Holding Multinational Companies Accountable


In the modern world the sense of freedom hardly arises from natural order. The state has difficulty in protecting individuals from each other engaged in rival pursuits who are entangled with its thinning authorities.  The preference of economy and business for short-term profits does not have rewarding resilience for social virtues such as political expression, civic participation and democratic access of the masses to public good vital for social peace. Multinational enterprises are praised for becoming the engines of free trade, market specialisation, business investment, technology transfer and expansion of production. They have created powerful supply chains across countries and continents, offered jobs to millions of people and contributed to social and economic progress and environmental sustainability. 

But multinational companies (MNCs) also fan a cauldron of popular discontent. The less fortunate ones do not have justice and standards of safety and security as they face a schizoid approach to production, distribution and hope for idyllic days ahead. In Nepal, most businessmen love politics and political leaders ease tax exemption or relief through executive decisions. Both have mutual interest in public life to crush the doctrine of the nation’s classical ideal of just price and the ability of Nepali state to provide distributive justice by alleviating the condition of scarcity and offering freedom of choices in the goods. Mostly family run-Nepali business and politics have created a fiefdom, inwardly safe shelter behind the wall of clientalism but outwardly protectionist and, therefore, lack confidence to build a sound competitive economic and political system.  

Selfish influence 

Many MNCs from powerful countries are accused of lobbying the government for favourable change in regulative conditions and policies for the utilisation of cheap labour, natural resources, market and repatriation of large parts of the profits thus reducing the corridor of economic basis of freedom. The struggle of Nepali society for freedom from the predatory nature of political economy is lawful.  In this context, the OECD Guidelines for Multinational Enterprises holds enormous value for its ability to cut free-riders' effects that generate selfish affluence. These are the product of recommendations of governments to multi-national enterprises seeking to make them accountable and promote responsible business conduct. 

Their aim is a quest for positive contribution of MNCs by promoting at least minimum social standards by avoiding the possibility of harms done by their unethical business practices -- tax evasion, bribe of cabinet for huge tax breaks, abuse of workers’ rights, legal loophole, weakening of the power of labour unions and even the state’s capacity to acquire economic and political wellbeing for self-governance. Practical politics supposes a correlation among financial integrity, public expenditure and good governance in Nepal.

The Guidelines are normative in nature and, therefore, non-binding but they are applicable laws and confirm international humanitarian standards. They esteem rights-respecting political culture which enables the state, trade unions, media and civil society to maintain oversight and due diligence on MNCs and private sector business. The economic institutions have a vital role to play in it by affirming the dignity of work beyond their traditional domain of inquiry and governance. The ILO Declaration on Multinational Enterprises and Social Policy bears the spirit of social justice critical for the design of good society where each governance actor fills the other’s critical gap.

The Guidelines embrace the UN’s Guiding Principles on Business and Human Rights in the frame of “protect, respect and remedy.” The 31 Guiding Principles are based on three pillars: state’s obligation to respect, protect and fulfil human rights and fundamental freedoms within its territory and jurisdiction and address the abuses done by business; the business enterprises’ compliance with all applicable laws and human rights; and adoption of effective remedies if these rights and obligations are violated. Each of these principles has three items: fundamental principles, operational principles and good commentary on them. They apply to all states and all business enterprises irrespective of their size, sector, location, ownership and structures. They help Nepal’s fight against generational poverty.

The Guidelines hold broad sanction of Nepali constitution and democracy: due diligence and responsible supply chain management. In the Global Framework Agreements companies and trade unions negotiate a framework for addressing workers’ rights and welfare. Business compliance of state laws, formulation of policies for compliance and control of adverse effects on human rights improve the transparency of enterprise operation, ethical business practice and lift the image of the business. Social and ecological duties build the trust of society on it and improves a company's standing, reputation and overall image. Nepali courts, trade unions, media, civil society and local government can act as a leverage and communicator in the context of remedies and shore up the rule-based system.

