Challenges to Comprehension Implied by the Logo
of Laetus in Praesens
University of Earth

6 March 2001

"Nongovernmental Organizations (NGOs)" and the Global Compact

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Part 4 of: "Globalization": the UN's "Safe Haven" for the World's Marginalized


Legal problem for the UN: are multinational corporations "NGOs" ?

In order to further clarify the status of multinationals in relation to NGOs in their respective relationship with the UN, it would be interesting to know exactly how the UN Office of Legal Affairs understands the legality of the Compact and of the adhering multinationals (or national business entities). This is especially intriguing when the adherence of such entities may be refused by a process, and with criteria, as yet to be determined - especially in the light of the exceptions already permitted in the initial accessions. The UN has long experience of the challenges posed by this process in relation to traditional NGOs - and has proven to be extremely "flexible" with its own principles in responding to political and other pressures.

Specifically, since multinationals have no international legal status and are effectively jumbles of national holding companies, exactly with what bodies is the UN establishing this relationship - when they "adhere" as "partners" to the Compact -- and how is their legal status, or that of the "partnership agreement" perceived in international law? Legally is this tantamount to a form of international recognition? Is the Secretary-General empowered to make international law in this way?

Secondly, since the relationship of the UN with NGOs is so carefully specified by the much-debated Article 71 of the UN Charter, and no other article exists governing relationship with other "nongovernmental" bodies, is it to be understood that multinationals are being related to by the UN under Article 71 and the resolutions based upon it? Are the multinationals effectively defined as "NGOs"? Does this mean, after decades of discussion and proposals, that traditional NGOs will be accorded some form of legal recognition "by the back door" through the extension of recognition accorded to multinational corporations? Should traditional NGOs convert themselves into offshore, profit-making multinationals to benefit from this new opportunity for creative partnership with the UN?

Again from a legal perspective, given the many past UN system resolutions on transnational corporations, is it to be assumed that these are now considered "inoperative" and that there is no inconsistency in the current arrangement with any unrescinded resolutions? It is however unclear how the UN "terminates" the legal standing of earlier resolutions when it revises a historical position. There are many ancient multilateral treaties still on the statute books.

Most intriguing is how the UN is going to handle the adherence of thousands of smaller business entities when it has long been overwhelmed by the administrative challenge of minimum correspondence with NGOs. Should NGO members encourage their local grocer to adhere to the Global Compact? Ironically, stepping back from the possible adherence of smaller corporations, John Ruggie indicated that the target was 1,000 "major" companies with 3 years (13 October 2000). Intriguingly there is no question of their geographic representativity -- long a major issue for the UN in considering the legitimacy of "NGOs". Nor is there any question of whether most of them might be headquartered in in a small number of industrialized countries -- also a point of considerable import in dealing with "NGOs."

When challenged on such points, the UN will of course be obliged to back off and reinterpret the current initiative and its future intentions. Thus the UN Office of Legal Affairs, has been obliged to clarify that there is no formal legal relationship between any business entity and the United Nations in respect of the Global Compact. Instead, companies have made "pledges" to adhere to the principles of the Global Compact, both in their individual corporate practices and by supporting appropriate public policies. From the perspective of the Office, the Global Compact is a set of principles to be promoted and applied by business. The Compact thus does not give rise to issues on the nature of those entities and their relationship beyond that commitment to uphold those principles. And indeed, on exploration of the UN Global Compact Network website (http://www.unglobalcompact.org), the much hyped reality of "partnership" vanishes into a pattern of words signifying no such relationship, formal or informal.

However in the "partners" section of that website, the Secretary-General's statement still indicates (December 2000) that:

"The United Nations once dealt only with Governments. By now we know that peace and prosperity cannot be achieved without partnerships involving Governments, international organizations, the business community and civil society. In today's world, we depend on each other." (http://www.un.org/partners/civil_society/home.htm)

Clearly CEOs of multinationals can be invited to lunch by the Secretary-General in his official capacity, and he can speak at their conferences and initiate "partnerships" with them, but the bodies in question actually have no legal reality for the UN -- despite what he has to say about them. They are a kind of international "legal ghost" -- on which the UN now "depends" in today's world. The ghosts are asked to make "pledges" to adhere to principles. A funny business -- very reminiscent of problems faced by conventional NGOs. But on the other hand, UNDP can cut a deal with individual multinationals in exchange for $50,000, or in its NetAid initiative with the multinational CISCO (http://www.netaid.org/) -- not listed as an early adherent of the Global Compact. But one wonders how the legalities of a contract with non-entities work.

