funding cuts. The

Cato 1997 Handbook for Congress described the

UN as "a miasma of corruption, beset by

inefﬁciency, Kafkaesque bureaucracy and mis-

conceived programs".

Reﬂecting this, the Reagan administration sys-

tematically delayed the timing of US payments

to the UN by appropriating funds nine months

late, in the following US budget year. US pay-

ments to the regular UN budget, due on 31

January, began arriving in October or November,

at the very end of the UN ﬁscal year. Since the US

is the largest UN contributor, this occasioned the

intended stress.

Over the course of more than two decades,

neo-liberal propagandists have deﬁned the UN

as an inefﬁcient and unresponsive bureaucracy,

threatening to impose itself on the world's

people. Again and again, editorial writers and

newscasters have repeated the term "vast,

bloated bureaucracy," even though the UN staff

UNethical

The UN’s global compact

is compromised by corrupt

members and dodgy

directors

by Michael Smith

SUPPORT

Businesses should support

and respect the protection of

internationally proclaimed

human rights

RESPECT

Businesses should make

sure they are not complicit

in human rights

abuses

UPHOLD

Businesses should uphold

the freedom of association

and the effective recognition

of the right to collective

bargaining

ELIMINATE

Businesses should

uphold the elimination

of all forms of forced

and compulsory labour

EFFECTIVE

Businesses should uphold

the effective abolition of

child labour

ELIMINATE

Businesses should uphold

the elimination of

discrimination in respect

of employment and

occupation

SUPPORT

Businesses should

support a precautionary

approach to

environmental

challenges

UNDERTAKE

Businesses should

undertake initiatives to

promote greater

environmental

responsibility

ENCOURAGE

Businesses should

encourage the development

and diffusion of

environmentally friendly

technologies

Work Against

Businesses should work

against corruption in all its

forms, including extortion

and bribery

ANTI-

CORRUPTION

HUMAN RIGHTS

ENVIRONMENT

UN Global

Compact’s ten

principles

€

The UNGC is a call to companies

to align operations with universal

principles on human rights, labour,

environment and anti-corruption

April 2016 7 7

is actually quite small.

Boutros Boutros-Ghali of Egypt, who died in

February, became UN Secretary General in

1992. Under heavy pressure from the United

States and from lobby groups like the Interna-

tional Chamber of Commerce, he immediately

set to work reforming the Secretariat and elimi-

nating programmes that most irritated global

commerce.

For example, the annual Human Development

Report drifted slowly rightwards after 1994 and

began to promote economic growth as the main

engine of human development. The trajectory

was not all one way. Boutros-Ghali outraged

the new conservatives by proposing global

taxes as a solution to the UN's ﬁnancial crisis in

a speech in Oxford University in 1996.

Koﬁ Annan assumed the post of Secretary

General in January 1997. Washington had sum-

marily vetoed Boutros-Ghali's campaign for a

second term, saying it wanted a more reform-

minded helmsman for the UN. Annan is a

graduate of MIT's Sloan School of Business. In

2004, allegations were made that his son Kojo

Annan had received unethical payments but

former US Federal Reserve Chairman Paul Vol-

cker led an investigation which found

insufﬁcient evidence to indict Koﬁ Annan of any

illegal actions, but did ﬁnd the UN’s manage-

ment structure and Security Council oversight

deﬁcient. Annan surfaces from time to time as

one of the egregious ‘Elders’ with Mary Robin-

son and Jimmy Carter.

After just three weeks in ofﬁce, Annan made

a pilgrimage to Washington to meet Congress,

particularly key conservative Senator, Jesse

Helms. He announced he would "streamline"

the UN, bringing modern business practices to

its management and setting "realistic" goals.

He committed to further budget and staff cuts.

Almost immediately Annan trundled to Davos,

Switzerland, to the annual meeting of the World

Economic Forum and also held talks with senior

ofﬁcials of the International Chamber of Com-

merce. The WEF subsequently kindly installed

new video-conferencing technology that it used

itself to the cash-starved UN. Extraordinarily,

the system worked primarily to connect the Sec-

retary General and other UN leaders with

corporate executives, bypassing the intergov-

ernmental process. Around the same time the

Secretariat decided to impose an offputting

ﬁnancial charge on NGOs for electronic access

to UN documents.

Annan exhorted heads of UN agencies to

open themselves to business, and to establish

partnerships with corporations. In a short time,

the UN High Commissioner for Refugees

(UNHCR), the UN Educational, Scientiﬁc and

Cultural Organization (UNESCO), the UN Devel-

opment Programme (UNDP) and other agencies

announced initiatives of this kind. In 1997, ﬂam-

boyant media billionaire Ted Turner, who owned

CNN, announced that he was making the largest

charitable donation ever, a $1 billion contribu-

tion to the UN.

