SRID Committee Meeting

SUB-COMMITTEE ON HUMAN RIGHTS AND INTERNATIONAL DEVELOPMENT OF THE STANDING COMMITTEE ON FOREIGN AFFAIRS AND INTERNATIONAL TRADE

SOUS-COMITÉ DES DROITS DE LA PERSONNE ET DU DÉVELOPPEMENT INTERNATIONAL DU COMITÉ PERMANENT DES AFFAIRES ÉTRANGÈRES ET DU COMMERCE INTERNATIONAL

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, November 21, 2001

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[English]

The Chair (Ms. Beth Phinney (Hamilton Mountain, Lib.)): I call the meeting to order. This is meeting 16 of the Subcommittee on Human Rights and International Development of the Standing Committee on Foreign Affairs and International Trade.

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We have two witnesses in this hour of our committee, Nexen Incorporated, Randy Gossen, and Real Assets Investment Management, Kai Alderson.

Randy, we'll let you go first. We have some material here from Nexen, but it's in English only.

Mr. Randy Gossen (Vice-President, Safety, Environment and Social Responsibility, Nexen Inc.): Parts of it are in French, but the majority of it is in English.

The Chair: That's a good portion of French, that's good. Okay. There's nobody here who needs the French anyway.

One is the annual report, and the other's some comments. With Doctor Alderson, you have all received a circulated biography.

Randy, would you like to go ahead?

Mr. Randy Gossen: Thank you very much for inviting us to participate in this session.

I have a package of material, and I'm just going to quickly walk through that. I'm going to focus on some speaking notes, which are about two or three pages into the document.

I thought I'd first introduce Nexen. We're engaged in the exploration and production of oil and natural gas, so we're an upstream company, as opposed to a downstream that has marketing and retail—we produce the stuff. In addition to that, we do have an industrial chemicals plant. We're headquartered in Calgary, we're a Canadian company, we're producing about 270,000 barrels a day of crude oil, and we're the fifth largest oil and gas independent company in Canada. Our peers in the industry would include the likes of AEC, Talisman, PanCanadian, and Canadian National Resources Limited. That's basically who we are.

We are a Canadian company, so we have production in Canada. In addition to that, we have production in the Gulf of Mexico in the United States. Our flagship production is in Yemen, where we operate a facility that produces about 230,000 barrels of oil a day, of which 52% is to Nexen's account. In addition, we have a small amount of production in Nigeria, we have exploration in Indonesia, we have exploration and a small amount of production in Australia, and we have exploration in Colombia.

We've been engaged in Colombia since about 1994. As I say, it's strictly at the exploration level at this point in time. There are a number of charts in your package that will give you some idea of the kinds of activities we have been involved in in Colombia. We opened an office there in 1995, and we've been engaged in partnership with Ecopetrol, the Colombian national oil company, as well as Petrobras, which is the national oil company from Brazil. We are striking off on our own in Colombia as well. We now have a number of blocks, exploration blocks at this point in time, where we are the operator, we have 100% of the working interest in a number of blocks. So as I say, our activities in Colombia have been of an exploratory nature, but we're hopeful that we will eventually have some production in Colombia.

Given my understanding of the mandate of the committee, I'm going to try to give you a bit of a flavour for the kind of approach we try to take relative to corporate social responsibility. Our approach there receives overarching guidance from a document that's in your package called the International Code of Ethics for Canadian Business, and this is the one that's in English and in French.

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Back in 1996 the then minister of DFAIT, the Honourable Lloyd Axworthy, challenged the business sector—and he was focusing particularly on companies that operate in Nigeria—to develop some kind of document, some kind of statement of values or a code that defines what we stand for. We took this challenge, and Nexen led the development, along with 12 other companies, and there was participation from DFAIT, there was participation from a Nigerian NGO. We jointly developed this International Code of Ethics for Canadian Business, which addresses not only business ethics, but also human rights, environmental protection and safety, and community involvement.

That document is basically the overall policy document that guides our activities wherever we operate. But it's just words. I think what's very critical here is that one be perceived as walking the talk, as well as engaging in regular reporting and monitoring and subjecting oneself to some form of external verification. So it's not just the words. You're prepared to stand up behind those words. You'd better be prepared to run the whole course in public scrutiny.

We implemented the code right from the outset in our activities in Colombia. In fact, I went down there and worked with our people, the majority of whom are Colombian. We translated that document into a number of working documents that would guide our activities in Colombia, focused, as I say, on corporate social responsibility.

As an example, our initial involvement in Colombia was in the southern part, in the Putumayo. That's getting into some real hairy areas, where the risk goes far beyond the geology. For an oil and gas exploration and production company, usually when we talk about risk, we talk about the risk that's below ground, the risk of finding oil, the risk of generating oil. Very clearly, this was an eye-opener, demonstrating that there's a lot of above-ground risk as well.

So applying the code was particularly important. One of the first things we did was develop a partnership arrangement with the Colombian Red Cross, which had a presence in the area and credibility in the area, as well as developing a partnership with an organization called REDEPAZ, which is a Colombian NGO dedicated to the peace process. So we've forged partnerships with those groups to help us develop a community affairs program.

The first key operating principle behind that program is basically a recognition that communities do have a legitimate right to participate in decision-making for issues that affect them. That's got to be fundamental. Unless you're prepared to commit yourself to that principle, my advise is to stay out altogether.

Second, we agree that we must strive to ensure that within our sphere of influence, because we're not another level of government, we're a company, there needs to be a fair sharing of benefits among stakeholders affected by our activities.

So as I say, all our activities, not only in Colombia, but everywhere else we operate, are guided by those principles. If we can't implement those principles, we're not going to be there.

The way we go about this is that we go into a country like Colombia and develop what we call an above-ground operating strategy. What that involves is sending a team into Colombia, somebody who's very knowledgeable on the political side of things, somebody who's knowledgeable on the community and environmental side of things, somebody who's knowledgeable in the security area. We send those folks into the country, and they interview a wide variety of stakeholders, from governments, communities, NGOs, other businesses, contractors, you name it. From that we're able to get a sense of what the issues are, then an assessment as to whether or not we can operate in that kind of environment. If we can operate in that environment, what form of risk management do we need to employ in that kind of situation? We take that information and we integrate it with the technical information on the geology, the below-ground strategy and the above-ground strategy, and it goes through a characterization process. Then we're able to determine whether or not we should make an investment in that particular opportunity.

I do have a copy of this above-ground operating strategy. I didn't include it in the package of material, but if you're interested, by all means, you're welcome to it.

The Chair: Just give it to the clerk. If anybody wants a copy we can make a copy of it.

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Mr. Randy Gossen: Sure.

The only other thing I'd like to say is that along similar lines, we have committed ourselves to the United Nations Global Compact—I think you're probably familiar with that initiative of Kofi Annan. The nine principles embodied in the global compact are very similar to the principles that are included in the International Code of Ethics for Canadian Business, so it was certainly not a stretch for us to get involved with the United Nations Global Compact.

Interestingly, one of the projects we're involved in through the global compact, which includes representation not only by UN agencies, but also by Amnesty International, International Alert, and a number of other international NGOs, as well as other companies besides ourselves, is developing a tool box for assessing and managing risk in zones of conflict. So that fits in very nicely with respect to our activities. We are involved in a number of countries that are characterized as zones of conflict.

I'm sorry, I'm rambling on a little bit. With our overall vision for Colombia, the desired future we are trying to achieve in Colombia, I think it can be stated that we want to have a presence in Colombia that's recognized, not just by us, but by stakeholders in general, so that it's economically rewarding to all parties, not just to the company, but to the communities, to the governments, acknowledged as being environmentally and socially responsible, operationally safe and secure, and more important than anything else, welcomed by the community. We believe that if we can achieve that, it will facilitate long-term growth opportunities, not only for us, but for the key stakeholders with whom we are involved.

So that's my key message. I've got some other material in this package. We do have a human rights policy, and I've included that. We have recently been accepted into the Dow Jones Sustainability World Index, so I've got some information on that in here as well.

I'd be more than pleased to respond to questions or try to provide further clarification.

Thank you very much.

The Chair: Thank you very much.

We had our Canadian ambassador here recently, and he told the subcommittee he had not seen evidence of Canadian industries that weren't acting responsibly down there. The ones he'd seen were behaving very responsibly. So that backs up what you've said.

I think we'll get Mr. Alderson to speak, and then we'll have questions.

