Multinational enterprises account today half of global exports, one-third of global production (world GDP) and one-fourth of global employment. Advocates of multinationals say they create high-paying jobs and technologically advanced goods in countries that otherwise would not have access to such opportunities or goods. On the other hand, critics say multinationals have undue political influence over governments, exploit developing nations, and create job losses in their own home countries. »… multinational enterprises (MNE) face a variety of legal, social and regulatory settings. In this context, some enterprises may be tempted to neglect appropriate standards and principles of conduct in an attempt to gain undue competitive advantage…«, neglecting responsible business conduct and gaining undue tax avoidance and disregarding of environmental and social rules.
Notorious examples of human and environmental devaluation are, for example, Nestle using cocoa harvested by slave labour, or Pfizer keeping its HIV/AIDS-related drugs out of the hands of the world’s poor, who need them the most. Wal-Mart pushed its suppliers to go lower and lower on their wholesale prices, until they’re so squeezed that they barely have two pennies to rub together at the end of the day. In 2001, ExxonMobil was the target of a lawsuit by a human rights group that accused the company of actively abetting human rights abuses including torture, rape and killings in Indonesia. In Richmond, California, toxic pollutants from Chevron’s refinery in the city have infiltrated people’s homes. Dow Chemical (along with Monsanto) will never escape the shadow of Agent Orange, the chemical used by the U.S. military during the Vietnam War during the ‘Herbicidal Warfare’ program, which lead to 400,000 deaths and disabilities and 500,000 children born with birth defects. MNE activity rapidly grew in recent decades!
The number of parent MNE (OECD) was 7000 in 1970, 38000 in 2000 and 82000 in 2010. Number of affiliates was 240 000 in 2014.
Given their economic strength multinationals could make a significant contribution to achieving the UN Millennium Goals on Sustainable Development (reducing inequality, decent work and respect for human rights), but the truth is exactly the opposite. This is not only a crisis of the economic system that generates infinite inequalities among the people and nations, but is primarily a crisis of modern political democracy.
GENERAL ON MNE
What are MNE and why bother?
Multinational are enterprises operating in various countries with its subsidiaries and affiliates. MNE aretypes of business units that are established in more than one country and are interconnected in such a way that they can coordinate their activities in different ways (capital or contract controlled). When one or more units have a significant impact on the activities of another, the degree of their autonomy in the company can vary, depending on the individual multinational company. Ownership may be private, state or mixed. A transnational enterprise differs from a traditional MNE in that, it does not identify itself with one national home. A multinational enterprise (MNE), can also be referred to a multinational corporation (MNC) a transnational enterprise (TNE), a transnational corporation (TNC), an international corporation, or a stateless corporation. MNE or worldwide enterprise is a corporation, which owns or controls production of goods or services in at least two countries.
The biggest 3 MNE in the world, like Philip Morris, United States (Market Cap $ 131.5B, Tobacco), Antofagasta, United Kingdom (Market Cap $12.9B, Diversified Metals & Mining) and Global Logistics Properties, Singapore (Market Cap $9.4B, Real Estate) generate 100% of their revenues outside the country where they are headquartered. The first three are followed by ASML Holding, Netherlands (Semiconductors), Novo Nordisk, Denmark (Pharmaceuticals), Pandora, Denmark (Household/Personal Care), Syngenta, Switzerland (Specialized Chemicals), Hon Hai Precision, Taiwan (Electronics), UCB, Belgium (Pharmaceuticals) and Givaudan, Switzerland (Household/Personal Care).
MNE, located in various countries are subject to the national laws and international conventions law. However, in some developing countries, MNE do not enjoy stable macroeconomic policy, non-discriminatory treatment of firms, appropriate regulation an impartial system of courts and law enforcement and efficient and honest public administration, standards and policies in support of sustainable development. In such circumstances, some MNE neglect appropriate standards and principles of responsible business conduct and gain undue competitive advantage, as tax avoidance and disregard of environmental and social rules.
Trends in MNE operations
The history of the MNE is linked with the history of colonialism (East India company 16o1). MNE operate in various countries with its subsidiaries and affiliates. NME have been restructuring from primary production and extractive industries into manufacturing, assembly, service and technology. NME are strengthening the economic ties of developed countries and the rest of the world.
Nowadays MNE play a significant role in global economy in creation new jobs, contribution to economic growth and efficient use of capital, technology and human and natural resources, facilitating also the transfer of technology among the regions of the world.
Some of the MNE are addressing the vital problems of modern world, as the root causes of poverty and of child labour, efficient use of capital, technology and human and natural resources facilitating the transfer of technology among the regions of the world). MNE possess considerable human resources, finance, expertise and technology enjoy substantial competitive advantage (tax haven) an are therefore very relevant for the discussion on how to overcome global economic and political conflicts as ecology, income inequalities and migrations.
As it is said in the theory, despite the benefits which host countries can gain from multinational corporations, these multinational corporations have been ill- famed for their corruptions and crimes which they commit behind the curtains or sometimes even in the public.
Multinational corporations commit corporate crimes or illegal activities in different ways. Environmental pollution, financial crimes such as tax evasion, bribery, corruption, violation of human rights are few of them. Human rights are paramount for all the humans and violating these rights is illegal. Despite the fact that, many international and national laws exist to protect human rights, multinational corporations are reported to be violating human rights in the territories which they have created their corporate environment.
The Luxleaks, SwissLeaks and Panama Papers scandals exposed instances of tax avoidance that shocked the general public. They have demonstrated that corporate tax responsibility is not just a legal issue but also an ethical one.
In the midst of the financial crisis, citizens of EU countries like Greece and Portugal were furious to learn that their multinational enterprises paid almost no taxes because of fiscal arrangements involving the same jurisdictions that had put pressure on them to implement severe austerity packages.
