Being accused of involvement in crimes against humanity is a risk for companies that can’t be overestimated, particularly for those operating in conflict zones or in regions blighted by modern slavery. In-House Perspective assesses what’s at stake and how in-house teams can help companies mitigate the dangers.

Of all the allegations to raise against a company, the accusation that it’s somehow involved in crimes against humanity is perhaps one of the most difficult to prove – as well as to deflect.

Many companies have been accused of either direct or indirect involvement in such crimes – from human rights abuses to providing aid to military regimes – with the threat of criminal action sometimes lingering on for decades.

These claims against companies are often civil rather than criminal. In early August 528 Americans filed a US Anti-Terrorism Act complaint against Swedish mobile phone company Ericsson over allegations it regularly paid protection money to terrorists in order that it could continue to operate in parts of the Middle East.

Ericsson disclosed in February that an internal investigation into the conduct of its employees, vendors and suppliers in Iraq during the period 2011—2019 ‘identified payments to intermediaries and the use of alternate transport routes in connection with circumventing Iraqi Customs, at a time when terrorist organizations, including ISIS [Islamic State of Iraq and Syria], controlled some transport routes’. The investigation could not identify that any Ericsson employee was directly involved in financing terrorist organisations, nor could investigators determine the ultimate recipients of these payments.

In an emailed statement to In-House Perspective, Ericsson said that it ‘notes the filing of a plaintiff’s action in federal court in the District of Columbia and will zealously defend against this action. Any effort to connect Ericsson to the actions described in the complaint will fail on the merits’.

Bringing action against companies and their boards can take time, but that doesn't mean that criminal proceedings are unthinkable. In May the Paris Court of Appeal decided that multinational cement company LafargeHolcim – the result of a merger between Lafarge and Holcim – should face charges of complicity in crimes against humanity after its subsidiary allegedly paid armed groups, including ISIS, to keep its Syrian cement factory running between 2011 and 2015.

The ruling follows a decision by France’s highest court, the Cour de Cassation, in September 2021 that clarified the legal framework under which a company may be charged for its involvement in human rights violations.

According to human rights non-governmental organisation the European Center for Constitutional and Human Rights (ECCHR), which brought the complaint alongside human rights group Sherpa and 11 former Syrian Lafarge employees in 2016, the case represents the first time a French multinational corporation has been charged with complicity in crimes against humanity. Lafarge also remains charged with deliberately endangering the lives of its Syrian employees.

A trial date has not yet been set.

In response to the latest legal decision, a Holcim group statement said: ‘We strongly disagree with the Court of Appeal’s decision to retain complicity in crimes against humanity within the scope of the investigation of Lafarge.’

The company, which is cooperating with authorities, added ‘the alleged conduct at Lafarge […] is in stark contrast with everything that the group stands for as a company’ and that the events ‘were concealed from our board at the time of the merger in 2015 and go completely against our values’. The statement notes that Lafarge intends to appeal the decision.

Meanwhile, in November 2021 Swedish prosecutors brought charges against the Chairman of Lundin Energy, Ian Lundin and the company’s former CEO, Alex Schneiter, for complicity in war crimes carried out by the Sudanese army and allied militia in southern Sudan in the period of 1999—2003.

Sweden launched an investigation into Lundin’s activities in Sudan following a critical 2010 report by the Dutch non-governmental organisation PAX on the company’s possible complicity in international crimes in Sudan between 1997 and 2003.

Prosecutors allege the company had asked the Sudanese government to secure a potential oilfield, knowing this would mean seizing the area by force. As such, this made the executives complicit in war crimes that were then carried out by the Sudanese army and allied militia against civilians. Prosecutors have also filed a claim to confiscate 1.4bn Swedish Krona (US$161.7m) from Lundin Energy, corresponding to the profit it made from the sale of its Sudan business in 2003.

The company and both Lundin and Schneiter deny any allegations of wrongdoing and the former has said it will contest the confiscation claim.

A very real risk to business

The term ‘crimes against humanity’ is an umbrella term that covers a variety of human rights abuses, including murder, extermination, enslavement, enforced disappearances, persecution and other serious crimes.