Mr. Kai Alderson (Vice-President, Research and Corporate Engagement, Real Assets Investment Management): Thank you.

My name is Kai Alderson. I am vice-president for research and corporate engagement with Real Assets Investment Management. Real Assets is the first Canadian money management to focus solely on socially responsible investment. Before my current position I had an academic background focusing on international human rights, particularly the role of multinationals operating in zones of conflict. I received my doctorate in international relations from Oxford University, and then I was at UBC on a Killam postdoctoral fellowship. And it was while I was at UBC that I prepared a report entitled Canadian Firms/Canadian Values: The Roles and Responsibilities of Canadian Multinationals Operating in Risky States, the policy summary of which, I believe, has been circulated. That was composed in the midst of the furore over Talisman Energy's operation in Sudan.

But I don't want to get into any particular companies at this time. What I want to do is take a step back and offer the subcommittee a broad road map of how Canadian companies can operate in zones of conflict in a way that will promote human security, and then look at how this road map applies in the Colombian context.

As an investment professional, my first reference point is that beyond moral responsibilities, senior management of any Canadian company have a duty to shareholders to minimize human rights-related risks in overseas operations. Shareholders do suffer when a company is associated in the public mind with collusion and human rights abuses, whether or not that reputation is justified. The most obvious example that springs to mind is the so-called Sudan discount on Talisman Energy share value, which, according to the National Post, has ranged anywhere from 9% to 35%.

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There are also legal risks. One that has received far too little attention, both by corporations and by government, is the risk of civil liability for Canadian firms under the U.S. Alien Tort Claims Act. Talisman Energy is currently being sued in a U.S. court under this act. I would be happy to answer any questions about this act, but I won't dwell on it now.

In general, socially responsible investors would recommend that senior management ask three questions before operating in zones of conflict. First, is this country a legitimate place to do business? Second, is the specific operation likely to exacerbate the causes of domestic conflict, and if that potential exists, has the company taken measures to offset this negative influence? Third, are management systems in place to ensure that the company is not complicit in violations of human rights? I want to dwell on those management systems, because I think some specificity is very much required at this level.

Companies should adopt an explicit commitment to observe and respect and take steps to secure internationally recognized human rights, and they should convey the seriousness of this commitment to host governments. Companies must ensure that security providers with whom there is a contractual relationship do not infringe human rights or aid and abet in the infringement of human rights. I can talk about this at greater length in response to any questions.

Companies should conduct meaningful consultation on the human rights impacts of their operations with local populations, human rights groups, trade unionists, security providers, and representatives of host governments.

Finally, companies must be able to provide credible assurances to investors and other stakeholders that these commitments are being taken seriously through ongoing monitoring, subject to periodic external verification, and regular public reporting. If investors are to be protected from undue risks, companies must disclose fairly and fully relevant human rights-related information concerning all their operations, especially in zones of conflict.

In the view of Real Assets, Colombia passes the first test. This is a perfectly legitimate place for Canadian companies to invest. So the first questions that arise are project-specific: is this particular project likely to strengthen or weaken human security in Colombia? And Canadian firms have to take this question very seriously, since it's estimated that half of Colombia's potential oil reserves lie under guerrilla-controlled territory.

I am happy to report that I know of no Canadian company that is currently facing serious allegations of complicity in human rights abuses in Colombia. Unhappily, I also know of no Canadian company operating in Colombia that is doing all it could be doing today to avoid possible allegations of complicity in the future. Certainly, Nexen is an example of very good practices in Colombia, as they've been described.

I have a list of concrete suggestions to make to the committee, but perhaps I shall leave these for the question period, as I have six points, and I don't know whether it would be better to present them now.

The Chair: Do them now, yes.

Mr. Kai Alderson: I would recommend that in issuing its report or resolution at the end of this investigation, this committee should affirm that in its view, Canadian companies have a duty to do no harm when operating in zones of conflict, and should call on Canadian firms operating in Colombia to demonstrate creativity and determination in shouldering this responsibility.

I think this committee should highlight as an issue of urgent concern the physical security of trade unionists employed directly or indirectly by Canadian firms in Colombia. In particular, Canadian firms must be very careful that their joint venture partners, especially Ecopetrol, are not in any way complicit in anti-union activity. In the highly-charged environment of Colombia, anti-union activity can be tantamount to passing a death sentence on union organizers.

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This committee should call on Canadian companies operating in Colombia to work with credible human rights organizations, both in Colombia and in Canada, to develop policies and procedures to avoid potential human rights-related problems in the future.

I'll just add one more, and this relates directly to the question of transparency for investors. This committee, in my view, should call on the Canadian Securities Administrators, which is the umbrella group for provincial securities regulators, to develop stronger rules for the disclosure of material risks arising from social, environmental, and ethical issues. Capital markets thrive on information, and social, environmental, and ethical risks are increasingly of concern to mainstream investors.

In this light—and I don't know whether it would find its way into this committee's report—I might mention Bill C-394, which is a private member's bill that would introduce pension disclosure legislation in Canada similar to that in the U.K., Germany, and Australia. This is legislation that would request pension plans to disclose the extent to which they used social, environmental, and ethical criteria in making their decisions. In Europe this has had a great impact on generating socially responsible investing as a main force in the investment industry, and anything that promotes social investment will create a positive force for dialogue with companies, creating groups that will encourage companies to respond progressively overseas, without the need for legislation.

Thank you.

The Chair: Thank you very much.

Mr. Obhrai, do you have some questions?

Mr. Deepak Obhrai (Calgary East, Canadian Alliance): Yes, I do.

I will ask a small question for a quick answer, and then I want to go to Randy over here.

Are you an investment firm that is listed on the stock market or are you an NGO?

Mr. Kai Alderson: We are not an NGO. We are an investment manager.

Mr. Deepak Obhrai: Are you a consulting firm giving advice to companies that are investing in this thing? I'm trying to get a grasp of what your company's mandate is.

The Chair: Let him answer that question. What does your company do? That's what he wants to know, I think.

Mr. Kai Alderson: We're a socially responsible investment firm.

The Chair: If I give you my money, you invest it?

Mr. Kai Alderson: According to socially responsible investment principles, yes.

The Chair: Okay.

Mr. Deepak Obhrai: If you have a brochure, it would be very interesting to know exactly where the recommendations are coming from on this. I'm just trying to grasp where you fit into the picture here.

I want to go to Randy. I'm glad you are from Calgary. I'm from Calgary, so welcome to Ottawa. I'm pretty happy to hear that oil company is doing very well.

Randy, as you know, this committee is studying the human rights issues in Colombia and investments. You are an active partner in Colombia, and have been there for some time. You are a business entity, investing there and working on business principles, adopting the United Nations code of conduct, which is commendable. What we are trying to do here is understand from your perspective, as a player in that part of the country, where you see this thing heading. We are grappling with that situation, we are getting all this information, we are trying to have an oral picture of the business community. Where do you see Colombia headed in the longer term, with the conflict that is going on? What do you think the role of the government has been in trying to clear this thing? I want just an overview picture—I know it's not a business question.

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Mr. Randy Gossen: It isn't, but then I've got some interests in Colombia that go beyond business interests. In fact, I began my career working for the Colombian Government. I married a Colombian, I have an adopted Colombian daughter. So I've got some very strong links to Colombia. It's a perfectly appropriate question, because my beliefs extend into my personal existence, not just my business existence.

The fundamental issue in Colombia, in my view, is that 90% of the wealth is controlled by 10% of the people. Those numbers are probably precisely wrong, but they're directionally correct. I think that's the basic issue. I think, for the resolution of issues like this, there needs to be a shared approach towards the achievement of sustainability, and at the end of the day, what you're really doing is addressing one of the fundamental issues, which is poverty alleviation.

Companies have a role to play. If you went and asked somebody from the oil industry 10 or 15 years ago, they'd have said we've got no business being involved in social issues; we're here to generate jobs, we're here to generate wealth, social stuff is for governments to solve. What we've found is that within our sphere of influence, we do have a role to play, and we do have a contribution to make towards social development. In Colombia and in other areas of the world where poverty alleviation is one of the prime focuses the only way that's going to be addressed is.... The global compact is a classic example of how to go about addressing it, I think, having UN agencies, the private sector, NGOs, governments, business in general working together to resolve these issues.

Mr. Deepak Obhrai: Primarily, I'm asking you about Colombia, not just saying we can apply all these things together. I want your assessment on Colombia. Where is Colombia headed, what is happening over there? What is your point of view?

