In 2012, the United States (U.S.) lifted economic sanctions on Burma that had lasted over a decade. Though Western companies expected international business to boom in Burma, U.S. investment has begun at a slower pace because of issues relating to existing infrastructure, human rights, and corruption.
Since lifting certain sanctions under General License No. 17, the U.S. Department of State (State Department) has asked certain American businesses to publicly report on the impacts of their investment in Burma. On July 15, 2014, DLA Piper held an informative discussion, hosting panelists from the State Department, U.S. Campaign for Burma, Coca-Cola, and Foley Hoag LLP, to expand upon the human rights situation in the Burmese marketplace.
The reporting requirements are two-fold, requiring (1) notification and (2) due diligence. The first prong is simple: companies investing in Burma must notify the State Department. The second prong is slightly more complex: U.S. persons making aggregate new investment of at least $500,000 must also annually report on their impacts and due diligence. More specifically, the 2013 Reporting Requirements for Responsible Investment in Burma requires companies to submit policies and procedures related to human rights, workers’ rights, the environment, anti-corruption, security service provision, land acquisition, revenue transparency, and military communications to the State Department. The U.S. government believes that responsible investment and development, backed by reporting requirements, will ensure that U.S. companies think before they leap.
In terms of corporate responsibility, the reporting requirements were inspired in part by the United Nations Guiding Principles on Business and Human Rights, also known as the Ruggie Principles. Each individual company chooses how to report to the State Department. While the State Department urges compliance with the requirements, the U.S. Campaign for Burma recently issued their Report Card on U.S. investment. Each rated company was scored as responsible, questionable, or irresponsible based on the following criteria: (1) compliance; (2) policies and procedures; (3) risks; and (4) stewardship. Of the six rated companies (Capital Group Companies, Hercules Offshore, Crowley Marine Services, Coca-Cola, Western Union, and Clipper Holdings Ltd.), only Coca-Cola was found to be a responsible investor. The Report Card nonetheless critiques Coca-Cola’s submission, which Coca-Cola elected to publish publicly.
One of the major concerns of the U.S. Campaign for Burma regarding business practices is land confiscation. Since Burma is a resource-rich country, land confiscation is an issue that pre-dates the lifting of U.S. sanctions. Often, the Burmese military would seize land from villagers due to the rich resources and sell it off, in this case, to foreign companies. This is a particularly common trend in extractive industries, including offshore industries. For example, the Report Card noted that Hercules Offshore (inactive in Burma as of September 2013) conducted offshore activity near Burma’s Rakhine State, where the Burmese Navy has a strong presence and where persecuted Rohingya Muslims flee by boat. While conducting such activities, the Report Card alleged that Hercules appeared to have failed to conduct human rights due diligence to identify the potential impact of its investment and policies off the Rakhine coast. Each of the panelists agreed that while Burma can benefit from investment, it must be the right kind of investment that enforces human rights policies and good business practices.