The term is also legally complex: for example, the concept of crimes against humanity has been defined differently by virtually every major international tribunal since the Second World War, including Nuremberg, Rwanda, Tokyo, Yugoslavia and under the Rome Treaty, which established the International Criminal Court. Domestic laws also have different specific definitions.

Generally, however, a crime against humanity requires that a crime is committed as part of a larger widespread or systematic attack, against any civilian population, where the accused has knowledge of that larger attack. Occurrences most often arise in the context of armed conflict because the potential for abuses – as codified under international humanitarian law – increases.

Mark Stephens CBE, Co-Chair of the IBA’s Human Rights Institute and a partner at Howard Kennedy in London, says there are many precedents for companies being accused of complicity in crimes against humanity, and not just those operating in spheres of conflict. Examples include arms manufacturers, companies that sell equipment directly to authoritarian regimes and those businesses that have failed to prevent their products being used by despotic governments or governments with aggressive military forces.

Because of how widely the term can be interpreted, as well as how easily a company’s products can be resold through multiple-tier supply chains and unapproved sub-contractors and buyers, Stephens believes ‘there is a real danger that companies have underestimated the risk of being complicit in crimes against humanity.’

He warns that ‘boards can no longer take a [blind eye] to the behaviours their companies are carrying out in pursuit of profit. If their activities involve child labour or despoil the environment, for example, they will be held to account for it.’

While a prosecution against a corporate for crimes against humanity may be rare, ‘disengagement by customers and suppliers for breach of contract and disinvestment by investors and the withdrawal of financing by banks for a breach of environmental, social and governance [ESG] principles is more common, relatively easy, and possibly more potent,’ says Stephens.

Lessons and guidance

International organisations like the UN and the Organisation for Economic Co-operation and Development (OECD) have both issued principles and guidance to try to help businesses look more widely at their societal, environmental and political impact to prevent harm.

The OECD’s Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, published in 2010, aims to prevent trade in ‘blood’ diamonds from African warzones, as well as tin, tantalum, tungsten and gold, by advising companies on how to identify potential ‘red flag’ areas.

The UN’s Guiding Principles on Business and Human Rights, endorsed in 2008, rest on three pillars of ‘protect, respect, and remedy’ and provide a duty for the state to protect against human rights abuses by third parties, including business, as well as a corporate responsibility to respect human rights.

They also provide for greater access by victims to effective remedy, both judicial and non-judicial. These principles have become widely accepted as ‘soft law’, meaning that while they’re legally unenforceable, they’ve become the basis for the expected norms upon which companies operate.

Indeed, some companies have acted to prevent themselves being caught up in a human rights scandal. In 2013 UK-based pharmaceutical company Hikma stopped selling a drug to Arkansas because the US state planned to use it to execute prisoners on death row.

Phenobarbital is prescribed to prevent convulsions and treat epileptic seizures, and Hikma learnt that it was to be used in state executions. Human rights campaigners said the drug was untested for such use and risked leaving permanent injuries or causing a lingering and inhumane death. Legal rights charity Reprieve, which highlighted the issue, welcomed the company’s actions, saying ‘their action, like that of many other companies before them, demonstrates that the pharmaceutical industry is not willing to see its drugs used to kill prisoners.’

While Stephens applauds the UN and OECD guidelines and the actions of companies that take active steps to prevent abuses and/or remedy them, he believes such moves are still part of an ‘evolutionary process’ that ‘needs more work’.

He cautions that such human rights abuses and potential crimes against humanity are likely to continue until enforcement improves and individuals – not just corporates – are held to account for such crimes. ‘Until individuals – especially executives – are properly held to account then companies will not stop,’ he says.

The role of in-house counsel

To try to prevent companies becoming unwittingly complicit in potential crimes against humanity, Stephens believes in-house counsel should ensure that their organisation reviews its supply chains to check that suppliers are not outsourcing work they should not be; are not engaged in child labour or slavery; and have signed up to and comply with the company’s code of conduct and terms of business.

He also recommends that companies use an external assurance provider to carry out onsite audits of suppliers, verify ownership and check their operations. Furthermore, companies should check where the materials for their products are coming from – and not just the names of the businesses they’re dealing with or where their suppliers say the goods are coming from.