Mr. Randy Gossen: Right now there's 9% to 10% inflation in Colombia, there's 20% unemployment. Economic renewal is, I think, crucial, and that's not to mention the issues of drugs and crime. It's all got to be addressed, it's all interlinked. The FARC gets a good piece of its funding from the production of illegal drugs; that's obviously got to be addressed. That's a difficult one to address, because it's a demand-driven issue, not a supply-driven issue, but that's all a piece of it.

President Pastrana's Plan Colombia addresses that, and as I say, I think we have a role to play in assisting, again within our sphere of influence, to enhance socio-economic development in Colombia. I think that's the direction in which things are going. I speak with members of my family who are living in Colombia and I see my nieces and nephews who are educated people. They're leaving the country in droves. That's got to be addressed, because that's the future of the country.

So it's such a complex thing, and there's not an easy answer, but as I say, I think there is a role for business in addressing this. When it comes to human rights, that's pretty fundamental. People have a right to clean water, they have a right to an environment that's productive, not polluted and not contaminated. I think that's the way, that's the environment in which we need to operate.

Sorry, I don't know if I'm addressing your question directly.

Mr. Deepak Obhrai: I'll come back.

The Chair: Monsieur Dubé.

[Translation]

Mr. Dubé.

Mr. Antoine Dubé (Lévis-et-Chutes-de-la-Chaudière, BQ): Everybody claims they are in favour of respect. In fact, every man and woman, be they in the private sector or elsewhere, says they support human rights. It's what everybody claims. Mr. Gossen, I enjoyed listening to your personal comments, which indicated that your interest goes beyond the economic and that you personally care about what may happen in Colombia. I find that reassuring.

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We are dealing with a voluntary corporate code of ethics here. This code could be written on the most beautiful paper, in colour or otherwise, but that does not necessarily mean the words will be applied.

We are involved in politics. Sometimes nice words are uttered in politics, but it may happen that, in reality, the opposite occurs.

I would like to ask you a couple of questions. First, you currently work in Colombia. Are you satisfied? How would you describe your relationship with the Canadian embassy in Colombia? Are you in contact with embassy staff? Do you feel that embassy staff, embassy employees—and I'm not referring to control here—have the ability to find out whether businesses respect human rights in their daily business? In fact, in a country which is waging a civil war and where, as you said, half the territory is controlled by rebels... I am not saying I doubt what you said, but when you see that the Colombian government cannot even control or respect the human rights of its own citizens, how can you claim that a company such as yours does respect human rights?

[English]

Mr. Randy Gossen: That's a very good question. As you say, those are words, that's all they are. I think it's extremely important that private sector people do make a statement of what they stand for, and that's what this is. This is a statement of what we stand for, but that, in itself, is not the answer. Obviously, it is an absolute necessity to walk the talk, and not only to walk the talk, but to be perceived as walking the talk. It's absolutely critical. So our actions need to be consistent with these words. What people observe of us needs to be consistent with these words.

To help facilitate that process, we have to be prepared to report on and monitor the activities. Transparency is extremely important. As one of the mechanisms we use to achieve that, we do have a document there in front of you, the annual report, and that does report on our activities, but again, that's us talking. I think it's extremely important that our activities also be subjected to some form of external verification, and we're working on that. We're not there entirely, but we have PricewaterhouseCoopers, for example, to monitor our corporate social responsibility through the Dow Jones Sustainability World Index. Our stuff is subjected to their scrutiny.

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Ultimately, what we are striving towards is some form of external verification that would include NGOs, even government representation, fully third-party verification that what we say about implementing this code is actually happening. As I say, we're not there 100%, a lot of this stuff is new to us, but we are working on it, and it is our goal that we reach that stage of truly external verification, not a financial analyst's opinion of us, but having community representation involved, having NGO representation involved in this scrutiny.

On the chemical side of our business we adhere to something called Responsible Care. I don't know if you're familiar with it, but it is an overall management program, and it does include environmental issues, safety issues, corporate social responsibility. Responsible Care does involve third-party verification. So we've got it in the chemical part of our business, and we're currently incorporating that into the oil and gas part of our business.

The other question concerned the relationship with the Colombian embassy. We've had an excellent working relationship with the embassy ever since we've been in Colombia. We've had a very supportive relationship with the ambassador and his or her staff, and that's been an on-going thing. We hear back not only from our embassy, but from Foreign Affairs and International Trade—by the way, Mr. Axworthy was one of the greatest supporters of this. This document went out to every Canadian embassy in the world, and so at least when we go into a country and we say, here we are, folks, this stuff provides us with our corporate social responsibility overarching policy. This is who we are, now we're going to prove to you that we live by this.

The Chair: I didn't mean to interrupt. I was just going to ask if Mr. Alderson wanted to say something.

Mr. Kai Alderson: Yes, I wondered whether I could respond as well.

I'd like to reiterate the importance of independent verification. This is absolutely critical to improved transparency.

The one issue in Colombia that really needs attention focused on it, which I only touched on, is security, relations to security providers. This is probably the single most important issue for Canadian companies operating in Colombia with regard to walking the talk, as you describe it. There are Canadian companies operating in areas of Colombia where the military units responsible for their protection have been credibly implicated in human rights abuses. I have no information about a Canadian company that is complicit in human rights abuses, but the risk is there, especially in Putumayo, which was mentioned.

Mr. Randy Gossen: We recognize that risk, and before we have a contract with the military to provide security for our operation or before we form a partnership with another oil company or a contractor, we show them our human rights policy and say, unless you abide by this human rights policy, we're not interested in doing business with you. We are on the ground there. We know what's going on. They can't say they are abiding by it, and then turn around and not do so. It's not as if we're not there. We are there, and we are monitoring this. As I say, unless contractors or partners are going to abide by our human rights policy, we're going to walk, and we have walked.

The Chair: Ms. Beaumier.

Ms. Colleen Beaumier (Brampton West—Mississauga, Lib.): Thank you.

Mr. Alderson, how many companies are listed in your portfolio that are operating in Colombia? How many are operating in Colombia that you wouldn't represent or sell?

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Mr. Kai Alderson: We would exclude no Canadian company operating in Colombia. We do hold Enbridge Incorporated, but we would not bar any of the Canadian companies operating in Colombia on the basis of their operations in Colombia.

Ms. Colleen Beaumier: So you don't have any major complaints with Canadian companies operating in Colombia?

Mr. Kai Alderson: As I say, I think the issue is less about whether we have evidence that there is a problem, such that we would exclude a company, and more about a recognition that there are risks and dialoguing with companies on whether they have the management systems in place to deal with those risks.

Ms. Colleen Beaumier: Mr. Gossen, we've heard from different groups who have come before us. There's been a great deal of complaint about the mining industry in Colombia, but I don't recall any about the oil industry, so I can only begin to relate some of the potential problems I have seen in Sudan. I know it's a totally different situation, but when you hire security, do you hire government military, do you hire paramilitary, do you hire private military?

Mr. Randy Gossen: To date we haven't hired military. We have our own security people. A Canadian ex-RCMP person heads up the security group in our Bogota office. We haven't operated anything yet in Colombia, so the security has been provided by the operators of the projects we have been involved in, which include Petrobras from Brazil and Ecopetrol from Colombia.

We are going to be drilling a well later on this year, and hopefully we'll be drilling some more wells, and we're going to be the operator. For drilling an exploration well you do develop a short-term contract, and it will be with the Colombian military, the national police—they have a different set-up there from what we have here in Canada. But when we do that, as we do everywhere else—for example, we have contracts with the military in Yemen—we will give them our human rights policy. We say we expect compliance with this policy and that the individuals who are assigned to provide the security for our infrastructure are only working on that, they're not working on anything else—that's their day job and their night job. We don't want to get into a situation where we have military guarding our activities, and then doing something else as well. That's all very explicit in any contractual arrangement we'll have with the military.

Ms. Colleen Beaumier: You've just said you're going to be drilling a site of your own soon.

Mr. Randy Gossen: Yes.

Ms. Colleen Beaumier: Is that going to be in a populated area? What are you going to do about displacement?

Mr. Randy Gossen: The area where we are now is very close to Bogota, so it is an area where there's a lot of infrastructure. It's not one of the hot zones of the country in respect of guerrilla activity, so from a security perspective, it's relatively safe. As I say, there is well-developed infrastructure in the area, so we're not anticipating any problems.