Of course the technical way around this strange UN "partnership" with the spirit world of global reality is that the UN only deals with the "NGOs" representing such multinationals (ICC, World Economic Forum, and WBCSD) who effectively act as "mediums". For the occasion they are however called "business associations" (http://www.un.org/partners/business/asso.htm) -- a form of entity not defined by the Charter. It is curious that the UN is now obliged to indulge in a kind of "spiritualism" -- but maybe the Global Compact should indeed be understood as a compact with the "world of the spirit". For the Secretary-General, attendance at the Davos Symposium is very much like attendance at a kind of global seance at the invitation of a medium. There he speaks with over a 1,000 disembodied entities (in terms of the UN's international legal reality) through the ICC (making its secretary-general the most powerful medium in the world?). So powerful is the medium that the Secretary-General can even physically encounter these disembodied entities and "recreate" with them on that occasion. For those with very strong negative views of multinational corporations, would this metaphor evoke associations of the archetypal Bal des Vampires? It would be interesting to know the extent to which UN policies are now influenced by "spirit guides" speaking through mediums. Are the "partnership meetings" of the Global Compact also somewhat akin to seances?

Making a "pledge" of any kind is normally a very serious matter and is done before witnesses to give weight to the commitment. Now that the legalities of "partnership" has been conveniently abandoned, it is remains unclear how the pledge of adherence to Global Compact principles is made, to whom, and by whom the act is witnessed. But maybe it is really just a notional pledge of little weight to any of those involved. It would however be curious if ghostly non-entities made their pledges in "seances" with UN officials as witnesses.

UN's Legal problems of receiving funds from "NGOs"

The strange legal context of "multinational corporations" also raises the irony of the contribution by Ted Turner at the crucial point in the 27 December 2000 debate on US contributions to the UN. As Cliff Kincaid commented in Foundation Watch on Turner's earlier creation of his public charity to channel these funds, donated in the form of stock in a multinational corporation (Time-Warner) in ten annual installments (Ted Turner's United Nations Foundation: Making the UN a Pawn for Tax-Exempt Special Interests) :

"Almost 18 months after Time-Warner vice-chairman Ted Turner announced he would give $1 billion to the United Nations, serious questions remain about the nature and influence of his "gift." One concern is technical and legal: Turner's money is being channeled to the UN through a private foundation and a 501(c)(3) nonprofit. But the UN is strictly prohibited by its own charter from accepting contributions not from member nations. Questions raised about this practice have not been fully answered by the UN." (http://www.capitalresearch.org/fw/fw-0399a.html)

Curiously a related Global Reporting Initiative (described earlier), with UNEP involvement, describes itself as benefitting from "the United Nations Foundation's generous funding". The Foundation awarded a $3 million partnership grant to CERES and UNEP to support GRI activities from 2000 - 2002. GRI is significantly supported by major American foundations (http://www.globalreporting.org/AboutGRI.htm)

The Secretary-General then created a United Nations Fund for International Partnerships (UNFIP) in March 1998 to coordinate, channel and monitor contributions from the United Nations Foundation and a special agreement has been signed for this purpose (with an "NGO"?). The Foundation itself has links with a number of UN-related programmes. According to the UN:

"The UNFIP/UNF partnership brings together UN organizations through joint programming to encourage complementarity of action and cohesion of response. UNFIP works to build additional partnerships between the UN and a variety of sources, including the business community, private philanthropists, foundations and international and bilateral donors." (http://www.un.org/unfip/)

According to Kincaid:

"... the agreement offers no clues about the UN's justification for accepting private foundation funds, which is a violation of the UN Charter. Article 17, Section 2 of the charter states that UN expenses "shall be borne by the Members as apportioned by the General Assembly." This requirement is supposed to prevent private interests like the UN Foundation from exercising undue influence over the world body. This author has repeatedly asked UN officials and members of Congress to provide a legal justification for the UN's acceptance of UN Foundation grants. Concerns about the foundation's activities were first expressed in an October 1997 letter to Joe Sills, then director of the UN Information Office in Washington, DC: "The UN Charter says the expenses of the organization shall be borne by the member-states. How, then, can the UN accept any money from a source outside of the member-states, such as a foundation, business or individual?" (http://www.capitalresearch.org/fw/fw-0399a.html)

As of March 1999, Kincaid had received no answer from the UN's Office of Legal Affairs. It would be intriguing to know how the crucial donation from Ted Turner was handled in December 2000 in the light of the legal position on Global Compact partners. Is the UN now being funded by ghosts? Time-Warner is not even listed as a multinational adhering to the Global Compact.