HISTORY OF IRRESPONSIBLE BUSINESS CONDUCT OF THE MNE
High Sustainability firms and 90 as Low Sustainability firms
Research from 2011 compared a matched sample of 180 companies, 90 of which they classify as High Sustainability firms and 90 as Low Sustainability firms, in order to examine issues of governance, culture, and performance. Findings for an 18-year period show that High Sustainability firms dramatically outperformed the Low Sustainability ones in terms of both stock market and accounting measures.  High Sustainability companies are more likely to have established processes for stakeholder engagement, to be more long-term oriented, and to exhibit higher measurement and disclosure of nonfinancial information.
Organizations voluntarily adopting environmental and social policies represent a fundamentally distinct type of modern corporation… Societal concern about sustainability, at both the level of the firm and society as a whole, has been growing from almost nothing in the early 1990s to rapidly increasing awareness in the early 2000s, to being a dominant theme today.
Research explain how multinational enterprises (MNEs) respond to pressure to conform to their stakeholders’ expectations for greater attention to corporate social responsibility (CSR)…mounting stakeholder pressure in an MNE’s home country leads to the transfer of socially irresponsible practices from its headquarters to its overseas subsidiaries.
However there are some extremely bad examples of irresponsible business conduct in the history, related to social and environmental issues of corporate governance.
More than 40% of the world’s chocolate comes from Côte d’Ivoire (the Ivory Coast) in Africa, where tens of thousands of children are estimated to be working in dangerous conditions on cocoa farms. Nestle uses cocoa harvested by slave labor,
Pfizer is guilty of some of the most despicable price gouging in corporate history: it keeps its HIV/AIDS-related drugs out of the hands of the world’s poor, who need them the most. Pfizer has aggressively fought efforts to make these drugs more affordable, refusing to grant generic licenses for HIV/AIDS drugs to Brazil, South Africa and other countries in need of them.
Wal-Mart pushes its suppliers to go lower and lower on their wholesale prices, until they’re so squeezed that they barely have two pennies to rub together at the end of the day. Thanks to its focus on low, low prices, the retailer has repeatedly turned a blind eye to child slave labor in its manufacturing facilities abroad, particularly in China and Bangladesh.
In 2001, ExxonMobil was the target of a lawsuit by a human rights group that accused the company of actively abetting human rights abuses including torture, rape and killings in Indonesia. The suit alleged that ExxonMobil had hired a local army to protect its natural gas fields in the Aceh province, providing them with equipment to dig mass graves as well as building interrogation and torture centers. The company denied all of the charges, but a motion it filed to have the case dismissed was denied in 2006
In Richmond, California, toxic pollutants from Chevron’s refinery in the city have infiltrated people’s homes. Air samples from inside and outside Richmond homes in 2006 were found to contain particulate matter known to come from oil refining that exceeded California’s air quality standards. Unsurprisingly, local residents are feeling the effects in the form of lupus, cancer, athsma and a number of other health problems.
Dow Chemical (along with Monsanto) will never escape the shadow of Agent Orange, the chemical used by the U.S. military during the Vietnam War during the ‘Herbicidal Warfare’ program, which lead to 400,000 deaths and disabilities and 500,000 children born with birth defects. But even with this evil legacy – and that of Napalm, which it also produced – Dow is not contrite. This corporation continues to pollute the earth without apology.
Monsanto is responsible for more than 50 Superfund sites including Anniston, Alabama, one of America’s worst man-made environmental disasters. For over 40 years, Monsanto routinely dumped toxic waste into West Anniston Creek while producing now-banned industrial coolants called PCBs. They also dumped millions of pounds of PCBs into open-pit landfills – and proceeded to spend decades covering it up even after confirming that fish submerged in the creek turned belly-up within seconds.
Monsanto knew exactly how dangerous the PCBs were, but chose to keep it secret, altering documents and forcing changes to study results to keep the secret. Though they were forced to pay $700 million in fines in 2003, they have not apologized or taken responsibility.
These days the consequences of irresponsible business behavior can be significant. For example BP’s bill for settlements of state and federal claims for environmental damages and damages to impacted communities for the Deep Water Horizon spill reached nearly USD 54 billion this June. The Volkswagen scandal involving emissions rigging of vehicles contributed to their stock plummeting a third of its value in less than a week and estimated costs associated with recalls as well as penalties that will have to be paid are being reported at USD 35 billion.
PREVENTING IRRESPONSIBLE BUSINESS CONDUCT OF THE MNE
OECD Guidelines for MNE
The OECD Guidelines for MNE in 2011 (hereinafter: the Guidelines) were adopted by the Governments addressing MNE, operating in or from their territories in order to prevent irresponsible business conduct performed by multinational enterprises (hereinafter: MNE). The Guidelines are recommendations, addressed by governments to MNE. OECD Declaration on International Investment recommends the observance of Guidelines to MNE, operating in or from their territories. Matters covered by the Guidelines may also be regulated by national law or international commitments. Observance of the Guidelines by MNE is not legally enforceable.
The Guidelines for MNE provide non-binding principles and standards for responsible business conduct (RBC) consistent with applicable laws and international legal acts. Guidelines are not a substitute, nor should they override local law and regulation. Guidelines are supplementary principles and standards of behaviour of a non-legal character.
Guidelines are very unclear and ambiguous in the case of the conflict of law: in countries where domestic laws and regulations conflict with the principles and standards of the Guidelines enterprises should seek ways to honour such principles and standards to the extent, which does not place them in violation of domestic law.
