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Dealing with terror
The Sunday Telegraph (UK)
July 03, 2005

View article on Sunday Telegraph website

British companies have been chastised by Kate Hoey, the Labour MP, for not doing enough to ensure that they are not giving financial succour to Zimbabwe's repressive regime. James Hall investigates.

Tony Blair will on Tuesday morning - via a satellite link from Singapore - urge businessmen at a conference in London to invest in Africa. The G8 Business Action for Africa conference is a curtain-raiser to the G8 summit in Gleneagles, which begins on Wednesday.

Along with assorted corporate leaders, including Jeroen van der Veer, the chief executive of Royal Dutch Shell, the oil giant, and Sir Mark Moody-Stuart, the chairman of Anglo American, the mining company, the conference will be addressed by the presidents of Mozambique, Nigeria and Zambia, among others.

However, one nation that will not be represented at the conference is Zimbabwe, the southern African country that is in turmoil under President Robert Mugabe. Brutal repossession of white-owned farms, widespread demolition of property and abuses of human rights characterise Mugabe's regime.

Savage food and oil shortages, 500 per cent inflation and 80 per cent unemployment are crippling the ravaged country, which has been teetering on the brink of collapse for months.

And yet many UK companies do business in Zimbabwe in a way that - according to their critics - helps to prop up Mugabe and his reign of terror. Even if they are not deliberately trading with the beneficiaries of illegally expropriated property, they may not be doing enough to establish whether or not the companies and people they deal with there are bona fide.

This matter of corporate conscience was highlighted last week by Kate Hoey, the MP and former minister, who returned from a trip to Zimbabwe a fortnight ago. She said that she was "concerned about companies in this country that continue to do business with counterparts in Zimbabwe that are working hand in hand" with Mugabe's regime.

"Supermarkets - I simply mention Tesco, but there are many - have not yet taken seriously their obligations to ensure that their vegetables and flowers are not being sourced from illegally seized farms or operations run by proxies for the regime," she said.

Hoey added that certain UK and European banks are arranging lines of credit for the repressive regime and its associates.

Hoey has placed those companies in a dilemma. UK retailers have rigorous rules governing which suppliers they use. As well as having their own codes of conduct, the retailers regularly employ external agencies to carry out audits of their supply base.

Further, large retailers - including Asda, Tesco, Marks & Spencer, J Sainsbury and Boots - are all signatories to the Ethical Trading Initiative, meaning that they must assume responsibility for the labour and human rights practices within their supply chains.

But when a country is as corrupt as Zimbabwe, and when information is kept from the outside world, how can these companies be so sure of what and whom they are dealing with?

John Worswick, a founder of Justice for Agriculture (JAG) - a Zimbabwean organisation that represents commercial farm owners and workers - says that although supermarkets may source goods from legally owned farms, these farms often outsource production to other farms, whose ownership may not be legal.

Therefore, tacit collusion with supporters of Mugabe's regime may be occurring.

"What is happening is that the big suppliers have outgrowers who are on illegally acquired farms," he says.

"The farms have been illegally acquired in that the government hasn't followed the due process, and confirmation of the acquisitions hasn't gone through the courts. Worse, in many situations the original owners haven't been compensated," he says.

JAG has been building a database of farms in Zimbabwe that have been seized. Through this, it can assess the legality of their ownership.

"We would like to see organisations like Tesco and Sainsbury being transparent in terms of who they are acquiring products from. Organisations like JAG can do due diligence and identify if the product is legitimate or not," he says.

Worswick says that he has examples of suppliers in Zimbabwe who are sympathetic to Zanu-PF, Mugabe's ruling party.

David Banks, a policy advisor for the Zimbabwe All-Party Parliamentary Group, has been on three clandestine missions to Zimbabwe over the past two-and-a-half years. He says that companies must not be allowed to "turn a blind eye to human rights abuses just in the name of getting a few pence off their mangetout peas".

"It wouldn't happen if it was Burma or somewhere like that," he says.

What is needed, Banks says, is an up-to-date official list of approved farmers that should be readily available to those who source goods from the country.

"It would be quite straightforward if the will was there to do anything about it," he says.

However, retailers deny Hoey's suggestion that they are not taking their obligations seriously.

An official at Tesco, which was singled out by Hoey, says that it buys "very little" from Zimbabwe and that it tends not to use suppliers who outsource production to third parties. She says that suppliers are regularly audited and that any change in ownership of a farm results in an automatic re-auditing.

Two years ago, Tesco stopped sourcing from two farms in Zimbabwe that changed owners.

"If a farm changes ownership it is unlikely, frankly, that they'll be able to guarantee those standards, particularly ethical ones. Our track record speaks for itself," she claims.

A spokeswoman for Sainsbury says that the retailer has "strict regulations in place to ensure that our suppliers only buy from farms that are legally owned", even though it does not employ those farms directly.

Chris McCann, the ethical trading manager at Asda, the UK supermarket owned by Wal-Mart, the world's largest retailer, says that Asda sources no goods at all from Zimbabwe. And he sheds some light on the lengths that supermarkets go to in their audit processes.

As well as implementing its own code, Asda - like its rivals - uses third-party auditors, such as Bureau Veritas. These auditors visit farms and interview workers, both individually and collectively. They carry out inspections of the sites, including the dormitories (if the farm is residential).

An auditor will also demand to see documents, such as pay slips from the employer and passports from the employees, to verify that staff are not being held in bonded labour.

"We do find issues, but I don't know a retailer in the world that doesn't," McCann says.

Companies that fail the audit have 120 days to implement a corrective action plan or be shut down. Last year, Wal-Mart carried out 13,000 audits of its suppliers worldwide.

However, Hoey says that more must be done. She has seen flowers of uncertain Zimbabwean origin sold at the New Covent Garden Market in her London constituency of Stockwell.

Her message to retailers is clear: 100 per cent certainty that products come from an ethical source is required.

"I - and the public - would want to be absolutely certain that anything that has Zimbabwe on it has not been sourced, or any part of it sourced, from land that has been illegally seized. We know if that has happened then we will not be helping the poorest people in Zimbabwe by buying it," she says.

"In fact, at the moment, I would ask people to be very careful about buying anything from Zimbabwe," she adds.

Dan Rees, a director at the Ethical Trade Initiative, says that Hoey has raised "very important questions about what are extremely serious issues".

"The decisions taken by the Mugabe regime have plunged the country into crisis and the effects on workers and others have been severe," he says.

"ETI membership obligations require retailers to ensure that their suppliers are observing national and international labour law. We urge retailers and brands to identify their suppliers, assess the conditions for their workers and where necessary, seek improvements to workers' conditions."

However, he admits that this can be hard, given the blanket of secrecy over much that takes place in Zimbabwe. "Given the current context in Zimbabwe, where the rule of law does not apply and where there are real concerns about personal safety issues, it is extremely difficult for companies to implement ETI membership obligations in full," he says.

Sourcing from such countries is an ethical minefield. So Dr Mohan Kaul, the director general of the Commonwealth Business Council, which is co-organising this week's G8 conference on Africa in London, has a simple solution. He says that countries such as Zimbabwe should simply be off-limits: "We are saying: 'Don't touch these countries.' "

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