When is a country too corrupt for Canadians to do business there?

Does a brutal dictatorship in the Horn of Africa, featuring systematic slavery and more generally an awful record of human rights abuse sound like a place you want to do business? If so, Eritrea is the destination for you.

The tiny State of Eritrea was the subject of a recent scathing report by the UN’s Office of the High Commissioner for Human Rights. Among the report’s findings: “Eritreans are subject to systems of national service and forced labour that effectively abuse, exploit and enslave them for indefinite periods of time.” Little wonder that Eritreans currently make up a disproportionate number of the African refugees landing on European shores.

Of particular interest is the fact that Canadian mining company Nevsun Resources Ltd is implicated in these human rights abuses. Nevsun is co-owner of the Bisha copper and gold mine. According to news reports, “Nevsun said it regretted if a state-controlled subcontractor it had been required to use had employed conscripts.” (See the petition here, asking Nevsun to “Get slavery out of your mining operations in Eritrea, pay your workers or else close the Bisha mine.”)

Doing business in less-developed country is always going to pose a range of challenges, from corrupt officials to bad infrastructure to non-existent environmental regulations and shoddy labour conditions. If you do business in such places, there are always going to be compromises, and in some cases those compromises — think of long hours and low wages in a Bangladesh garment factory — may be a net benefit to workers, to the local economy, and to shareholders.

And there are things companies can do to act responsibly when doing business in developing countries. They can work with local governments to make sure that existing regulations are adhered to and enforced, throughout the supply chain. They can scrupulously avoid indulging in bribery (which is both illegal everywhere and almost always seriously unethical). They can look for win-win ways to raise labour standards to make workers better off and more productive. Simply by operating with quiet integrity, a company from a developed country may be able to set a good example that helps promote reform.

But in some cases, that won’t be enough. In some cases, doing business in a particular country is just going to mean getting your hands very, very dirty. In some cases, becoming complicit in human rights violations will be either inevitable, or simply overwhelmingly tempting. We have to come to grips with the fact that there are some places where a responsible company simply cannot do business.

And that’s a tragic fact for the people who live in such countries. People in places like Eritrea desperately need trade, to help pull them up out of poverty. But sometimes — as when important human rights are on the line — helping in this way is going to have to stay out of reach.

Chris MacDonald is founding director of the Jim Pattison Ethical Leadership Program at the Ted Rogers School of Management, and founding co-editor of the ethics news aggregator, Business Ethics Highlights. Follow him at @ethicsblogger.

1 comment so far

  1. Ashlee Thomas on

    As I read your article, I can’t help but imagine I am a business owner who is looking at less-developed countries to start a business overseas in order to save on product and production. I think many people first think of the benefits to doing business overseas without giving much regard to the negatives. You bring up a great point on the challenges that a business owner would face establishing a business there. “From corrupt officials to bad infrastructure to non-existent environmental regulations and shoddy labour conditions” all of these factors play a part in how business is going. And at what point does the business owner make these problems come to the forefront and outweigh the fact that their business might be making a surplus of money in the specific country. I think as a business owner you might justify these challenges by saying that you’re adding money to the local economy and helping many people, who without you, would not be working and providing for their families. And, although like you stated, there can definitely be “win-wins” for both your business and the country where you are working while still operating with integrity, an employer really needs to look closely at what is happening in that area before starting business there.


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