The Guidelines espouse the ethos to fight bribery, extortion, environmental corrosion, taxation on enterprises and their regular information disclosure so as to recover the nation’s dysfunctional economy and polity and abide by the egalitarian ideal of social contract. The state, business and trade unions can collaborate on fair wage, social protection and the dignity of work. Nepal’s adoption of Sustainable Development Goals presumes the partnership of these actors including international regimes. But, without political will, adequate resources and robust support of multi-stakeholders these goals will remain empty and noisy without any possibility to animate in real life.

Nepali state and business have committed to promote and implement the Guidelines through National Contact Points (NCP) duly set up by the government. The NCP offers an important arena for the suggestions, facilitation, reconciliation and mediation of disputes between MNCs, the state and workers.  The Guidelines seek to strengthen the role of NCP to make available both human and financial resources, improve the performance of governance actors, cooperation across nations, meet regularly and report to its committees about rights abuse. The NCP leadership can set up both advisory panels from the stakeholders and oversight agencies. 

On the remedial aspect the state’s court system can play a role regarding the abuse of rights by offering the affected needed access to justice. The operational principles lay out four aspects: state-based justice, state-based non-judicial system, non-state based grievance mechanism and operational level tools.  It spells the partnership of industry and other multi-stakeholders in solving issues and shaping public policies by public opinion, not by power, for societal wellbeing. The Guidelines intend to foster pro-active implementation of the agenda to assist enterprises in fulfilling their duties in a transparent and honest manner. 

Business enterprises entail to respect human rights, avoid intruding, and address the adverse impact of unlawful business practices on rights through prevention, mitigation and remediation. Business reputation largely rests on maximising ethical business dealings with the customer and minimising negative effects of business on child labour, industrial pollution, exploitation of workers, gender discrimination and violence, etc. One is related to the cause of rights abuses while the other is harmful effects through global supply chains and business relationships which bring low wages, poor working conditions, wage discrimination and violation of labor rights.

Responsibility of business spurs customers to multiply information about the fair transaction around the market and curtail the harms on the business reputation created by negative bureaucracy, shortfall with Nepali state in abolishing syndicate, political culture of shifting blame to others and peddling of money in politics. A development model where only the poor, women and environment will have to bear the costs is unsustainable for it provokes the crazy oracle of the oppressed. Awareness of the Guidelines and building the capacity of Nepali state, NCP, business and labour related institutions is vital. It is more important because capital is largely privatised and centralised at the higher ups in the hands of a few powerful people while the labour's payment to the national economy is socialised. 

Contribution of remittance

One can see the decentralised contribution of remittance to national progress and its ability to lift up the poor. It is higher than the contribution of foreign aid, investment, trade and tourism. The welfare of a nation can hardly be measured by a skewed distribution of national income through a market which only imperils the weaker sections of society offering them neither means nor choice in public good. Nepal’s long adaptation to market-based growth had veiled many signs of malaises. The progress of politics in Nepal as a critique of the past, not thinking about the aptness of new ideas, technology and institutions, is less a tonic to avert its dire curve. The state and business community are obliged to promote SDGs and utilise optimal resources as they are connected to intergenerational justice and human security without deflating the capacity of nature for renewal.

 Obviously, the business sustainability in Nepal rests on its benefits not outweighing the costs, taxing business transactions and reasonable rent from the land, capital, technology and services. The economic institutions have to adopt systemic approaches and strategies for the implementation of the Guidelines.  They help bridge the gaps between normative standards and the political culture of business rooted in profit incentive. Adam Smith, the ardent advocate of moral sentiment, has wisely suggested people not to innocently succumb to business advertisement induced by media manipulation, fabricated by self-styled spin doctors and justified by the rationality of lawyers involved in propagation of commercial law, not the spirit of social justice inscribed in the constitution for a rewarding life of freedom and dignity.

(Former Reader at the Department of Political Science, TU, Dahal writes on political and social issues.)

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