In this context it is also worth noting that according to UNDP figures, the donations received by UNESCO from foundations during 1993 (DP/1994/40/Add.1, 28 September 1994), for example, amounted to $3.20 million dollars, namely a total of $5.87 million for the 1992-93 biennium. But "foundations" are not included within the UNESCO definition of "NGOs". Responsibility for both NGOs and foundations is however held by the same department within UNESCO. It would appear that, in terms of funds alone, NGOs (if foundations are to be considered NGOs in the light of the UNDP perspective) are far from being a cost to UNESCO, as Member States have long endeavoured to argue. Rather UNESCO effectively redistributes to "NGOs" about half of what it actually receives from "NGOs". In this sense NGOs may be said to be a net financial contributor to UNESCO, even though it is not clear that foundations have any legal existence for the UN system. More funding by ghosts!

Of course these legal and semantic confusions, and the associated fast footwork, do raise the issue of the significance to be attributed to any other partnership arrangement touted by the UN system with other bodies. But it would be a grave mistake to believe that any rapid rectification about "misunderstandings" (notably on easily modifiable web pages) would be more than skin deep. The UN is in a new chameleon mode and has to fight for its survival with its newfound friends. But, if the Global Compact initiative turns sour, will it be possible for all involved to dismiss it as a short-term public relations ploy?

Treatment of NGOs during the emergence of the Global Compact

An extremely dubious aspect of the emergence of the Global Compact was the lack of information provided to the UN's traditional "partners" the NGOs. The Corporate Europe Observer (October 1999, #5) raises important questions. Firstly why the Secretary-General has "not at any stage of developing this covenant consulted with the many public interest groups involved in campaigns against corporate power abuse around the world?" But secondly, "why business should not simply be forced to follow mandatory international standards for corporate behaviour"? Has the UN been bought off in some unstated way? Is that a secret clause of the Compact? Who would be able to provide a trustworthy answer?

It would also be helpful to know whether any briefing document has been addressed to NGOs in consultative relationship clarifying the questions raised. Specifically, how are the notions of rules of "access" by NGOs within the UN explained in relation to the notion of "access" by multinationals -- specifically promised within the Global Compact. Many NGOs are extremely concerned by the erosion of their "right of access". The ICC has already had to deny assertions by other NGOs that corporations will have privileged access to the UN, despite a promise in those terms by the Secretary-General.

Now that the UN has - at least superficially -- developed a more open attitude to the category of bodies that it created by Article 71 of its Charter, namely the "nongovernmental organizations", it is curious that a new class of pejoratively labelled nongovernmental bodies should be defined by the UN, namely the "rejectionists" -- those who do not believe in the new cult of globalization. Ruggie will undoubtedly be aware that the association of "unbeliever" with "kafir" (in the Koran) and "infidel" had many historical consequences. It is unfortunate that he did not extend his allusions to the bodies of "uncivil society" (Judge, 1996) - the mafias and similar networks - with which he might wish to group the "rejectionists". Is the UN endeavouring to create a new organizational underclass -- to set up a new system of organizational apartheid?

It is intriguing that in seeking to defend and justify the Global Compact, the Secretary-General has had to rely on the fact that (some) NGOs expressed approval of it (although any their reservations they might have had are not so evident). Whether or not these NGOs are representative as "leaders of civil society" - an issue on which the UN has previously been very attentive - it is far from clear whether their complicity is approved by other NGOs. Indeed many might ask what undeclared deals they struck with the UN in exchange for indicating their approval of the Compact.

It is curious that pro-globalization enthusiasts argue that NGOs in general are now 'totally discredited' following such incidents as Brent Spar (Shell / Greenpeace) -- during which no one was killed. By comparison, it might however be asked how credible is a UN that had a direct role in supervising two major massacres, and maintained a monitoring facility in the immediate proximity of a prison (El-Khiyam) in which torture was systematically practiced for a decade and many people died as a consequence.

Attitude of NGOs to the Global Compact

An organization with the misleading title Business Council for the United Nations (http://www.unausa.org/bcun/index.htm) has been created "to bring a better understanding of the U.N. to the business community". It is in fact not an independent body, nor an international body, nor is it formally a part of the UN system. It is in fact a division of the American NGO called UNA-USA. The latter is a strong NGO supporter of the Global Compact.

Reporting on the launch of the Global Compact on 26 July 2000, the Earth Times Service carried an article by Nandan Desai titled NGOs back the Global Compact (http://www.earthtimes.org/jul/humanrightsngosbackthejul27_00.htm), naming 5 NGOs and offering quotes from some of them. It mentioned none of the reservations that absent NGOs might have had.