The legal nature of the OECD Guidelines for MNE is explained by the Guidelines itself: “The OECD Guidelines for MNE contain voluntary principles and standards for responsible business conduct in accordance with the applicable acquis and internationally recognized standards … In addition, issues covered by these guidelines may also subject to internal law and international commitments.“
It is though very clear from this definition that the OECD Guidelines for MNE imposes principles and standards for responsible business conduct as voluntary; that surprisingly means that responsible business conduct for companies is not mandatory. It is up to MNE to follow annd implement them or not. They may, but not necessarily, also be subject to internal law and international commitments.
The purpose of the Guidelines is to recommend that the business of these companies is in line with government policies, to strengthen the basis for mutual trust between the companies and the social environment in which they operate, to help improve the environment for foreign investment and increase the contribution of MNE to sustainable development. However being mere legally non binding recommendations, the Guidelines will hardly cope with the imanent MNE temptations to raise competitivness and investment returns by irresponsible business conduct.
Concepts and principles of the OECD Guidelines for MNE
Guidelines recommend that MNE to take fully into account established policies and contribute to economic, environmental social progress and sustainable development, in the countries in which they operate, however, no way is shown, how this orientation should be implemented.
MNE are, according to the Guidelines, recommended to encourage local capacity building through close cooperation with the local community. They are recommended to create employment opportunities and facilitate training opportunities for employees. MNE are also recommended to refrain from seeking or accepting exemptions out of the statutory or regulatory framework related to human rights, environmental, health, safety, labour, taxation, financial incentives, or other issues. MNE are recommended to support and uphold good corporate governance principles and to develop and apply good corporate governance practices and abstain from any improper involvement in local political activities. MNE are recommended to refrain from discriminatory or disciplinary action against workers who report to management or, to the competent public authorities, on practices that contravene the law, the Guidelines or the enterprise’s policies- whistler blowers.
According to the Guidelines, MNE are recommended to take fully into account established policies and contribute to economic, environmental social progress, sustainable development, encourage local capacity building through close cooperation with the local community and create job and facilitate training opportunities for employees in the countries in which they operate; they should respect the internationally recognized human rights of those affected by their activities and refrain from discriminatory or disciplinary action against workers.
All these recommendations are directed to MNE to voluntarily decide, either to follow them or not. This is certainly not an adequate approach to achieve more than to remind MNE to responsible business behaviour, rather than to enforce it by binding regulation.
Non-binding recommendations for responsible business conduct
As already pointed out, the OECD Guidelines for MNE contain a set of recommendations on the vital issues that, in the vast majority, should be considered compulsory and also severely sanctioned. It’s amazing to learn that these are only non-binding recommendations.
For example, The OECD Guidelines for MNE recommend that businesses fully comply with established policies in the countries in which they operate and also that businesses fully take into account the views of other stakeholders (?). Recommendation is, for example, also that companies contribute to economic, environmental and social progress in order to achieve sustainable development (?). It is also recommended that businesses respect the internationally recognized human rights of those affected by their activities (?); or to encourage the development of local capacities through close cooperation with the local community, including business interests, and the development of the company’s activities on the domestic and foreign markets, in accordance with the needs of the development of a sound entrepreneurial practice (?) (OECD Guidelines II / 1- 4, General policies).
The above guidelines (contribution to sustainable development, human rights, cooperation with the local community) and many others recommended by the OECD Guidelines for MNE (promoting the development of human capital, in particular by creating employment opportunities and employability education opportunities, the principles of good corporate governance, mutual respect between businesses and the social environment in which they operate, etc.) are only a recommendations, as it is voluntary corporate social responsibility.
The realization of these principles and standards depends on the good will and marketing opportunities of the individual corporation and from the consciousness and mercy of its directors, what is totally unacceptable. The implementation of socially responsible governance, which the OECD Guidelines for MNEs clearly define at the level of the recommendation, should be an international obligation for the OECD Member States to regulate those definitions as legal duties of corporations and / as the responsibility of their agents.
Certainly, it can not be merely a recommendation, but a sanctioned legal obligation not to require companies to make exceptions or reject offers for exemptions that do not have a legal or other basis in regulations and which relate to human rights, the environment, health, safety, work, taxation, financial incentives or other issues (OECD Guidelines for MNE II / 5, General Policies).
THE SPECIFIC FIELDS OF RECOMMENDATION
The OECD Guidelines for MNE contain recommendations also in Chapter VI. Environment, VII. Fighting bribery, taking bribes, extortion, VIII. Consumer interests, IX. Science and Technology, X. Competition, XI. Taxes.
Disclosure of information
The same is true for the directors’ duty to disclose corporate information, which should be a legal duty and not merely a recommendation that companies must ensure (OECD Guidelines for MNE III, Disclosure).
According to Guidelines, MNE should disclose timely and accurate information on its activities, structure, financial situation, performance, ownership and governance, Information should be tailored to the nature, size and location of the enterprise, with due regard taken of costs, business confidentiality, others. Enterprises should ensure that timely and accurate information is disclosed on all material matters regarding their activities, structure, financial situation, performance, ownership and governance. Disclosure policies of MNE should include the financial and operating results of the enterprise, enterprise objectives, major share ownership and voting rights, the structure of a group of enterprises and intra-group relations; control mechanisms, key executives, and board members, qualifications, the selection process, independent directors, remuneration for board members, related party transactions, foreseeable risk factors, issues regarding workers and other stakeholders and the content of any corporate governance code and its implementation.
Enterprises should apply high quality standards for accounting of financial as well as non-financial, including environmental and social reporting. An annual audit should be conducted by an independent, competent and qualified auditor an external and objective assurance to the board and shareholders. The financial statements fairly represent the financial position and performance of the enterprise in all respects.
