BUSISIWE KAMOLANE-KGADIMA: Corporations require supervision, not self-regulation

In his recent state of the nation address, President Cyril Ramaphosa highlighted the persistent crises faced by our country. Among these are high unemployment exacerbated by the Covid-19 pandemic, a lack of electricity and corruption.

The president’s response has been to emphasise the role of the private sector;  he spoke extensively on the need to “cut the red tape” to provide more access and opportunities to the private sector, including the introduction of independent power producers. While it is debatable whether increasing the influence of the private sector in areas such as the provision of essential services can benefit a fundamentally impoverished and unequal society, one thing we cannot ignore is government’s growing exaltation of the private sector.

With the private sector being granted more power to influence the lives of more people, there are increased prospects for human rights violations if the exercise of such power is not monitored and regulated. Corporations’ focus on maximising profits may conflict with the protection of human and environmental rights, and without government exercising proper oversight, corporations more often than not choose profits, to the detriment of people and the environment.

A recent example is British multinational Shell and Australian geodata company Searcher, which sought to conduct seismic surveys off the Wild Coast despite the permanent environmental and social damage this could cause. SA therefore needs tighter regulatory mechanisms on both national and international levels as opposed to cutting red tape.

Mandating human rights obligations and corporate accountability is essential to protect people. But holding companies to account has proven challenging, particularly when it comes to multinationals. Many are richer than the GDPs of the countries in which their subsidiaries operate, and and some with headquarters in in the Global North commit violate of human rights via their subsidiaries in the Global South.

A case in point is the oil spillages by Shell in the Niger Delta in Nigeria more than 50 years ago, which continue to have devastating effects on locals. For decades Shell refused to take responsibility for the harm it caused. This denial continued until 2021, when Shell finally paid reparations. Scottish company James Finlay, through its subsidiary in Kenya, for decades subjected its tea pickers to slave-like working condition. A class-action suit has now been instituted by current and former workers.

Multinationals would often avoid sanctions as a result of weaker regulatory mechanisms, incapacity or even the refusal of countries in the Global South to monitor and regulate multinationals. For victims who do receive some form of relief, justice generally comes many years after they have suffered harm. In an effort to address these accountability gaps, a binding treaty to regulate multinationals and other business enterprises under international law is being negotiated.

Sponsored almost eight years ago by SA and Ecuador, the binding treaty aims to offer increased protection to people against the impunity of corporations. Over the years each revised draft has reflected (and rejected) the views of different stakeholders. Differing political, ideological and legal considerations have on the one hand resulted in stern opposition from corporates and on the other fuelled calls by supporters of the treaty for stricter and more comprehensive terms.

The diverse opinions yielded polarised ideas of what a treaty of this nature should encompass. The divide between the Global North and the Global South is particularly striking in this regard. Most states in the Global North oppose the treaty, opting instead for voluntary and self-regulatory mechanisms, while many states in the Global South have supported the negotiation process and continue to contribute immensely towards strengthening the contents of the treaty.

Despite the challenges, such a treaty remains indispensable. The significant increase in the political, economic and social influence of multinationals in SA and across the globe has led to significant power imbalances. Part one of the Zondo state capture report reveals how corruption and the facilitation of the capture of the SA Revenue Service by Bain & Co, hollowed out one of SA’s most important government entities, with enormous impact on the functioning of the state as a whole.

The third revised draft was debated at last year’s seventh session of the UN Human Rights Council’s negotiations on the binding treaty at which SA which emphasised its commitment to the successful adoption of a binding treaty. This commitment commendable and hopefully will continue until the treaty is adopted and ratified.

Civil society organisations such as the Centre for Applied Legal Studies continue to play a pivotal role in advocating for the adoption of a binding treaty that can address, among other issues, state capture by corporations. SA, together with other Global South governments, civil society organisations and Global North allies, should continue the vibrant and robust fight for an effective treaty. Global South governments and civil society must strongly oppose abandoning the negotiation process for other “soft law" and voluntary mechanisms that would render the past eight-year battle for the treaty futile.

Ramaphosa’s declaration to “cut the red tape" should recognise the impact large corporations and multinationals have had on the rights of people and how to prevent such continued rights violations in future. A binding treaty under international law is a positive step forward in this regard and SA’s commitment to the process should not only extend to an international platform but also within SA’s borders. Now, more than ever, as we anticipate the fourth draft of the treaty, we must unite our efforts as Global South voices to bring to fruition the kind of treaty that will be an instrument of justice and accountability to ensure that all countries, including SA, remain free from corporate abuse and corporate capture.

• Kamolane-Kgadima is research co-ordinator at Wits University's Centre for Applied Legal Studies.