But our risk insurance in that area is really our community affairs program. We have developed programs in the communities that will be affected by this activity, and we're going to maintain those community affairs programs, as I say, with the principals. The communities do have a legitimate right to participate in decision-making, and they have participated in regard to the location of the well site and that sort of thing.

With that single well, there's not a heck of a lot of employment, but in your package, one of the blocks we have is called the Fusa block, and there are about 450 people employed in the seismic program, they're all local.

Ms. Colleen Beaumier: And is there training for the skilled jobs?

Mr. Randy Gossen: Absolutely. We believe that wherever we operate, we need to leave some form of legacy. I mentioned community affairs programs, and these aren't giveaway programs. These are self-help initiatives, where we'll go into a community and assist it, whether it's something to do with health infrastructure, education, environment, or whatever. But the community has got to put something into it, and that doesn't need to be money, it can be a commitment to undergo the appropriate capacity building and training. The last thing we want is to set up something that's totally reliant upon the company, so if the company disappears, poof, there goes the program.

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Ms. Colleen Beaumier: You mentioned the Red Cross and another organization. Do you have your own corporate people who oversee the development?

Mr. Randy Gossen: Yes, we do, and I guess ultimately, that rests with me through my responsibilities within Nexen. In Colombia we have Colombian staff who are working on this issue, and we also have local Colombian contractors, who are actually living in the communities where we are operating. But the standards are set, and we operate under the same standards no matter what country we're in.

Ms. Colleen Beaumier: Thank you.

The Chair: Ms. Jennings.

Mrs. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.): Thank you, Madam Chair.

Thank you very much for your presentations.

Mr. Gossen—

Mr. Randy Gossen: Randy.

Mrs. Marlene Jennings: Randy. Marlene.

I understand that Nexen received an international cooperation award in 2000 for its social responsibility in ethics. Could you perhaps explain to the members here and the people who are listening who might not be aware of it what that's all about?

Mr. Randy Gossen: It's basically a recognition that we are walking the talk, and we're very proud to have received that. In fact, the reason I have to leave here at 4:30 is that we are short-listed for an award for our corporate social responsibility from the Institute of Petroleum in the U.K. They don't tell you in advance whether you've won the thing or not, so that's why I'm going to London tomorrow. At least we've been short-listed.

What I feel so awkward about in addressing these things is that it's me talking, and I'm a company person. What's really important is when there is recognition from others, particularly others who don't have a vested interest in our company. That gives us a good sense that maybe we are doing some of the right things. We're not there 100%, we've still got a way to go, but we're trying our darndest, and we do recognize that without being successful in this area of corporate social responsibility, we're not going to be economically successful either.

Mrs. Marlene Jennings: One message I have for you and for other Canadian companies operating in Colombia or in any other country, companies that are socially responsible, that have definite principles, a mission in place, and values they've adopted, is that you need to toot your own horn here in Canada. We do have many critics of CIDA's programs in providing money partnerships with the private sector in the developing countries. There are Canadians who ask why government dollars should be going to the private sector for their projects. So I think it's important that you do toot your own horn.

Mr. Randy Gossen: As you mention CIDA, this morning I had a meeting with CIDA Inc., because we want to undertake a water project in Yemen aimed at providing enhanced water capability within the rural area. Only 17% of the rural population of Yemen has access to clean water—that was startling. We're in Yemen for the long run. We want to leave a legacy, and not only can we do that through the oil and gas industry, but we can do it with something even more fundamental, which is this water project. So we met with CIDA today to discuss with them whether they would have an interest. They are indeed interested, particularly in the capacity building aspects of this project. So that's a very good message, and we'll follow up on that.

Mrs. Marlene Jennings: Well, take it to the Canadian manufacturers and exporters also.

Mr. Randy Gossen: Yes, we're plugged into those guys too.

Mrs. Marlene Jennings: Mr. Alderson, I give you the same message. You're in the private sector, you're investing on behalf of Canadian investors in Canadian companies that are operating abroad, particularly in the developing countries, and I think your message is also very important. It needs to get out, for the benefit of the segment of the Canadian population that thinks none of Canada's international cooperation and development moneys should go to the private sector. I think the private sector in Canada needs to take that banner into the public, advertising the good things you are doing, how you are being socially responsible.

• 1625

Mr. Gossen, I have a question. You were talking about how you walk the talk in ensuring that the security personnel in projects Nexen is involved in do not get involved in or are not guilty or suspected of human rights abuses, and it's part of the contractual agreement. You show them your code, and in the contract they have to agree to abide by it. I'd like to know what monitoring mechanisms you have in place to actually ensure that is happening.

Mr. Randy Gossen: As I say, we are on the ground. It's not as though they're out there doing something and we're somewhere else. We are there. So there's the simple matter of observation. There's also the feedback from the community. We are directly plugged in to the community, and with anything irregular that might be going on, you'd get feedback from the community. In addition, we do have, as I mentioned, security experts on staff. Part of their job responsibility is to provide that form of assurance.

Mrs. Marlene Jennings: I'm asking more along these lines. If someone doesn't know the actual process by which they would bring information to the company, even if they're an employee, if they're a local, and they don't know what the process is that the company is going to use to actually investigate that complaint, and what security measures the company is going to put into place for protection of the alleged victim of human rights abuses by security personnel, then chances are you are not going to get any formal complaints. You might get rumours and things like that.

The reason I'm concentrating on that is that I come out of law enforcement. I was deputy commissioner for police ethics in the province of Quebec. One of the things our studies showed is that if people do not know what the process is to bring their complaints and what happens with their complaints and what protections are in place, they will not file a complaint. So what actual processes are in place to handle the complaints, and also to provide protection and confidentiality to the alleged victim?

Mr. Randy Gossen: A key element of our community development program is community consultation, speaking with the local people and understanding their concerns, issues, and views, and having them understand ours. I would say that would be the forum to ensure that folks do understand what our position is on security, what the process is, and what they should do in the event that there's something they want to disclose. I'd say it's in developing that relationship at the ground level with the communities.

Do you have any other suggestions?

Mrs. Marlene Jennings: One of the suggestions is that in the community consultations you actually sit down with the communities and encourage the tabling of a complaint where someone is alleging abuse by one of the contractual employees, whether it's the military or someone else, and ask what kind of process they think you should be putting into place to investigate that, and how you can provide protection and confidentiality for the complainant.

In Quebec, for instance, we engaged community organizations, and in some cases, we permitted and encouraged community organizations to file the complaints on behalf of the alleged victim. That created a security and comfort barrier for the alleged victim that the alleged perpetrator, because there are complaints that are not founded.... That's why I always say—

Mr. Randy Gossen: How do you create the safe haven? I guess that's what you're addressing.

• 1630

Mrs. Marlene Jennings: Exactly. We developed that through ongoing discussions with community groups, but we also discussed it with the police chiefs and with the police unions. That might be a little difficult in some countries where there are allegations and where even the Canadian government says there is human rights abuse on the part of agents of the government, but I would strongly urge that as a process you could use.

Mr. Randy Gossen: Well, that's good advice. I'll talk to our security people.

Mrs. Marlene Jennings: Okay. Thank you.

The Chair: Maybe you could exchange cards and confer afterwards.

Mr. Alderson.

Mr. Kai Alderson: I just wanted to say that security issues and security relations are one of the key points that socially responsible investors are looking at. I do have a list, and I would be happy to talk to you outside the committee room about the particular concrete mechanisms companies can use.

Mrs. Marlene Jennings: Thank you.

The Chair: I would just like to address both of you.

We've heard about the Canadian code of ethics and the United Nations compact, as well as the United States and U.K. voluntary codes. I just wondered, Mr. Alderson, if you think these are adequate, or whether we need to beef them up a little bit. It doesn't have to be a long answer.

Mr. Kai Alderson: Voluntary codes need some kind of bite behind them if they are to be effective. They need some kind of legislative fallback if they are to be effective, even if that legislated penalty is seldom or never used. What happened with the Special Economic Measures Act, where it turned out this could not be used against a company operating in the Sudan, is indicative of the need for something stronger. The international code of ethics is good, the global compact is good, all of these are good. I would also direct the committee's attention to the draft UN code for the activities of transnational corporations—I can provide the exact name to the committee's researcher—which is actually a very strong code. I don't honestly know where it is in the UN process, but I would recommend that the committee look at that seriously as something that actually takes verification seriously, takes relations to security providers seriously.

The Chair: Thank you very much.