All these recommendations are useless if the MNE does not respect the national legislation, which is as an international routine imposed in this field (corporate, audit and accounting laws). As for developing countries, which do not dispose with such legislation, pure recommendation does not help mush. There should be an obligation, that MNE should follow the same standards and law as are imposed in the countries of its origin.
Reporting in conformity with the standard of the Global Reporting Initiative is now standard practice and Integrated Reporting is an established concept. In the EU, a ground breaking directive issued in 2014 made sustainability reporting mandatory (Directive 2014/95/EU). In 2017, the EU Guidelines on non-financial reporting to enhance business transparency on social and environmental matters. The EU Guidelines supplement the existing EU rules on non-financial reporting.
This is particularly the case with the OECD Guidelines for Chapter V. Human rights, in which the Guidelines recommend that companies act in the context of internationally recognized human rights, international human rights commitments undertaken by the countries in which they operate and within the relevant internal laws and regulations on human rights.
According to Guidelines, States MNE are recommended to act, within the framework of internationally recognised human rights, as well as relevant domestic laws and regulations, seek ways to prevent or reduce adverse human rights impacts, directly linked to their business operations, products or services, avoid causing or contributing to adverse human rights impacts, address such impacts when they occur and avoid infringing on the human rights of others. MNE are recommended to carry out human rights Due diligence, appropriate to their size, the nature and context of operations and the severity of the risks of adverse human rights impacts. MNE are recommended to co-operate through legitimate processes in the remediation of adverse human rights impacts, when they have caused or contributed to these impacts.
Recommendation in the field of human rights is not an appropriate legal tool. Unfortunately, the protection of human rights is not a legal duty of corporate directors at all in the majority of corporate legislations.
MNE shall simply be obliged sanctioned and enforced to respect human rights, where ever they operate, same way in developed as in developing countries. “Human rights are rights inherent to all human beings, regardless of race, sex, nationality, ethnicity, language, religion, or any other status.”
There is significant gap between the EU’s commitment to the respect and promotion of human rights, the potential to regulate the conduct of MNEs, and the EU’s reluctance to impose human rights obligations on MNEs. Theory argues, that EU could do more to ensure that EU-based MNEs respect human rights when operating in third world countries. Alexandra Gatto identifies the primary obligations of MNEs as developed by international law.
Employment and industrial relations
The same is true for chapter V. Employment and employer-employee relations. Here the recommendations are made that, in accordance with current legislation, regulations and prevailing employment law and employment practices, and with applicable international labour standards, companies must take into account the right of workers to set up trade unions in order to opt for trade unions and organizations to represent them at negotiations for the conclusion of collective agreements.
In this chapter, there are some surprising recommendations, referring to issues, where the strictest sanctioned legal provision should take place, namely that companies contribute to the effective abolition of child labor and to take immediate and effective action in order to ensure the prohibition and complete elimination of the worst forms of child labor, then to contribute to the complete elimination of all forms of forced or compulsory labor and to take appropriate action to ensure that or compulsory work no longer exists in their business.
The OECD Guidelines for MNE it is also recommend that companies conduct the principle of equal opportunities and treatment in employment in their business, and that they must not discriminate between their employees in employment or pursuing a profession based on race, color, sex, religion, political opinion, nationality or of social origin or some other status.
It is further just recommended that enterprises should act within the framework of applicable law, regulations and prevailing labour relations and employment practices and applicable international labour standards. the freedom of association and right to collective bargaining.
It is obvious, that Guidelines for MNE broadly reflects the principles and objectives contained in ILO Declaration on Fundamental Principles and Rights at Work (employment, training, working conditions, and industrial relations): the effective abolition of child labor, the elimination of all forms of forced or compulsory labor, non-discrimination in employment and occupation. In this context recommendations to follow this standards is even more, to put it mildly, weird. Government should commit themselves to fully implement these international standards, instead of just recommend MNE to do so.
The same stays for ILO Tripartite declaration of principles concerning MNE and social policy (2017) that already provides direct guidance to MNE on social policy and inclusive, responsible and sustainable workplace practices (decent work agenda). It was adopted by governments, employers and workers from around the world 40 years ago and revised in 2017 and addressed to MNEs, governments, and employers’ and workers’ organizations covering areas such as employment, training, conditions of work and life, and industrial relations as well as general policies. It is build on international labour standards (ILO conventions and recommendations) most of which is nationally reckognized.
It is further only recommended, that in their operations, MNE employ local workers and provide training to improve their skills, promote consultation and co-operation between employers and workers and their representatives on matters of mutual concern and observe not less favourable standards of employment and industrial relations than those by comparable employers in the host country. Again, instead of committing themselves, to adopt national legislation to achieve these goals.
MNE are further recommended to provide the best possible wages, benefits and conditions of work, within the framework of government policies (when MNE operate in developing countries, where comparable employers may not exist). These should be related to the economic position of the enterprise, but should be at least adequate to satisfy the basic needs of the workers and their families. MNE should provide also take adequate steps to ensure occupational health and safety in operations.
MNE are also just recommended to respect the right of workers to establish or join trade unions and representative organizations, they choose, to collective bargaining, and in constructive negotiations, on terms and conditions of employment, to effective abolition of child labour; prohibition and elimination of the worst forms of child labour as urgency and to elimination of all forms of forced or compulsory labour; ensure that forced or compulsory labour does not exist in their operations.
MNE are further only recommended to follow the principle of equality of opportunity and non discrimination against their workers with respect to employment on grounds as race, colour, sex, religion, political opinion, nationality, social origin.
In considering changes in their operations (major employment effects) (closure of an entity, involving collective lay-offs or dismissals), MNE are recommended to provide reasonable notice of such changes to representatives of the workers and, to the relevant governmental authorities, and co-operate with the worker representatives and appropriate governmental authorities so as to reduce adverse effects (possibly prior to the final decision being taken). In negotiations with workers’ representatives they not threaten to transfer the whole or part of an operating unit from. Such MNE behaviour should be and in most cases it is, legally binding in national legislation and should be MNE legal obligation also in the countries, where such laws do not exist (developing countries).