Stephens also recommends that in-house counsel check how contracts are pitched and won, as well as how clients and projects are selected to ensure the work is won on merit and that it represents value to the business.

Jonathan Drimmer, Corporate Counsel Forum Liaison Officer for the IBA Business Human Rights Committee and a litigation partner at Paul Hastings in Washington, DC, says that whenever a company is operating in a country or region embroiled in the middle of an armed conflict, ‘it is prudent to be attentive to whether the company is knowingly or unknowingly contributing to the conflict, its participants, or the actors involved’.

If a company is aware of any evidence of such acts taking place – or of being involved in them – they should regard them as immediate ‘red flags’, he adds.

Drimmer says if a company has been involved or linked to committing crimes against humanity, it should firstly stop any activities that may be construed as crimes and hire outside counsel for advice. Secondly, he says, outside counsel should investigate the extent to which the company may have been involved in criminal activity. Thirdly, working with outside counsel, the company should institute measures to provide confidence that it will not be involved in future crimes.

To obtain assurance that their suppliers and/or customers are not involved in committing crimes against humanity, companies should conduct heightened due diligence on them, says Drimmer. Where there are red flags, ‘companies should investigate and address the issues quickly and use their leverage to encourage these suppliers to mitigate and prevent negative impacts. If necessary, they should cut ties,’ he says. 

The evolution of ethics

Graham Wladimiroff, Chair of the IBA Corporate Counsel Forum and Associate General Counsel at multinational packaging manufacturer Avery Dennison, says the invasion of Ukraine has possibly raised the bar on ethics in doing business. Since Russia’s actions have been heavily criticised in the West, many companies doing business in Russia have chosen to put activities on hold or withdraw for the foreseeable future, says Wladimiroff, ‘even though there has not been a single law forcing them to do so, save the specific sanctions against certain individuals and companies.’

Wladimiroff says there are some obvious red flags that should trigger alerts within companies that they could be at risk of being implicated in crimes against humanity. Geographic proximity to armed conflict is the first, he says. ‘The inability to visit or audit because of security concerns requires in any event an organisation to make extra efforts to monitor developments, be it from a distance,’ he says.

If a company uncovers (or suspects it may be part of) activities that could constitute crimes against humanity, ‘it will need to report its concerns to the necessary authorities and will have to probably go public at some point,’ he says.

‘Anything justifying being branded crimes against humanity is likely to require a quick response and probably quick cessation of that infringement,’ adds Wladimiroff. ‘In-house counsel will be heavily involved in planning an exit, defining the legal position, considering the risks and fall out, planning the interaction with the authorities and reviewing public and internal statements, and probably a lot more.’

For Wladimiroff, ‘simply asking the right questions as opposed to avoiding them – for example, asking how you have continued to manage to keep the unit operational in a conflict zone – can help establish just how exposed the organisation is to potential accusations of crimes against humanity.’

Those asking the questions – and demanding answers from department heads – should be the executives, with the non-executive directors carrying out annual or semi-annual risk reviews that focus specifically on high-risk areas. Oversight should then be cascaded down the chain to assurance functions such as risk management, compliance and internal audit, as well as in-house legal, he says.

‘Some situations will be glaringly obvious and justify an approach of “we should not be there unless…”,’ says Wladimiroff. ‘However, the more challenging ones are the issues that are less visible. Getting evidence first-hand can be difficult – supply chains are often not transparent.’

A further complication is that the decision to step away from a relatively small market such as Russia may be a lot easier than stepping away from an important, perhaps critical manufacturing base and market, such as China.

Over recent years an increasing number of companies have implemented a human rights framework to ensure best practices and to help detect potential areas where the company’s operations either may not comply or are at risk of non-compliance. Important elements of such a framework are carrying out a risk assessment and focusing on mitigating risk to improve the situation on the ground.

However, Wladimiroff is not sure such a framework ‘would capture the issues at hand’.

‘The focus of these frameworks is now often on the supply chains or at least challenges posed over a longer period of time,’ he says. ‘A company therefore needs to look at human rights to some extent in a more holistic and dynamic fashion linked to broader and more regular risk reviews,’ to ensure certain matters are picked up.