I'd like to thank both Dr. Gossen and Dr. Alderson for being here today. It's rounded out some of the things we've heard from witnesses who have already been here, and we appreciate it very much.

Mr. Randy Gossen: Thank you. It's been a pleasure, and if there's any follow-up or any further questions or a need for information, please feel free.

The Chair: You may hear from us. Thank you.

You'll probably want to meet Ms. Jennings out in the hall.

We'll just suspend for about three minutes while the next group gets settled.

• 1633

• 1639

The Chair: We don't have a very big audience, but we're good listeners, so we'll listen hard.

We have now Stéphanie Allard, first secretary and commercial and trade program manager in the Canadian embassy in Colombia. Did I meet you when I was down there in June?

Ms Stéphanie Allard (First Secretary, Commercial and Trade Program Manager, Canadian Embassy in Colombia): Briefly.

The Chair: Yes, I thought you looked familiar when you were sitting there.

Thank you very much for coming up here. Are you up just for one day?

Ms. Stéphanie Allard: Actually, I'm staying until tomorrow.

The Chair: Two days?

Ms. Stéphanie Allard: Yes.

The Chair: Oh. We'll have to speak to the ambassador about that.

Ms. Stéphanie Allard: I did have some other business in the department.

The Chair: That's a long way to come for a couple of days. Thank you very much.

Ms. Stéphanie Allard: Thank you, Madam Chairman.

I don't know if this is okay for you, but I sent you a presentation earlier. I believe you received it yesterday, both in English et en français. I read it aloud this morning and I found it was very long, so in order to leave you more time for questions, I made a short version. So is it okay if I read the short version?

The Chair: Yes.

Ms. Stéphanie Allard: Okay. I'll just read it, and then maybe you can ask me questions.

• 1640

I'd first like to thank the members of the Subcommittee on Human Rights and International Development for the opportunity to be here. My presentation will last about 15 minutes. The subject of the presentation is the Colombian business environment and Canada-Colombia business relations today.

I'll start with an indication of the size and the importance of the market. Colombia is a country of 42 million people. It is the third largest market for us in South America. The country occupies a strategic position in the South American continent. It has access to both oceans. It enjoys preferred market access to the neighbouring countries through a number of trade agreements, such as the Andean Pact. It also has bilateral agreements with Chile and Mexico.

[Translation]

Canada's fourth largest export market to South America is Colombia, after Brazil, Venezuela and Chile. Canadian exports to Colombia totalled 304 million dollars Canadian in 2000.

Today, our main exports to Colombia are legumes, wheat, newspaper and newspaper products, copper, telecommunications equipment, cars and car parts, electronics, chemical products, processed foods and beverages. Our main imports from Colombia are coffee, cut flowers and agrifood products, particularly exotic fruits.

Over the years, Canada has also become one of the main foreign investors in Colombia, especially in the oil and telecommunications sectors, with direct investment totalling over 5 billion dollars Canadian today.

[English]

As to the structure of Colombia's economy, since 1992, when Colombia's policy of apertura, or “opening”, was initiated, the country's economy has become less restrictive, and import duties on most goods have decreased significantly. This has led to an increase in imports of consumer goods and of equipment for the modernization of industry.

[Translation]

Colombia is extremely rich in human and natural resources. It has one of the highest education rates in the region. Its labour force is very qualified, particularly in engineering and manufacturing. Colombia is bursting with all kinds of natural resources, including oil, coal, metals, precious stones and lumber.

[English]

Colombia, like Canada, is what we could call a regional economy, in the sense that its industrial and economic centres are spread out across the country. You have Bogota, with a population of 8 million, which is the capital and the financial centre of the country. Then the second city is Medellin, with a population of 2.5 million, and it's home to some of Colombia's most well-managed and efficient companies, especially the telecommunications and manufacturing sectors. Cali is the third city, with a population of approximately 2 million, and is in a region known especially for the agricultural industry. Finally, Barranquilla is the fourth city, with 1.5 million, and it hosts Colombia's largest commercial port and is a major trade centre.

Coming to Colombia's economic performance, from 1975 till 1995

[Translation]

The growth rate in Colombia has always been very high. It stood at between 4 and 5% per year. In terms of economic growth, it is one of the more remarkable performances in South America.

However, in 1998 and 1999, economic growth fell substantially to between 3 and 4.5% for each year, because of the crisis with regard to the Brazilian real which affected the entire continent, falling world oil and coffee prices, which are Colombia's main export products, and, obviously, because of the serious security problems caused by the internal conflict between the guerrillas and the paramilitary forces.

The growth rate rose to about 2.5% in 2000, which is nevertheless a marked increase, and the Colombian government expects a similar growth rate for 2001.

However, Colombia remains one of the most dynamic economies in Latin America and it has retained a solid international credit rating for the last 10 years.

Since 1999, Colombia, Chile, Uruguay and Costa Rica are the only countries in Latin America to have received an investment credit rating from international credit rating agencies, such as Moody's and Standard & Poor's.

The Export Development Corporation, the EDC, feels Colombia is a good risk and has authorized, over the last few years, a certain number of lines of credit for the country.

• 1645

As regards the investment climate, Colombian investment law is basically designed to encourage foreign investment. The various privatization programs that have been implemented to improve efficiency and productivity often interesting possibilities in the long term for investors, particularly in the sector of telecommunications, public services and infrastructure. Further, the existence of a transparent government approval system has created a very pro-investment climate. It has attracted a high degree of foreign investment, including Canadian investment, over the last several years.

As for the political situation, since his election in 1998, President Pastrana's government has spent a lot of time and energy on the implementation of a peace process in Colombia. I think ambassador Rishchynski mentioned this when he appeared before the committee in September. During his mandate, President Pastrana has initiated discussions between the two major guerrilla groups in Colombia, which are FARC, Colombia's revolutionary armed forces, and the NLA, the National Liberation Army.

Canada is actively involved in the peace process involving FARC and is also a member of an international facilitation commission with representation from 10 countries. Canada has also been invited to eventually sit on an international audit committee which will address the peace process with the NLA.

As for ethical corporate practices, it is important to note that a good part of the work on that issue is carried out by all my colleagues and myself within the trade section of the embassy, and the work is shared equally. It consists in maintaining an open and sustained dialogue on the themes of ethical investment and corporate social responsibility with the Canadian business community in Colombia and local representatives. The aim of this dialogue is partly to stay informed of the company's activities and to intervene in case there is inappropriate behaviour, if cases are brought to our attention and, on the other hand, to encourage the companies to contribute not only on an active or reactive way, but also in a proactive way to the economic, social and human development of Colombians, through the individual actions of each company, as well as through the development and implementation of joint initiatives with the embassy or with the Colombian-Canadian Chamber of Commerce.

This approach has two objectives. One, to make Canadian businesses and their local representatives aware of the importance of their contribution to the social and economic development of Colombia and to the eventual resolution of the armed conflict in their capacity as a key group within that society. In other words, it is essential that the foreign and local business sectors realize that they are actors and not simply spectators of the situation of violence and poverty afflicting Colombia for over 50 years now.

The second objective of our approach is to generally encourage foreign and domestic businesses—not only Canadian ones, but all foreign businesses—to adopt an attitude and measures which go hand in hand with corporate responsibility and ethical investment practices. Indeed, I feel that the Canadian business community has been a leader in contributing to the peace process in Colombia. Over the years, Canadian businesses have organized several events dealing directly with issues linked to human rights, ethical investments and the need to involve all local community interest groups in the decision-making process of the private sector, which will affect other groups within society. Let me give you a few examples.

We put together a joint initiative, involving the Colombian-Canadian Chamber of Commerce and the embassy in Bogota, which was the Forum on ethical investment and human rights in 1999. To my knowledge, it was the first time this type of initiative was taken to bring together the private sector, government and civil society in an open exchange, a transparent dialogue on issues relating to corporate responsibility in Colombia. This event also highlighted the leading role the Canadian community in Colombia had taken in this area. The Colombian-Canadian Chamber of Commerce intends to organize a second forum on ethical investment in February 2002.

In the same vein, the Colombian-Canadian Chamber of Commerce integrated presentations and a working group on ethical investment and corporate social responsibility into the first Colombian-Canadian Business Forum which was held in Bogota in May 2000, and a second Colombian-Canadian Business Forum, with a second meeting of this working group, will be organized in 2002 in Canada or in Colombia; that still remains to be determined.