In 1998, soon after attending his second

Davos gathering, the Secretary General again

met the International Chamber of Commerce

(ICC) in Geneva. This time, there were 25 corpo-

rate enormouswigs in attendance, including

representatives of Coca Cola, Unilever, McDon-

alds, Goldman Sachs, British American Tobacco

and Rio Tinto Zinc. ICC Secretary General Cat-

taui heralded the new relationship. "The way

the United Nations regards international busi-

ness has changed fundamentally", she gloated

afterwards in the International Herald Tribune.

"This shift towards a stance more favourable to

business is being nurtured from the very top”.

The quest for reform goes on though it is now

less ideological. The United Nations Commis-

sion on Human Rights had long been viliﬁed for

its role in promoting member states that did not

guarantee the human rights of their own citi-

zens before Koﬁ Annan in the In Larger Freedom

report suggested setting up a new Human

Rights Council as a subsidiary UN body. In

2006 a resolution enshrining this was passed

by 170 members of the 191-nation Assembly.

And in 2011 Secretary General Ban Ki-moon

appointed Atul Khare of India to spearhead

efforts to implement a reform agenda aimed at

increasing UN efﬁciency, starting with a wide-

ranging plan to streamline activities and

increase accountability.

The UN Global Compact was announced by

Annan in an address to the World Economic

Forum on in 1999 that contained all the buzz

concepts of partnership with business, "values"

rather than rules, the "threat" that grassroots

opposition might pose to globalisation. The

speech succeeded in its purpose. It drew the

attention of many corporate executives and it

attracted a good deal of positive comment from

the media. and was ofﬁcially launched at UN

Headquarters in New York on July 26, 2000. The

sequence was suspicious and the initiative was

very much Annan’s own.

An academic paper in the 2013 Journal of

Business Ethics notes damningly that “all cred-

ible and publicly available data and

documentation conclusively demonstrate that

the UNGC has failed to induce its signatory com-

panies to enhance their CSR efforts and

integrate the 10 principles in their policies and

operations. The result has been a loss of public

trust and support of UNGC from important con-

stituencies among civil society organizations,

and those individuals and groups adversely

impacted by corporate activities and resultant

negative externalities”.

It notes that the UNGC is “largely dependent

on the corporate sector for its very survival. We

conclude that this dependence has in turn

impaired and would continue to hinder UNGC’s

ability to fulﬁll its mission. Such an outcome

raises serious questions as to the viability, use-

fulness, and continued existence of UNGC”.

In 2014 the US and EU opposed moves for

legally-binding measures to hold corporations

to account, at a meeting of the UN Human Rights

Council, citing the Global Compact as an alter-

native approach. The chair of the Global

Compact is Ban Ki-Moon but its Vice-Chair is Sir

Mark Moody Stuart. He is a non-executive chair-

man of Anglo American PLC, an ex-chairman of

Royal Dutch Shell and a director of HSBC Hold-

ings and of Accenture. He serves on the board

of Saudi Aramco.

Chey (Choi) Tae-Won is the Group Chairman

of one of Korea’s biggest business conglom-

orates or Chaebols, SK, and is a convicted

fraudster - having served seven months in

prison in 2003 for accounting irregularities

before he received a presidential pardon. His

then father-in-law was a former Korean

None-too-probing self-assessment

7 8 April 2016

The UNGC is a moral

guide dog not watchdog

and has ceded any role

of invigilating member

companies

President. Far from any sanctions being

imposed by the UNGC he was actually invited

to join its board in 2004. Under pressure from

the media the UNGC director, Georg Kell, stated

the UNGC was a moral guide dog rather than

watchdog, it has ceded any role of invigilating

companies subscribing to its core principles.

In 2008 Chey Tae-Won quietly left the UNGC

board after he was found guilty of embezzling

nearly $47 million from two SK afﬁliates and

diverting the funds to personal wagers on stock

futures and options. He served a four-year

prison term before being pardoned by Korean

President Park Geun-Hye in August 2015. In

anyone’s terms this is damaging for the UNGC.

There are shadows over many of the UNGC’s

members. The patron sponsor of a 2013 Global

Compact ‘Leaders Summit’ in 2013 was Oil and

Gas conglomerate, Petrobas, the largest com-

pany in South America. In 2014 an investigation

by by Brazilian Federal Police and public pros-

ecutors— placed Petrobras at the centre of what

may be the largest corruption scandal in Bra-

zil's history.

Barrick Gold, a Canadian mining giant, that

joined the Global Compact in 2005 has been

removed from a New Zealand government pen-

sion fund for human rights and environmental

violations in Papua New Guinea and Tanzania.