To counter-balance the potential for abuse, a coalition had already been formed to promote a Citizens Compact on the United Nations and Corporations. This was announced on the occasion of the Davos Forum in January 2000, one year after the Secretary-General's preliminary launch and is supported by at least 50 organizations on 6 continents. The coalition argues that "The UN is our best hope to monitor and hold accountable the giant corporations that control so much of our economies and our lives" (http://www.xs4all.nl/~ceo/untnc/citcom.html)

A letter to that effect was sent to the Secretary-General on 20th July 2000, with a follow-up on 28th July (http://www.twnside.org.sg/title/compact.htm), in the light of the text of those Guidelines published on 17th July. The letter draws attention to the abusive practices that have characterized, or continue to characterize the initiatives of a number of business entities already adhering to the Compact, despite the explicit statement in the Guidelines that "business entities that are complicit in human rights abuses...are not eligible for partnership". The letter expresses further dismay at the right accorded to such business entities by the Guidelines to use the name and emblem of the UN. Especially since no provisions are made for monitoring the Guidelines' modalities, these are viewed as quite susceptible to abuse.

The letter concludes that the Compact and the Guidelines "do not 'ensure the integrity and independence' of the United Nations. They allow business entities with poor records to 'bluewash' their image by wrapping themselves in the flag of the United Nations. They favour corporate-driven globalization rather than the environment, human health, local communities, workers, farmers, women and the poor".

This alternative Compact favours rules and monitoring excluded from the Global Compact. In that it is consistent with views articulated, curiously, by UNDP: "Tougher rules on global governance, including principles of performance for multinationals on labour standards, fair trade and environmental protection, are needed to counter the negative effects of globalization on the poorest nations" - a view immediately challenged by ICC (Financial Times, 21 July 1999).

In the lead up to the WTO Seattle event, the Corporate Europe Observer (October 1999, #5) sees the Secretary-General (having "embraced the corporate trade and investment agenda") as having:

"clearly taken sides in one of the most heated issues in the current debate about the global economy. He not only alienates himself from a very large part of the 'civil society' he otherwise speaks so positively of, but also from the large number of Southern governments which oppose the idea of a comprehensive round of liberalization negotiations..."

Detailed critiques of the Global Compact can be found in the correspondence of one NGO, TRAC, with the Secretary-General and in its report Tangled Up in Blue: Corporate Partnerships at the United Nations (http://www.corpwatch.org/trac/globalization/un/tangled.html). This chronicles a set of policy decisions that are steering the UN away from its potential role as an independent regulator of transnational corporations and toward a model where the UN is just as entangled in corporate interests as all other international finance agencies. TRAC has been leading an international campaign to document and expose the growing number of, often secretive, partnerships between various UN agencies and corporations with poor records in the light of the values of the Compact.

According to the TRAC UN Project Coordinator, "The Secretary-General seems to think the UN can help 'fix' the problems of globalization by getting serial violators of human rights, labour rights and the environment to declare that they won't be bad anymore".

With reference to the Secretary-General's effort to seek legitimacy for the Global Compact through the support of NGOs, the Rural Advancement Foundation International jokingly refers to the "importance of IQ tests to screen out idiot CSOs [civil society organizations] who don't know when they are being used." (http://earthhopenetwork.net/alerts_9-00_1.htm#gc)

Victor Menotti of the International Forum on Globalization concludes his Brief History of Corporate vs Citizen Power under the UN :

"Yet with the existing set of peoples' rights already negotiated and agreed to internationally by governments under UN auspices, Secretary General Kofi Annan has now undermined the UN's own accomplishments by issuing a set of voluntary and unenforceable principles called the Global Compact. When understood in this historical context, Annan's recently unveiled deal between himself, some of the world's largest corporations, and a few hand-picked "representatives" of civil society, is nothing more than a feeble and cynical attempt to diffuse the backlash to global corporate power that was so evident on the streets of Seattle. The Global Compact ignores the original mandate of the UN, legitimizing the corporate highjack of peoples' protections chartered under the UN some fifty years ago. Today, the World Bank, International Monetary Fund, and World Trade Organization institutionally subordinate the citizens' rights embodied in the UN. This is why people must begin to focus on the relationship of the BWIs [Bretton woods Institutions] to the UN system, with a view to resubordinating the BWIs back to their original and rightful place." (http://www.e-terra.net/stories/storyReader$129)

At the time of the World Economic Forum (Davos, January 2001) a counter-forum entitled the World Social Forum met concurrently in Porto Alegre (Brazil).

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