Blog Entry

New Report Points To Corporate Complicity in Human Rights Abuses in Eritrea as Canadian Company Goes To Supreme Court Over Allegations of Forced Labour

Jamie Kneen

National Program Co-Lead

It was sheer coincidence, but more than a tinge of irony coloured yesterday's news that the Supreme Court of Canada will hear Nevsun Resources' appeal of a court ruling that accusations against it regarding the use of forced labour at its Bisha mine in Eritrea should be heard in British Columbia, not Eritrea, just as a new report revealed evidence of the Eritrean regime's use of forced labour and exposed transnational mining companies' contributions to supporting the regime.

A group of Eritrean refugees allege that as military conscripts, they were forced to work for an Eritrean military contractor at Nevsun's Bisha gold-copper mine, in violation of international laws against forced labour, slavery, and torture, and that Nevsun was complicit in their treatment. The allegations have not been tested in court. So far, Canadian courts have rejected Nevsun's arguments that the case should be heard in Eritrea, not in B.C. where it is based. In November 2017, the B.C. Court of Appeal upheld lower court's ruling that there was a real risk of corruption and unfairness in the Eritrean legal system, while acknowledging the considerable practical difficulties of hearing the claims in British Columbia.

At the same time, UK-based Eritrea Focus published a new report, "Mining and Repression in Eritrea: Corporate Complicity in Human Rights Abuses" as a submission to the UK All-Party Parliamentary Group on Eritrea. The report notes that in addition to accusations of forced labour dating back a decade, transnational mining companies – with Nevsun in the forefront – provide important income and financial support for the repressive Eritrean regime with little to no transparency and accountability on either side. The report notes that "Nevsun has “consistently cited confidentiality non-disclosure agreements” when questioned about its finances by the UN Monitoring Group on Eritrea and Somalia."

Key facts and recommendations made in the report:

  • Since 1993, Eritrea has been ruled as a one-party state under the dictatorship of President Isaias Afwerki. There is no independent judiciary, civil society or independent media in the country, and the Constitution of Eritrea – ratified in 1997 – has never been fully implemented. As a result, many thousands flee into exile every month.
  • A 2016 UN Report of the Commission of Inquiry on Human Rights in Eritrea found that enslavement inside the country “has been committed on an ongoing, widespread and systematic basis since 2002.”
  • At the age of 18, Eritrean citizens are drafted into compulsory indefinite military or national service. The UN Commission of Inquiry report found that most “are subject to forced labour” in public and private companies.
  • Any foreign firm operating in Eritrea is required by law to contract public construction companies. The US State Department reported in 2015 that the country’s “mandatory national service programme,” and tendency to “place persons performing national service in commercial enterprises, may leave businesses open to charges of relying on conscripts as forced labour.” These concerns were echoed in 2016 and 2017.
  • The 2016 UN Commission of Inquiry report stated that the mining industry was “one of the most successful economic sectors in Eritrea” and that proceeds from mining operations jointly owned by the Government and transnational corporations were an “important and undisputed source of revenue.”
  • UN Security Council Resolution 2023 expressed concern that the mining sector was being used as a financial source “to destabilize the Horn of Africa”, and called on Eritrea to “show transparency in its public finances.” This has not been complied with.
  • At least 17 mining and exploration companies – including from Australia, Canada, China, and the United Kingdom – currently operate in Eritrea.
  • Of the approximately 1,500 people working for Nevsun Resources Ltd, which manages the Bisha mine west of Asmara, more than 1,400 are sub-contracted by Segen Construction. Segen, owned by the ruling party, is accused by Human Rights Watch of relying heavily on conscript labour.
  • Nevsun’s 2016 financial statement showed that the company had paid more than $1bn in taxes to the Eritrean state since production began at the Bisha mine in 2011. Nevsun has “consistently cited confidentiality non-disclosure agreements” when questioned about its finances by the UN Monitoring Group on Eritrea and Somalia.
  • A 2013 report by Human Rights Watch into the Eritrean mining sector found “clear evidence that many of Segen’s workers at Bisha...faced terrible conditions, from inadequate food supplies to unsafe housing”. Workers interviewed said that they “lived in fear and were ordered not to complain about their plight.”
  • First hand testimonies collected for this report found evidence of forced labour and torture. National Service conscripts were being subjected to abusive working and living conditions, hazardous working and living conditions, and the withholding of wages.
  • At the time of writing, British investment management company M&G Investments, whose parent company is the insurance and financial services firm Prudential plc, holds almost 29 million shares (9.5%) in Nevsun.
  • J.P. Morgan Asset Management, headquartered in the UK, holds shares in both Nevsun and Danakali, an Australian company engaged in a joint project with Eritrean state-owned mining firm ENAMCO.
  • UK-based Andiamo Exploration currently holds an exploration licence for copper and gold in Eritrea. Major investors include Ortac Resources Ltd., whose own shareholders include the investment arms of Halifax and Barclays banks.
  • Under Section 54 of the UK’s Modern Slavery Act 2015, every organisation operating in the UK with an annual turnover of £36m or more is required to produce a yearly slavery and human trafficking statement, setting out what action they have taken to ensure slavery is not taking place in their supply chains. If a business fails to produce a slavery and human trafficking report for a particular financial year, the Home Secretary may bring a High Court injunction requiring the company to comply. Failure to do so is punishable by an unlimited fine.
  • There is currently no requirement for these reports to be independently audited. There is also no effective monitoring system to record which companies fail in their obligation to report, and no effective enforcement mechanism for compliance.

Recommendations made in this report to the All-Party Parliamentary Group on Eritrea

  • The first recommendation is that the All-Party Parliamentary Group on Eritrea invites the company directors of M&G Investments/Prudential Plc, Ortac Resources Ltd, and JP Morgan UK, along with the relevant officials from the Foreign and Commonwealth Office who deal with the implementation of the United Nations Guiding Principles, to appear before the APPG to address the concerns raised in this report.
  • The second recommendation is for the All-Party Parliamentary Group to write to M&G Investments/Prudential Plc, JP Morgan UK, Halifax and Barclays, to ask what steps they are taking to produce human rights impact assessments.
  • The third recommendation is for the All-Party Parliamentary Group to ask the appropriate government departments what steps are being taken, in the light of the evidence of gross human rights violations, to ensure that measures in accordance with UK Anti-bribery legislation, the Modern Slavery Act, and the Extractive Industries Transparency Initiative are applied to company activities in Eritrea.
  • The fourth recommendation is for the All-Party Parliamentary Group to issue a statement highlighting the abuses outlined in this report, publicly calling for companies to end their activities in Eritrea until there is a sustained and verifiable improvement in human rights within the country.
  • The fifth recommendation is for the All-Party Parliamentary Group to write to the relevant ambassadors and High Commissioners of the countries in which companies operating in Eritrea, and their investors, are headquartered, raising the human rights concerns detailed in this report while at the same time remaining actively informed about the developments in Eritrea’s mining sector.
  • The sixth recommendation is for the All-Party Parliamentary Group to write to the Foreign and Commonwealth Office and the Department for International Trade, asking what steps have been taken to force the provisions of UN Security Council Resolution 2023, and what the outcome of such advice has been.

For details please see Mining and Repression in Eritrea: Corporate Complicity in Human Rights Abuses.