In Chile, the company was ordered to suspend

its Pascua Lama project. Barrick Gold was ﬁned

for $16m for environmental violations in the

Chilean-Argentinean border region.

Petrochina has been accused of being com-

plicit in supporting the Sudanese Government’s

genocidal reign of terror in Darfur which

resulted in the displacement of over 2.7 million

and the deaths of over 300, 000 people.

Because Petrochina was and is signed up to

the UNGC , a formal open letter of protest was

published with over 80 signatories from legiti-

mate organisations and the request that the

UNGC investigate and if necessary remove Pet-

rochina from its membership. Nothing.

Sinopec is another oil and energy operation,

one of the biggest companies in China. It has

been mired in controversy for breaking the

Western oil sanctions in Syria and Iran. Its

former chairman, Chen Tonghai, narrowly

escaped the death penalty after his conviction

for taking over $20 million in bribes and the

conviction of other senior executives at the

company didn’t slow the submission of glowing

progress reports to the UNGC each year.

For the past seven years, Baby Milk Action

has been pursuing complaints against

Nestlé for violating the Global Compact Princi-

ples in the way it markets its baby foods. Nestlé

promotes its infant formula as the ‘natural

start’. In 2013, an eight-storey building col

lapsed near Dhaka, Bangladesh, causing the

death of over 200 people. The building accom-

modated a number of garment factories

including some working for Global Compact

participant, Mango. However, the Global Com-

pact Ofﬁce refuses to take action speciﬁed in

so-called Integrity Measures, or to explain its

refusal.

The UNGC Foundation accepts donations

from any donor (whether corporate, foundation

or an individual) provided that acceptance of

the donation would not threaten the integrity of

the Foundation, the UN Global Compact Ofﬁce

or the initiative as a whole. In general, it is

expected that contributors to the Foundation

will be participants or other stakeholders of the

Global Compact. There was some peripheral-

ised criticism of the initiative but the leading

critic, an ‘informal network’ known as Global

Compact Critics which systematically criticised

the Global Compact, citing a lack of mecha-

nisms for sanctioning non-compliance or lack

of progress, but was strangely formally dis-

banded in February 2015.

It suggested that interested parties consult

the Centre for Research on Multinational Corpo-

rations (SOMO) website.

Similarly, the Alliance for a Corporate-Free

UN, which also no longer exists, was a cam

paigning organisation of several international

NGOs, led by Corpwatch, which highlighted

weaknesses in the principles underlying the

Global Compact.

A paper by Irishman Tom Cunningham, of

DePaul University, delivered to the Vincential

Ethic Conference in Chicago suggests that the

UNGC is in denial that it is in effect engaging in

moral arbitrage. He told Village that the ‘prin-

ciples’ should be reframed as aspirational

‘goals’ lest they serve to cloak members with

an unmerited ethical imprimatur, from the strin-

gent UN.

He notes that the UNGC is actually a US-

based charity and so escapes scrutiny from the

UN ethics ofﬁcer and that it beneﬁts from less

stringent accounting obligations than other UN

bodies'.

Cunningham's attempts to get details of

funding have, on occasion, been stonewalled.

He also expressed concern to Village about the

over-representation of energy companies and

the surprising lack of women, and representa-

tives of environmental and human-rights NGOs,

on the board.

In 2010 the UN's own Joint Inspection Unit

published a scathing assessment of the role

and functioning of the UNGC, describing it as a

"learning tool" not a "regulatory instrument"

and acknowledging fears of 'bluewashing'

(laundering improprietry by using the UN's

name). It made 18 sweeping recommendations

starting with the need for immediate resolution

of a clear mandate. It also recommended a stra-

tegic framework for its objectives and that the

UN General Assembly call for institution of a

selection process with "pre-set" criteria to miti-

gate "brand-management risk".

Former President of Ireland Mary Robinson is

both “supporter and a critic” of the UNGC, a

self-declared “awkward voice, supporting the

goals but pushing for more substance”. In her

opinion the commitment made by businesses

through the Global Compact principles is too

weak. She emphasises: “We cannot continue

with business as usual”. However, her criticism

is tempered. “I think the very fact that corpora-

tions are talking a language of zero carbon, of

the need to get rid of fossil fuel subsidies, of the

need for carbon pricing – that’s all very impor-

tant”, she believes. I believe the Global Compact

needs to be aware of the risk of setting pro-

cesses over principles. I think many member

companies see the commitment to report on

progress towards sustainable development as

a sort of box to tick rather than something

deeper. It’s too easy”.

Cunningham claims

the UNGC is in denial

that it engages in moral

arbitrage-'bluewash'.