In OECD Guidelines, enterprises are recommended, within the framework of laws, regulations and administrative practices in the countries in which they operate, and in consideration of relevant international agreements, principles, objectives, and standards, to take due account of the need to protect the environment, public health and safety, and generally to conduct their activities in a manner contributing to the wider goal of sustainable development. MNE are recommended to establish and maintain a system of environment management: collection and evaluation of adequate and timely information regarding the environmental, health, and safety impacts of their activities; they should set measurable objectives and targets for improved environmental performance and resource utilisation (consistent with relevant national policies and international environmental commitments) MNE are recommended to set regular monitoring and verification of progress toward environmental, health, and safety objectives or targets.
MNE are recommended to provide the public and workers with information on the potential environment, health and safety impacts of the activities of the enterprise and to engage in communication and consultation with the communities (adequate and timely) directly affected by the environmental, health and safety policies. They are recommended to assess, and address environmental, health, and safety-related impacts associated with the processes, goods and services of the enterprise with a view to avoiding or reducing them. (prepare environmental impact assessment).
MNE are recommended to take measures to prevent or minimise damage, where there are threats of serious damage to the environment, human health and safety and improve corporate environmental performance, at the level of the enterprise (supply chain), by encouraging such activities as:
– adoption of technologies and operating procedures that reflect standards concerning environmental performance;
– development and provision of products or services that have no undue environmental impacts, are safe in their intended use and reduce greenhouse gas emissions, are efficient in their consumption of energy and natural resources, can be reused, recycled, or disposed of, safely, promoting higher levels of awareness among customers of the environmental implications of using the products and services of the enterprise and providing accurate information on their products (for example, on greenhouse gas emissions, biodiversity, resource efficiency, or other environmental issues
MNE are also recommended to provide adequate education and training to workers in environmental health and safety matters, including the prevention of environmental accidents, the handling of hazardous materials environmental impact assessment procedures, public relations, and environmental technologies.
Many of these recommendations are already a part of national law in the developed part of the world. However, such an approach should not be just recommended but rather binding also in the countries which still lack such legislation.
Combating bribery, bribe solicitation and extortion
In this field there is a number of international commitments that are already transformed to national binding legislations. For this reason, recommendations look pretty unusual and hard to be properly understood.
For example, enterprises are by the Guidelines recommended not, directly or indirectly, to offer, promise, give, or demand a bribe or other undue advantage to obtain or retain business or other improper advantage. Enterprises should also resist the solicitation of bribes and extortion. In particular, enterprises are recommended not to not offer, promise or give undue advantage to public officials or the employees of business partners, request, agree to or accept undue pecuniary or other advantage from public officials or the employees of business partners or use third parties for channelling undue money or other advantages to public officials, or to employees of their business partners such agents and other intermediaries, consultants, representative.
MNE are also recommended to develop and adopt adequate internal controls, ethics and compliance programmes or measures for preventing and detecting bribery, on the basis of a risk assessment addressing the individual circumstances of an enterprise. These internal controls, ethics and compliance programmes or measures include a system of financial and accounting procedures, system of internal controls, reasonably designed to ensure the maintenance of fair and accurate books, records, and accounts, that cannot be used for the purpose of bribing or hiding bribery. Such individual circumstances and bribery risks are recommended to be regularly monitored and re-assessed as necessary to ensure the enterprise’s internal controls, ethics and compliance programme or measures are adapted and continue to be effective, and to reduce the risk of enterprises in bribery, bribe solicitation and extortion.
MNE are recommended to prohibit or discourage the use of small facilitation payments, which are generally illegal: in the countries where they are, MNE should make, accurately record these in books and financial records.. Ensure properly documented due diligence, taking into account the particular bribery risks facing the enterprise.
MNE are recommended to enhance the transparency of their activities in the fight against bribery, bribe solicitation and extortion. Measures could include making public commitments against bribery, bribe solicitation and extortion, disclosing the management systems and the internal controls, ethics and compliance programmes or measures adopted by enterprises fostering openness and dialogue with the public so as to promote its awareness of and cooperation with the fight against bribery, bribe solicitation and extortion.
MNE are recommended to promote employee awareness of and compliance with company policies and internal controls, ethics and compliance programmes or measures against bribery, bribe solicitation and extortion through appropriate dissemination of such policies, programmes or measures and through training programmes and disciplinary procedures.
MNE are recommended not to make illegal contributions to candidates for public office or to political parties or to other political organisations. Political contributions: should fully comply with public disclosure requirements and should be reported to senior management.
When dealing with consumers, enterprises are, by Guidelines, recommended to act in accordance with fair business, marketing and advertising practices and should take all reasonable steps to ensure the quality and reliability of the goods and services that they provide.
MNE are recommended to ensure that the goods and services they provide meet all agreed or legally required standards for consumer health and safety (health and safety warnings). They should also provide accurate, and clear information that is sufficient to enable consumers to make informed decisions on prices, content, safe use, environmental attributes, maintenance, storage and also provide consumers with access to non-judicial dispute resolution and redress mechanisms; fair, easy to use, timely and effective , without unnecessary cost.
MNE are recommended not to make omissions, nor engage in practices, that are deceptive, misleading, fraudulent or unfair and support efforts to promote consumer education in areas that relate to their business activities, with the aim of improving the ability of consumers to:
– make informed decisions involving complex goods, services and markets,
– better understand the economic, environmental and social impact of their decisions
– support sustainable consumption.
