“Even though Canada advocates for the promotion and protection of human rights (…) the government too often appears willing to compromise these values in order to advance economic and other foreign policy interests.”

That was the conclusion made by a Senate committee in 2018 after it studied Canada’s export law and policies. While the study focused largely on export permits for controlled goods, such as the controversial armoured vehicles sold to Saudi Arabia, it also looked at how Crown corporations like Export Development Canada (EDC) help companies export products that could be used to violate human rights abroad.

Senators on the committee were concerned in particular by EDC’s support for the sale of Internet censorship technology to the government of Bahrain. EDC backed the deal, they noted, “despite the widespread availability of credible reports indicating that the Government of Bahrain was committing large-scale violations of the right to freedom of expression of its own citizens, as well as various other serious human rights violations.”

“The committee is very concerned that the Government of Canada has supported companies that are contributing to human rights violations abroad through its Crown corporations.”

– Standing Senate Committee on Human Rights, 2018

It wasn’t the first time that EDC supported business activity linked to human rights abuse. Although the agency asserts that it makes every effort to “prevent and mitigate potential human rights impacts,” it has repeatedly facilitated business that harms and in some cases even kills people.

Mexican oil firm Pemex, for instance, has passed EDC’s screening process at least 13 times since 2009. Over the same time period more than 190 workers and contractors have been reportedly killed in fires, explosions and collapses at Pemex’s facilities. Reuters reported in 2015 that the company’s fatality and injury rate was six times the international average for oil exploration and production firms.

EDC has also financed Vale, a company involved in both of Brazil’s recent catastrophic mining waste disasters. Vale owns the mine near Brumadinho where hundreds were killed in January 2019 when a waste containment dam collapsed, and is co-owner of the mine near Mariana where a similar disaster destroyed an entire village in 2015. Both mines were built using the riskiest method allowed by regulators. Other Vale operations include a railway on which locals have been routinely hit by trains and a mine repeatedly ordered shut down over its impact on indigenous tribes.

The Senate committee concluded that Crown corporations including EDC “need to take immediate action” to bring their operations in line with international human rights standards. It further recommended that EDC be legally required to take human rights risks into consideration before supporting any business deal. We believe that even more extensive legal reforms are needed, in part because the potential for human rights abuse is especially high in industries that EDC supports.

Heavy investment in high-risk business

Much of EDC’s business is in natural resource industries. Mining, oil and gas companies, for instance, receive about a quarter of the $100 billion in support EDC provides to the private sector each year.

Extractive sector risks 

Among the hundreds of attacks on human rights defenders around the globe that were tracked by the Business and Human Rights Resource Centre in 2016-17, the greatest number were linked to mining projects.

Because they disturb large tracts of land, natural resource projects such as mines and hydro dams often threaten to push disadvantaged communities from their homes, or to degrade the environment they rely on for their food, livelihoods and culture. Water-intensive operations such as mining and fracking can also deplete or pollute scarce water resources that local people depend on.

EDC routinely supports mining, oil and gas companies working in countries where such abuses are widely reported, such as Colombia and Brazil. And its clients have been involved in some of these abuses.

In Brazil, frequent EDC client Kinross Gold displaced traditional communities when it dramatically expanded one of its mines between 2006 and 2011. As we show in our case study, EDC continued to finance Kinross Gold long after public authorities warned of harmful actions by the company, including land-grabbing that led to the “elimination” of one of the communities.3Kinross asserts that it acquired the land for its project legally, and that it maintains a “respectful and constructive relationship” with the affected communities

“[O]ne of the most significant trade-related human rights concerns in Colombia [is] the rapidly increasing presence of extractive companies in and around the territories of Indigenous peoples at a time when one-third of Indigenous nations in Colombia are at the brink of physical or cultural extermination.”

Amnesty International Canada, 2015

In Colombia, EDC financed Pacific Exploration and Production’s oil operations in 2014 despite well-documented risks posed to indigenous people by extractive projects in that country. The next year, a court suspended Pacific’s activities at one oilfield because the company had violated the rights of an indigenous community.

Natural resource projects often pose a further risk that people who oppose them could face violent repression, threats and attacks including assassination. Indeed, locals who spoke out against Kinross’s mine expansion and Pacific’s oil operations reported receiving death threats. At least four people who opposed an enormous hydro dam being developed in Colombia by EDC client Empresas Públicas de Medellín (EPM) have been murdered.

Without consequence

EDC reports that it screens all potential deals for human rights risks, taking into account factors such as the “country context,” the company’s track record and the business activity EDC would support. The agency states that it monitors the performance of clients that present “higher risks,” and that human rights impacts could influence its decision to “disinvest from a customer relationship.”

The public, however, doesn’t have access to EDC’s assessments or details about its ongoing risk management in relation to any particular client. So we’ll likely never know what human rights risks it identified before financing Pacific’s or EPM’s operations in Colombia, or Vale’s in Brazil. Nor whether it cancelled or declined support to any of these companies after attention was called to their implication in human rights violations.

“[T]here is no indigenous territory where there aren’t minerals. Gold, tin and magnesium are in these lands, especially in the Amazon (…). I’m not getting into this nonsense of defending land for Indians.”

Jair Bolsonaro, before being elected as president of Brazil in October 2018

“The extractives markets in Brazil are amongst the most dynamic in the world, with plenty of opportunities in oil and gas (…). Brazil also has large mineral resources, including rare metals, and a large concentration of key players in the market.”

– Export Development Canada blog post, December 2018

As for Kinross, EDC has issued new loans to the company after being made aware of the abuses suffered by communities near its Brazilian mine and their unresolved grievances. In 2018, a senior EDC official declared that Kinross had taken “appropriate and responsible actions to address issues” at the mine.

The agency continues to actively pursue business in Colombia and Brazil, targeting oil and gas as key industries in both countries. It’s especially alarming that EDC maintains its enthusiastic position on natural resource sectors in Brazil, even after the country elected a president who pledged — and has since begun — to roll back indigenous and environmental protections.

Closing the legal gap

The Canadian government has a duty under international law to ensure that its institutions protect against and avoid contributing to human rights abuse by businesses. And yet, Canadian law doesn’t place any restrictions or requirements on its export credit agency to assure compliance with this duty.

Essential reforms 

We identify legal reforms urgently needed to strengthen oversight of EDC in this submission to the Canadian government:

Bringing Accountability and Transparency to Export Development Canada’s Practices

With the Export Development Act currently under review, now is the time for the government to fix this glaring omission. The legal amendments that Above Ground and sixteen other civil society groups are calling for are outlined in detail here.

As Brazil’s latest mining waste disaster reminds us, practices that fail to protect people are widespread in industries that EDC heavily supports, and can result in the loss of hundreds of lives in one tragic event. The Canadian government must take action to ensure that its export credit agency avoids facilitating such abuses.

Published July 15, 2019

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