• 1650

[English]

Security, I think, is a very important issue in Colombia for Canadian companies, and Canadians in general. Security is the first thing Canadians and other foreign business people must consider when they visit Colombia, even more when they decide to establish a permanent presence there. Colombia is a very dangerous place, and one must constantly take security and safety very seriously and rigorously into account. Petty and violent crime is prevalent in all the urban centres in Colombia, including Bogota, Medellin, Cali, Bucaramanga, and other cities. This is the same kind of risk, let's say, or security problem that one would find in most large South American or Latin American cities.

On the other hand, there is another security risk that is much more specific to Colombia, which is the risk posed by subversive groups who partially finance their activities through extortion, kidnapping, and other crimes that might affect the business community.

Security, therefore, represents a cost, and it's an important one that must be taken into account when doing business in Colombia. Foreign companies operating in that country usually seek professional advice on security matters—we certainly encourage them to do so. For companies operating in rural areas, additional security measures are often necessary to protect their operations and the people working for them.

Many security companies estimate that the cost of security in Colombia will be approximately 10%, sometimes more, higher than in other countries in the region. The embassy recommends that careful and effective security measures be warranted for Canadians establishing residence or business in Colombia, and high-profile business people usually travel with trained armed drivers and bodyguards, carry cellular phones at all times, and adopt other personal safety measures when living in Colombia.

The embassy also recommends that Canadian companies be proactive, as I said before, in their contribution to the country's social and economic development, and that they participate in initiatives that focus on corporate social responsibility, ethical investments, and human rights. This will ensure that Canadians in general, and Canadian companies in particular, are perceived as contributors to the solution and not to the problem in respect of Colombia's internal conflict, violence, and human rights situation. I believe a good image will minimize the risk of Canadians becoming targets of subversive groups.

I'd like to end my presentation with a few key messages.

First, the Colombian government welcomes growing trade relations with Canada and has demonstrated its intent to develop a special relationship with Canada. We are important to Colombia. They have let us know in many ways and many times in the course of the last years that we are a very good alternative market to their principal export market, which is the United States. So we do mean something to Colombia, both as an export market for them and as a potential investment country in Colombia.

Second, while Colombia's industrial base is growing significantly, it still requires sizeable imports of equipment and services to develop and modernize its economy, and Canada is a provider of some of that equipment and high-tech product.

Third, Canadian companies are attracted to ever-increasing opportunities in Colombia that closely match some of our leading sectors of capability, mainly telecommunications, oil and gas, mining, environment, and agriculture, but there are also other sectors.

Fourth, the level of Canadian trade and investment in Colombia is sizeable and important for the Canadian economy. Colombia is Canada's fourth largest export market in Latin America. Colombia also has a very favourable and open business climate, both in its legal environment and in its business culture. I might have some things to add on that later, if you want.

Fifth, security, admittedly, is a problem for Canadian companies operating in Colombia, but I think with alert and careful management, this has been kept under reasonable control. We cannot eliminate totally the risk, but we can, I think, manage it and minimize it. There is always a high risk, and Canadian companies are encouraged by the embassy to remain highly vigilant, as regards both their personal security and the security of their operations.

Sixth, strong efforts have been made to ensure that Canadian companies are operating in Colombia under ethical business practices and corporate social responsibility. The embassy is doing everything possible to ensure that this continues. Close cooperation between the embassy and the Colombian government and special efforts undertaken with the Canada-Colombia Chamber of Commerce I think have developed a very positive position for Canada in Colombia. I think Canada has a very good reputation right now in Colombia, Canada in general, but also Canadian companies and the way they do business.

• 1655

Finally, I think that by taking a strong leadership role with the Colombian government in assisting in the peace process, in what we're doing in the facilitation commission with the FARC and other initiatives, Canada has developed a responsible and positive reputation as an active partner in Colombia, one that is striving to be a part of the solution.

[Translation]

So, in conclusion, I feel that Colombia is a country which offers both excellent business opportunities but also major and serious challenges. It is a country which is strategically located. It is a country which has many natural resources and a highly qualified, motivated and hard-working labour force. Colombians have an excellent business and work ethic and a legal system conducive to good business. However, there nevertheless remains a personal security risk due to the very serious internal conflict in that country.

[English]

I think it's possible to do business in Colombia, through exports and through local investments, as long as these challenges are taken into account very seriously.

I hope this presentation has shed some light on the Colombian business environment. I welcome your questions and comments.

[Translation]

Thank you.

[English]

The Chair: Thank you very much.

[Translation]

Mr. Dubé.

Mr. Antoine Dubé: I must congratulate you for your presentation. I did not have time to read it before this meeting, but I have some questions. Have you been in Colombia for long?

Ms. Stéphanie Allard: I have been there for two and a half years. I arrived in July of 1999 and I will stay until next year or even longer.

Mr. Antoine Dubé: Fine. When something is written in a report, we know that the words will remain; therefore, we choose our words carefully. But in the less formal context of oral questions, it is sometimes possible to add additional information.

I realize that a lot of work has been done. You also said that Canadian companies are leaders compared to other foreign companies doing business in Colombia. Could you perhaps single out certain companies or perhaps comment about those we heard from just a few moments ago? I think you were in the room. Nexen, for instance. Could you tell us about what you have seen on the ground? Do these companies actually do what they say as regards human rights?

Ms. Stéphanie Allard: Yes. I could name several companies with whom I am in regular contact, even on a daily basis, in Colombia. Nexen is obviously known by most people because it is a huge company which has interests throughout the world. In this particular case, I would say that it is a leader amongst our leaders. The company has developed a written strategy which outlines its social and economic responsibility to consult with local populations and to protect the environment.

The company put this down in writing several years ago. And in the particular case of Colombia, I must say that the company is a leader. Why? Because, for instance, it spontaneously, of its own freewill, decided to participate in the events I mentioned a little earlier, such as the Colombian-Canadian business forum and the Forum on ethical investment and human rights.

Nexen also described, in presentations to other companies, to NGOs and to representatives of the Colombian government, what it had achieved and also described the positive results it got regarding its corporate image. It also described how its actions benefited the community. Then, Nexen invited all the other businesses to follow suit. Of course, it could not force the others to copy its actions, but suggested they emulate it or do things in the same vein. A company really has to go out on a limb to explain what it does and to encourage other companies, in Canada or elsewhere, to emulate it.

That's what I mean when I say that Nexen is a role model and a leader because it has shared its experience with others and is passing the word. I think that's a fine thing.

Mr. Antoine Dubé: Now there's a good player. I am convinced that you have also... The witnesses gave explanations a little earlier.

Perhaps there are players whose reputation was falsely criticized. I'll give you the example of a company doing business in Sudan, Talisman Energy. There's been a lot of criticism of Talisman. Can you tell us a little more about it?

Ms. Stéphanie Allard: As regards Talisman's operations in general, I probably read and heard the same things you did.

• 1700

As for its presence in Colombia, I believe it contacted the embassy—well, it contacted me—for the first time last year to ask what we thought about one of its projects. Talisman was considering acquiring certain exploration blocks in certain areas of Colombia.

Of course, my role was to warn them about the fairly high security risks in the region and to tell them about what we know regarding subversive movements in that area, which we find out by reading reports from various Colombian sources. What we suggest is that a company call on the services of a specialized security firm, which would be in a better position to explain exactly what is going on.

All this takes place before any type of work or exploration begins on-site. When the company approached me for the first time, it was before it had bought the blocks. It then made the acquisition and informed us of it. For the moment, the company is still studying the situation. It is not yet very active in Colombia.

Of course, yes, we realize that Talisman is established in our region and we are going to ensure that it stays in constant contact with the embassy and the Chamber of Commerce.

As for me, when I meet with representatives of companies which operate in Colombia, I obviously always encourage them to become involved in corporate social responsibility activities.

Mr. Antoine Dubé: I have a third question: Mr. Svend Robinson, another member of Parliament, and myself in particular have raised certain issues regarding the Export Development Corporation, the EDC, and have pointed to criticism regarding some of its projects. The corporation produced a report and based on my first reading of it, I had doubts regarding the way it monitored the human rights records of businesses it lent money to. In the particular case of the building of a dam, a lot of questions were left unanswered. Witnesses told us that they also had doubts and even voiced criticisms.

In its defence, the corporation put part of the blame on yourselves, the officials from Canada's Foreign Affairs Department. The EDC claimed it was willing to uphold human rights, but that it was also your job to monitor the companies which received the loans. Do you have the available resources to play that role?