MNE are recommended to respect consumer privacy and take reasonable measures to ensure the security of personal data that they collect, store, process or disseminate. MNE should co-operate fully with public authorities to prevent and combat deceptive marketing practices (including misleading advertising and commercial fraud) and to diminish or prevent serious threats to public health and safety or to the environment. MNE are alsomrecommended to take into consideration the needs of vulnerable and disadvantaged consumers and the specific challenges that e-commerce may pose for consumers.
Science and technology
Enterprises are recommended to endeavour to ensure that their activities are compatible with the science and technology (S&T) policies and plans of the countries in which they operate and contribute to the development of local and national innovative capacity. MNE should permit the transfer of technologies and know-how, with due regard to intellectual property
MNE are recommended to perform science and technology development work in host countries to address local market needs, employ host country personnel in an S&T to encourage their training, taking into account commercial needs.
Where relevant to commercial objectives, MNE are recommended to develop ties with local universities, public research institutions, and participate in co-operative research projects with local industry.
Enterprises are recommended to carry out their activities in a manner consistent with all applicable competition laws and regulations, taking into account the competition laws of all jurisdictions in which the activities may have anticompetitive effects. The term “competition” law is used to refer to “antitrust” and “antimonopoly” laws, that prohibit collective or unilateral action to abuse market power or dominance, or to acquire market power or dominance by means other than efficient performance, or to engage in anti-competitive agreements.
ME are recommended to co-operate with investigating competition authorities by providing responses as promptly and completely as practicable to requests for information, and considering the use of available instruments, such as waivers of confidentiality where appropriate, to promote effective and efficient co-operation.
MNE are recommended to regularly promote employee awareness of the importance of compliance with all applicable competition laws and regulations, and, in particular train senior management of the enterprise in relation to competition issues.
Guidelines stresses the importance of the that enterprises to contribute to the public finances of host countries by making timely payment of their tax liabilities. Tax compliance includes such measures as providing to the relevant authorities timely information that is relevant or required by law for purposes of the correct determination of taxes.
Recommendations instead of commitment for binding rules are the case also in this, normally significant for very strictly regulated and also sanctioned field of regulation.
Enterprises are recommended to treat tax governance and tax compliance as important elements of their oversight and broader risk management systems. In particular, corporate boards should adopt tax risk management strategies to ensure that the financial, regulatory and reputational risks associated with taxation are fully identified and evaluated.
IMPLEMENTATION PROCEDURES OF THE OECD GUIDELINES FOR MNE
As it is generally known, the world faces a huge gap between normative and real, between political and legal acts stipulating to individuals guarantees, freedoms and rights on the one hand and the actual situation in real life on the other, especially between the normative scope of human rights law and the effective power of property rights; unfortunately here we are confronted with another case of wishful recommendations that never come true, unless severe severe sanctions are imposed.
II. part of the OECD Guidelines for MNE however approaches the issue of implementation differently; In the absence of binding commitments of the signatory Governments to adopt related national legislation to implement Guidelines in the real life, it sets out the procedures for implementing the OECD Guidelines for MNEs through so called national contact points.
The associated States establish national contact points (NCPs) in order to increase efficiency implementation of the Guidelines, but they should only provide these countries with incentive activities, by examining inquiries and by cooperating in addressing issues arising in the implementation of the Guidelines in specific cases. The role of National Contact Points (NCPs) is to further the effectiveness of the Guidelines.
NCPs operate in accordance with core criteria of visibility, accessibility, transparency and accountability to further the objective of functional equivalence. Countries have flexibility in organizing their NCPs, seeking the active support of social partners, including the business community, worker organizations, other nongovernmental organizations, and other interested parties. An NCP can consist of senior representatives from one or more Ministries, may be a senior government official or a government office headed by a senior official, be an interagency group, or one that contains independent experts. Representatives of the business community, worker organisations and other non-governmental organisations may also be included.
Given their economic strength (representing half of world exports and one third of the world GDP), multinationals could make a significant contribution to achieving the UN Millennium Goals on Sustainable Development (reducing inequality, decent work and respect for human rights), but the truth is exactly the opposite.
This proves that the global economy is driven by capital and that elected politicians, who are supposed to respect the will of the masses they were elected by, have no word at all. This is not only a crisis of the economic system that generates infinite inequalities among the people and nations, but is primarily a crisis of modern political democracy. It is a conflict of two types of democracies, in which the winner is a capital-based democracy, and the loser is electoral democracy.
Weapons in this clash cannot be benign OECD recommendations that merely render ethical. Therefore, a resolute conflict is needed with powerful centres of economic power that do not respect the rule of law. Because the centres of economic power are stronger than the elected political representatives, the conflict does not occur at all.
– Investopedia, https://www.investopedia.com/terms/m/multinationalcorporation.asp
-The OECD Guidelines for MNE 2011
– Profit before People: 7 of the World’s Most Irresponsible Companies, http://eco-chick.com/2009/05/3845/profits-before-people
– Andrea Murphy, Global 2000, Top Multinational Performers: There are three companies tied for first place, Philip Morris International PM +0%, Global -Logistics Properties and Antofagasta
– Prasadi Wijesinghe, Human Rights Violations by Multinational Corporations: Nestle as the Culprit, 14 Mar 2018,https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3136321
– Staying ahead of the curve on corporate responsibility: Indigenous peoples’ rights, taxation and disclosure, OECDONTHELEVEL on 29 July 2018. https://friendsoftheoecdguidelines.wordpress.com/2018/08/29/staying-ahead-of-the-curve-on-corporate-responsibility-indigenous-peoples-rights-taxation-and-disclosure/
– Robert G. Eccles, Ioannis Ioannou and George Serafeim, The Impact of Corporate Sustainability on Organizational Process and Performance, Harvard Business School, 14 Nov 2011, Working Paper Summaries
– The Impact of Corporate Sustainability on Organizational Processes and PerformanceRobert G. Eccles, Ioannis Ioannou, George Serafeim, NBER Working Paper No. 17950, Issued in March 2012, Revised in April 2014, NBER Program(s):Corporate Finance https://www.nber.org/papers/w17950
-Jordi Surroca, Josep A. Tribó and Shaker A. Zahra, Stakeholder Pressure on MNEs and the Transfer of Socially Irresponsible Practices to Subsidiaries, Academy of Management Journal, VOL. 56, NO. 2 Published Online: 19 Jul 2012 https://doi.org/10.5465/amj.2010.0962
– Stephanie Rogers, Profit before People: 7 of the World’s Most Irresponsible Companies, A2009, http://eco-chick.com/2009/05/3845/profits-before-people/
-Roel Nieuwenkamp, Chair of the OECD Working Party on Responsible Business Conduct Can Companies Really Do Well By Doing Good? The Business Case for Corporate Responsibility http://oecdinsights.org/2015/11/02/can-companies-really-do-well-by-doing-good-the-business-case-for-corporate-responsibility/
-2030 Agenda for Sustainable Development and the 17 Sustainable Development Goals.
-OECD Principles of Corporate Governance ,
-Guidelines on Corporate Governance of State-Owned Enterprises,
-EU Guidelines on non-financial reporting (2017), Policy Framework for Investment (PFI),
-Recommendation of the Council on Principles for Private Sector Participation in Infrastructure
-David Kinley, Sarah Joseph Multinational Corporations and Human Rights: Questions about Their Relationship , First Published February 1, 2002 Research Article, https://doi.org/10.1177/1037969X0202700102-Article 2. of the Universal Declaration of Human Rights:
-Alexandra Gatto, PhD, LLM, MA , Multinational Enterprises and Human Rights, Obligations under EU Law and International Law
-International labor standards, fund. rights at work: 1977 ILO
-Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, last revised in 2017, 1998 Declaration on Fundamental Principles and Rights at Work (employment, training, working conditions, and industrial relations) ,
-The ILO 1999. Convention 182 concerning the worst forms of child labour, The ILO 1973 Convention 138 and Recommendation 146 concerning minimum ages for employment,
-The ILO 1930, 1957 Conventions 29 and 105 on suppress of forced or compulsory labour,
-The ILO 1952 Recommendation 94 of concerning Consultation and Co-operation between Employers and Workers at the Level of the Undertaking.
-The 1992 Rio Declaration on Environment and Development in Agenda 21,
-The 1998 Aarhus Convention on Access to Information, Public Participation and Access to Justice in Environmental Matters.
-The 1999 OECD Convention of Combating Bribery of Foreign Public Officials, signed by 34 countries (the Anti-Bribery Convention),
-The revised Recommendation on Combating Bribery in International Business Transactions a
-The 1996 Recommendation on the Tax Deductibility of Bribes to Foreign Public Officials,
-The 2009 Recommendation for Further Combating Bribery of Foreign Public Officials in International Business Transactions (the 2009 Anti-Bribery Recommendation), The 2009 Recommendation on Tax Measures for Further Combating Bribery of Foreign Public Officials in International Business Transactions,
-The 2006 Recommendation on Bribery and Officially Supported Export Credits, The 2005 United Nations Convention against Corruption (UNCAC), 14 December
– The 1999 UN Guidelines on Consumer Policy, The 1999 OECD Guidelines for Consumer Protection in the Context of Electronic Commerce, The 1980, 2002, 2016 OECD Guidelines Governing the Protection of Privacy and Transborder Flows of Personal Data
– The 1998 Recommendation of the OECD Council Concerning Effective Action Against Hard Core Cartels, C(98)35/Final,
-The 2002 OECD Recommendation on Anticompetitive Practices Affecting International Trade, The 1999 Report of the OECD Committee on Competition Law and Policy, Making International Markets More Efficient Through “Positive Comity” in Competition Law Enforcement.