Ms. Stéphanie Allard: To monitor Canadian companies in general or those benefiting from loans from the EDC?

Mr. Antoine Dubé: The companies that are benefiting from loans from the EDC.

Ms. Stéphanie Allard: Do we have the resources to do this in every case? I think that we cannot assume a monitoring role for every case at all times. No.

I think, on the other hand, that when cases are brought to our attention, we can study them. I think that we must do this if there are doubts or problems arising about the nature of the activities or the consequences that might ensue from the project that is carried out with the help of that loan.

The case you mentioned is the case of the dam built by the Urra company. I think that the Canadian company had obtained an $18 million EDC loan for a project that was worth $700 million at the time. As I understand it, at that time, the impact on the environment and communities was studied by the EDC and other organizations funding this project.

The result of the studies, at the time, according to the legislation in force at the time in Colombia... I must say that Colombia was basically benefiting from the EDC loan, because the government is... Well, anyway. The results showed that that project was in compliance with the standards defined by the legislation that was in force at the time in Colombia and the funding organizations were satisfied with the results of the studies on the environment and communities.

Mr. Antoine Dubé: What we are especially interested in are human rights. That is the most important part.

Ms. Stéphanie Allard: In fact, in this specific project, human rights were closely linked to environmental considerations. In fact, this region was inhabited by aboriginal communities.

• 1705

Mr. Antoine Dubé: And they were displaced.

Ms. Stéphanie Allard: After the dam was built, a part of the territory was flooded and people were displaced.

So that is how the problem arose. Thus we are dealing with a human rights problem caused by a project that impacted on the environment. Studies were done at the time, and to my knowledge, they showed the results of carrying out this project...

Mr. Antoine Dubé: What do you mean by “at the time”?

Ms. Stéphanie Allard: It was in 1992, if I am not mistaken.

Mr. Antoine Dubé: It seems like a long time back.

Ms. Stéphanie Allard: It has been quite a long time, but...

Mr. Antoine Dubé: Since then, have any measures been taken?

Ms. Stéphanie Allard: Since then, there have been ongoing discussions between representatives of the Colombian government and the communities displaced by the project. To my knowledge, a large number of people, but not all, a very large part of the people in these communities affected by the dam, were satisfied with the compensation they got. Discussions are still going on with those who are not satisfied with the solution to this problem.

[English]

The Chair: Thank you very much—you're way over time.

I just want to remind you. Did you see the papers we got from the Export Development Corporation?

[Translation]

Mr. Antoine Dubé: Yes.

The Chair: Very well.

Ms. Jennings.

Ms. Marlene Jennings: Thank you, Madam Chair.

[English]

The Chair: You can have 10 minutes.

[Translation]

Ms. Marlene Jennings: Thank you very much for your presentation which was very interesting and revealing. You were in the room when Mr. Randy Gossen, from Nexen, and Mr. Kai Alderson from Real Assets Investment made their submission. You heard Mr. Alderson say that, according to their charter and their definition of a company that takes its corporate and social responsibilities to heart, there's not a single company operating in Colombia with which they would not be ready to negotiate, and in which they would not want to invest.

Ms. Stéphanie Allard: For that very specific reason.

Ms. Marlene Jennings: Yes: in your long presentation, you named several companies that I'd like to mention again: Enbridge, Nexen, Alberta Energy, Talisman, Bell Canada International, Nortel Networks, Quebecor, the Kruger Group and Bata, just to mention a few.

Now, should I assume that you agree with Mr. Alderson when he says that these companies, the ones you just named and the other Canadian companies you have not mentioned and that invest in Colombia or operate there, are meeting their corporate and social responsibilities?

Ms. Stéphanie Allard: All right. I do not think I can guarantee, reasonably and sincerely, that there are no problems at all. I think that would not be honest.

To my knowledge, in my work... I must say that between 20 and 30% of my daily work consists in proactively reminding the private sector of its social and corporate responsibilities. I think that this is very important and our ambassador insists a great deal on this.

Thus, in my work, I keep in touch with companies, I have conversations with people other than company representatives, such as members of the Colombian government or of NGOs, and I very often travel inside Colombia where I meet all kinds of people who are not necessarily businessmen. According to the information I have and my experience, I agree with what Mr. Alderson said, to the extent that I do not see any Canadian company acting unethically in Colombia.

If a reasonable doubt, or a complaint were officially expressed, you can be sure that I would look into it very seriously. I would raise the matter with the ambassador and I would consult my Ottawa colleagues and we would take steps, we would do whatever we could to verify what was going on. I think we did this in the past and we will do it again. This cannot be allowed, and we must not allow this for moral, human and professional reasons, because ethical business is good business.

• 1710

Ms. Marlene Jennings: Thank you very much. Here is my second and last question.

Do you agree with the advice I gave Mr. Gossen, from the Nexen company? Do you agree that private sector companies that invest and operate abroad, especially in developing countries, who take their corporate and social responsibilities seriously and try, as far as possible, to implement mechanisms for doing business ethically, should boast about this here in Canada and try to counteract the propaganda? Currently, certain anti-globalization elements are producing propaganda that claims that any private sector investment in developing countries is non-ethical and against the human rights in that country, is only intended to make a profit at any cost and amounts to exploiting the population.

Ms. Stéphanie Allard: This is a long question, but I think that the answer can be quite brief.

Yes, I agree with you, but I will have to elaborate a little. I think this is an excellent recommendation. I think that sometimes, some companies in areas torn by conflicts, in countries that are dangerous because of security problems, prefer to keep a very low profile and not to publicize the fact that they are operating in that kind of place.

Ms. Marlene Jennings: And here, in Canada?

Ms. Stéphanie Allard: Yes, this is a comparison I want to make.

I can understand why companies abroad may sometimes want to keep a low profile and low visibility. On the other hand, I think that in Canada, it is not only good, but even essential to promote those things. And the reason is that there are people who have complaints about what the companies are doing. Sometimes they are well founded, sometimes not so well. Each case is different. I think that each case should be looked at. To the extent that people think negatively about doing business abroad, it is important for companies to talk about the investments they make in various countries, about what they do for the community, how they consult it, and the positive impact they have on the social and economic conditions and human rights of a given country. It is important for them to outline all the good that they do in that country as Canadians and as companies.

I think that this is an excellent thing to promote. It sets a good example, establishes a continuing dialogue between the companies and other members of civil society in Canada and ensures better agreement in the end. Perhaps globalization and multilateral and regional trade agreements are not entirely bad. There might be something good in all that. I think that it is important, if only to have an open and reasonable dialogue in Canada about these issues and to take everyone's opinion into account.

Ms. Marlene Jennings: Thank you very much.

[English]

The Chair: Go ahead, Monsieur Dubé, and then I have a little question afterwards.

[Translation]

Mr. Antoine Dubé: Let me tell you that you gave Ms. Jennings a diplomatic answer.

Finally, she connected the anti-globalization groups to... I heard something from the witnesses who were invited here and I will repeat it to you in other words. Must we always believe what the NGOs tell us or are the NGOs involved in propaganda?

Ms. Stéphanie Allard: May I answer you with a question?

[English]

The Chair: A subtle question—can we believe them?

Ms. Stéphanie Allard: Yes, I agree.

[Translation]

Must we always believe what the companies tell us? I think it is important to—

Mr. Antoine Dubé: From what you told us, I gathered that our Canadian companies were decent.

Ms. Stéphanie Allard: Yes, but we believe them because we talk to them, as well as with other people. I do not think that we should take for granted whatever an NGO tells us any more than we should believe or take for granted what a company tells us. I think we should listen to what people tell us and corroborate the information with various interest groups. We have to look at the various aspects of the same issue to obtain the best possible or the most general point of view.

Mr. Antoine Dubé: This is what the committee is trying to do. We have heard from NGOs, churches, religious communities, and we should normally believe them. We heard from many people, but there are two perspectives. Some people criticized some companies very severely. We asked them to substantiate their claims, but I must say that apart from talking to people who work there like you, there are not many ways to verify these things. You are our eyes and our ears in those places.

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Ms. Stéphanie Allard: And we take this work seriously. I do not only mean the ambassador or the political sector. In the trade sector, this is my priority, and I think that it is very important for everyone.

I think that we should take all these points of view into account. I think that any Canadian person or organization in that place has the right to say that it thinks that some company is doing this or some group is doing that, and why they think this is not right. Anyone has the right to speak out, but the allegations have to be backed up. There has to be something behind it. As I said just now, and I am repeating it because it is very important for this message to be heard clearly, if someone makes serious allegations against a Canadian company or group to me or my colleagues, you can be sure that we will look at this very, very closely. That much is clear.