– The 2017 OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, OECD Transfer Pricing Guidelines,
– The 2017 revised
Recommendation of the OECD Council on the Determination of Transfer Pricing
between Associated Enterprises
 Investopedia, https://www.investopedia.com/terms/m/multinationalcorporation.asp
 The OECD Guidelines for MNE 2011
 Profit before People: 7 of the World’s Most Irresponsible Companies, http://eco-chick.com/2009/05/3845/profits-before-people/
Andrea Murphy, Global 2000, Top Multinational Performers:There are three companies tied for first place, Philip Morris International PM +0%, Global Logistics Properties and Antofagasta . All three companies generate 100% of their revenues outside the country where they are headquartered. Cigarette and tobacco company Philip Morris International was spun off from parent company Altria Group in 2008 to focus on non-U.S. markets. In 2016, 36.2% of revenues were generated in the European Union, 27.4% came from Asia, 24.4% from Eastern Europe, the Middle East and Africa, and 12% from Latin America and Canada. https://www.forbes.com/sites/andreamurphy/2017/10/10/global-2000-top-multinational-performers/#5d5fa4902bc5
 The list of top 10 GDP-per-capita countries 2017, contains most of the major global tax havens: Qatar 130, Macau 116, Luxemburg 106, Singapore 100, Brunei 79, Ireland 78, Norway 74, UAE69, Kuwait 67, Switzerland 64, Hong Kong 64
 Prasadi Wijesinghe, Human Rights Violations by Multinational Corporations: Nestle as the Culprit, 14 Mar 2018,https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3136321
 Staying ahead of the curve on corporate responsibility: Indigenous peoples’ rights, taxation and disclosure, OECDONTHELEVEL on 29 July 2018. https://friendsoftheoecdguidelines.wordpress.com/2018/08/29/staying-ahead-of-the-curve-on-corporate-responsibility-indigenous-peoples-rights-taxation-and-disclosure/
Robert G. Eccles, Ioannis Ioannou and George Serafeim, The Impact of Corporate Sustainability on Organizational Process and Performance, Harvard Business School, 14 Nov 2011, Working Paper Summaries
The Impact of Corporate Sustainability on Organizational Processes and PerformanceRobert G. Eccles, Ioannis Ioannou, George Serafeim, NBER Working Paper No. 17950, Issued in March 2012, Revised in April 2014, NBER Program(s):Corporate Finance https://www.nber.org/papers/w17950
 Jordi Surroca, Josep A. Tribó and Shaker A. Zahra, Stakeholder Pressure on MNEs and the Transfer of Socially Irresponsible Practices to Subsidiaries, Academy of Management Journal, VOL. 56, NO. 2 Published Online: 19 Jul 2012 https://doi.org/10.5465/amj.2010.0962
 Stephanie Rogers, Profit before People: 7 of the World’s Most Irresponsible Companies, A2009, http://eco-chick.com/2009/05/3845/profits-before-people/
 Prof. Dr. Roel Nieuwenkamp, Chair of the OECD Working Party on Responsible Business Conduct Can Companies Really Do Well By Doing Good? The Business Case for Corporate Responsibility http://oecdinsights.org/2015/11/02/can-companies-really-do-well-by-doing-good-the-business-case-for-corporate-responsibility/
 Other related UN, EU and OECD documents: 2030 Agenda for Sustainable Development and the 17 Sustainable Development Goals. OECD Principles of Corporate Governance , Guidelines on Corporate Governance of State-Owned Enterprises, EU Guidelines on non-financial reporting (2017), Policy Framework for Investment (PFI), Recommendation of the Council on Principles for Private Sector Participation in Infrastructure
 Staying ahead of the curve on corporate responsibility: Indigenous peoples’ rights, taxation and disclosure, OECDONTHELEVEL on 29 July 2018. https://friendsoftheoecdguidelines.wordpress.com/2018/08/29/staying-ahead-of-the-curve-on-corporate-responsibility-indigenous-peoples-rights-taxation-and-disclosure/
 See on accountability mechanisms: David Kinley, Sarah Joseph Multinational Corporations and Human Rights: Questions about Their Relationship , First Published February 1, 2002 Research Article, https://doi.org/10.1177/1037969X0202700102
 Article 2. of the Universal Declaration of Human Rights: Everyone is entitled to all the rights and freedoms set forth in this Declaration, without distinction of any kind, such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status. Furthermore, no distinction shall be made on the basis of the political, jurisdictional or international status of the country or territory to which a person belongs, whether it be independent, trust, non-self-governing or under any other limitation of sovereignty. https://www.un.org/en/universal-declaration-human-rights/
 See on that: Alexandra Gatto, PhD, LLM, MA , Multinational Enterprises and Human Rights, Obligations under EU Law and International Law
European Union could do more to ensure that EU-based multinational enterprises (MNEs) respect human rights when operating in third world countries. Alexandra Gatto identifies the primary obligations of MNEs as developed by international law, and investigates how the EU has promoted the respect of human rights obligations by the MNEs to date.
The OECD Guidelines for MNE broadly reflects the principles and objectives
International labor standards, fund. rights at work: 1977 ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, last revised in 2017, 1998 Declaration on Fundamental Principles and Rights at Work (employment, training, working conditions, and industrial relations) , The ILO 1999. Convention 182 concerning the worst forms of child labour, The ILO 1973 Convention 138 and Recommendation 146 concerning minimum ages for employment, The ILO 1930, 1957 Conventions 29 and 105 on suppress of forced or compulsory labour, The ILO 1952 Recommendation 94 of concerning Consultation and Co-operation between Employers and Workers at the Level of the Undertaking.
The OECD Guidelines for ME broadly reflects the principles and objectives contained in: The 1992 Rio Declaration on Environment and Development in Agenda 21, The 1998 Aarhus Convention on Access to Information, Public Participation and Access to Justice in Environmental Matters.
The OECD Guidelines for ME broadly reflects the principles and objectives
contained in: The 1999 OECD Convention of Combating Bribery of Foreign Public
Officials, signed by 34 countries (the Anti-Bribery Convention), The revised
Recommendation on Combating Bribery in International Business Transactions a
-The 1996 Recommendation on the Tax Deductibility of Bribes to Foreign Public Officials, The 2009 Recommendation for Further Combating Bribery of Foreign Public Officials in International Business Transactions (the 2009 Anti-Bribery Recommendation), The 2009 Recommendation on Tax Measures for Further Combating Bribery of Foreign Public Officials in International Business Transactions, and The 2006 Recommendation on Bribery and Officially Supported Export Credits, The 2005 United Nations Convention against Corruption (UNCAC), 14 December
 The 1999 UN Guidelines on Consumer Policy, The 1999 OECD Guidelines for Consumer Protection in the Context of Electronic Commerce, The 1980, 2002, 2016 OECD Guidelines Governing the Protection of Privacy and Transborder Flows of Personal Data
The 1998 Recommendation of the OECD Council Concerning Effective Action Against Hard Core Cartels, C(98)35/Final, The 2002 OECD Recommendation on Anticompetitive Practices Affecting International Trade, The 1999 Report of the OECD Committee on Competition Law and Policy, Making International Markets More Efficient Through “Positive Comity” in Competition Law Enforcement.
 The 2017 OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, OECD Transfer Pricing Guidelines, The 2017 revised Recommendation of the OECD Council on the Determination of Transfer Pricing between Associated Enterprises