Mr. Antoine Dubé: Thank you.

[English]

The Chair: Thank you very much.

[Translation]

Mr. Antoine Dubé: [Editor's Note: Inaudible]

[English]

The Chair: Mr. Dubé, I'll just give you an example of how we have to pay attention to all sides. When I was in Colombia in May, one of the NGOs came up to us with a long list of Canadian oil companies doing business in Colombia—I think you were at that meeting when we had the business people in. I'm guessing right now that there were 20 or 25 names on the list—these are the Canadian oil companies that are doing terrible things to our country. They couldn't name one single thing they were doing to the country, but they gave us the list. I went from that meeting to the meeting with the oil companies and the chamber and different people, and I said, could you just look at this list and see what you think of it? And they said, what is it? And I said, well, it says at the top: Canadian oil companies. They went through it and said, American, American, American, Colombian, American, American.... There were only four or five on the whole list that were legitimate Canadian companies.

So here's an example where we had to do some work and then go back. We checked with some other people as to which ones were Canadian and which ones were not. So you really do have to, I think, in any situation, look at both sides, check for yourself, and find out. That was an example of an NGO just really leading us down the garden path.

[Translation]

Mr. Antoine Dubé: But at the same time, I am certain that if we were Americans going through the same exercise, American companies would say that they are taking appropriate steps. It is not easy to be objective. We can see that governments do not control these situations perfectly. There is legislation, but if laws are not enforced and if no one is there to check—

I want to ask one final question, because time is moving on.

Canada is present in Colombia, but there are people doing the same type of work as you are doing who are also down there. These people work for other governments. Do you have contact with American government officials doing the same type of work as you are? Do you work together to assess complaints from individuals, NGOs and other groups?

Ms. Stéphanie Allard: Do we have contact with the representatives from the embassies of other countries? Yes, and I believe that this contact is important. Do we discuss cases of ethical or unethical behaviour by specific companies—

Mr. Antoine Dubé: They are sometimes multinational companies.

Ms. Stéphanie Allard: —sometimes multinationals? No, we have not done that to date. That does not mean that we could not do that in the future, however. If the opportunity arose, I would love to work with my counterparts. Indeed, I think it would be my duty to do so. However, in the cases that we're talking about, we have not done so. We have in the past discussed US-Canadian multinationals in terms of other business-related issues. In particular, we looked at legal issues related to specific telecommunications projects by these companies in Colombia. However, we have never discussed allegations or ethical problems in terms of multinational companies. That does not mean that we will not do so in the future. It just means that we have not discussed these issues to date.

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However, I would like to raise one specific point. Earlier, I mentioned the first human rights and ethical investment forum held in Bogota in 1999. Both the chamber of commerce and the embassy are now, in cooperation with the Universidad Javeriana, in the throws of organizing a second forum which will be held on the 19th of February in Bogota.

This year, we would like to invite the business communities from other countries including chambers of commerce, the AMCHAM, the Colombia-United States Chamber of Commerce and the France- Colombia Chamber of Commerce as well. We would like representatives of companies and even officials from the embassies of other countries to get together with us to continue the pioneering work that has been done in this area. That is what we intend to focus on. We tested the water in 1999 and things went well. We are going to try to organize a larger event next year.

Mr. Antoine Dubé: I myself do not have a major share portfolio, but there are many Canadians and Quebeckers who invest in companies and whose portfolios are managed by consultants or companies. I would like to use the example of fair trade coffee. These people, and we must take them at their word, assure us that the products from these companies are environmentally and socially friendly. What is your opinion of this trend, which exists in particular in Colombia?

Ms. Stéphanie Allard: You are referring specifically to Colombian exports to Canada, aren't you?

Mr. Antoine Dubé: Yes.

Ms. Stéphanie Allard: There are several initiatives of this type. You mentioned coffee. That is the most well-known initiative. However, there is another initiative that you do not perhaps know about. I am referring here to an agreement in Columbia, between Colombians and Americans. This agreement is called the Business Anti-Smuggling Coalition. Under this agreement specific Colombian companies have a seal of approval from the American authorities. This seal indicates that the company does business appropriately, is not engaged in smuggling and that the company's products are produced in an environmentally and socially responsible manner. Colombia is attempting to develop initiatives of this type with other countries and other regions. I think that this initiative is a good one.

Another area where we are seeing this type of thing, and I think that it is important to point it out, is in the flower industry. And I believe that Colombia is the second largest exporter of cut flowers in the world. This industry has created many jobs, but it has done more than create jobs. Many jobs have been created for women. For instance, a major proportion of people working in the flower industry are single mothers raising their children alone. This is a very difficult situation.

Consequently, several flower-exporting companies in Colombia have decided to develop specific programs. These companies have set out their arrangements in terms of trade unions, the programs that they have for single mothers, education programs for children, health programs, etc. Some of these programs are extremely well- thought out. I visited one of these programs near Bogota. It was fantastic. The company is really taking care of its employees. It has developed genuine working standards and consults broadly with its employees. It is important to encourage initiatives of this type. This is all part of the solution.

Mr. Antoine Dubé: Madam Chair, I would just like to bring your attention to Ms. Allard's deep-seated enthusiasm, which is very compelling.

[English]

The Chair: Now I want my little one.

When you gave your report, I don't think you said anything about drugs, and you didn't say much about personal security as a result of political situations down there, which I guess are a result of drugs. Does that have much effect on somebody saying, I'd like to go down there and invest my money? Do they have to pay the Canadians who go down there more money as danger pay?

Ms. Stéphanie Allard: A short answer?

The Chair: Yes.

Ms. Stéphanie Allard: Yes.

The Chair: Does it affect how much money Canadians might invest down there? If they want to start up a company, they have to go down there, they have to send employees down there.

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Ms. Stéphanie Allard: This is a big question.

The Chair: No, no, you only have four minutes.

Ms. Stéphanie Allard: Okay.

The Chair: Make it a small question. It's a big question, but speak quickly.

Ms. Stéphanie Allard: I see two questions in there. The first is whether the drug and security situation affects a decision to be present or invest in Colombia. The second is a sub-question: do you have to pay foreigners more or take special measures in order to bring them there? I'll start with the second one.

Companies will send a Canadian representative to Colombia. You have to convince that person to go to Colombia. That person would probably rather stay in Canada or be sent to a country that has a different reputation. Let's face it, what we hear about Colombia in the news is not good news, it's bad news; not very often do you see something good about Colombia in the news. So people are scared to go, because they have a certain image of Colombia in their minds, which sometimes is related to the truth, obviously, but they don't think of it in practical terms. Because of the security situation, because you have to change your lifestyle, because you have to live in an environment where every day, every minute you have to have that sixth sense, that switch, it has to be on, you have to stay alert, companies, when they send a member of their team down there, pay them more. They not only pay them more, they also have to take into account the extra cost of having that person down there—personal security, the apartment has to be safe, the office has to be safe, the car. There are a lot of elements you have to think about in order to make this security manageable. You cannot eliminate the security problem, but you can minimize it. That's a very important factor. That's the first answer.

With the decision whether or not to establish a presence or have an investment made in Colombia, I think it's basically the same rationale, but at a larger level. Security is at the base. There's an emotional aspect to it, there's an emotional aspect to what is happening in Colombia. It touches me just as it does every Colombian. But if you take security and you integrate it into the go-no go decision—will I do this or not?—you put it in the equation, you add up the extra 10%, 15%, or the amount the security company consulting for you indicates through its study. You integrate that into the equation, and if at the end you are okay with the money you are going to make, the type of presence you're going to have, the type of impact you will have over there, and whether what you are doing will be good or not for the community, and you have accounted for extra security, then it is a business decision that seems reasonable.

Yes, the internal conflict, largely due to the drug situation, and the security situation resulting from that are aspects that influence decisions about doing business in Colombia.

The Chair: Thank you very much for coming, Stéphanie.

Ms. Stéphanie Allard: Thank you very much for inviting me.

The Chair: Thank you. I'll have to speak to the ambassador. I'm sorry you are not getting more time up here.

Ms. Stéphanie Allard: Me too. Thank you.

The Chair: Thank you again for coming.

[Translation]

Ms. Stéphanie Allard: Thank you.

[English]

The Chair: The meeting is adjourned to the call of the chair.