The extent to which mining and oil companies in developing countries are more likely to be associated with violence is well established. In Africa, events in Chad, Sudan, Nigeria, Congo-Brazzaville and Angola have clearly indicated this linkage. In these countries, the profile of the role of businesses in conflict prevention, governance and democratisation has become more defined. Africa needs every dollar of foreign direct investment that it can attract. In fact, Africa will either develop through the dynamism of the private sector or it will fail to develop at all. Business and markets are the cornerstones of development and the essential means to achieve a transition from dependence on overseas development assistance to sustainable growth.

Multinational corporations are active in every part of the world, either directly through the establishment of subsidiaries or indirectly through links with literally thousands of suppliers. Fortune 500 lists General Motors as the largest corporation today, with revenue of approximately US $176 558 million, greater than the national income of a small industrialised state, such as Denmark, and greater than the combined income of almost all the countries of sub-Saharan Africa, excluding South Africa and Nigeria. There are over 53 000 transnational corporations in the world with about 450 000 affiliates. The value of international production by multinational corporations in 1998 was US $3.5 trillion, and US $9.5 trillion in global sales by foreign affiliates. Despite these global operations, business has not been involved in good governance and conflict management activities on any significant scale, although foreign investors and banks are routinely accused of supporting repressive regimes to protect their investments in countries such as Sudan.

The private sector can play a key role in reducing poverty. But private and economic interests have often also played a significant role in causing and prolonging conflict. Can the private sector play a role in resolving or managing conflicts? And should it not play a key role in advancing minimum standards of governance in countries such as Angola, Chad, Sudan, the Republic of the Congo and elsewhere? In Angola, only a few companies such as Shell, Exxon, BPAmoco, Texaco, Chevron and TotalFinaElf have the expertise to exploit its deep-sea oil deposits. This makes it particularly susceptible to a co-ordinated approach to governance that involves the international community, as well as international business concerns. Elsewhere, in Sudan, the fact that oil fuels the civil war is well established, but pressure on Talisman Energy, a Canadian firm, could be self-defeating. Determined to disinvest from Sudan, companies from Malaysia or China will probably replace Talisman, much less amenable to calls for an adherence to broader issues regarding governance and human rights.

The growth in the size and power of major corporations in Europe and North America has been matched by a demand for accountability, after a series of environmental disasters (such as the Exxon Valdès) and the exposure of sweatshop practices involving footware companies (such as Nike). This is even more important where the social fabric is fragile and where foreign corporations are dominant, evident in a number of mineral-producing African countries.

Most multinational corporations have common goals, and larger corporations with massive capital investments, for example, in the oil sector, are more interested than most to protect their reputation. They are therefore vulnerable to exposure on stock markets where social investment considerations increasingly carry more weight. At this end of the capital market, corporations want to invest in countries that show respect for the rule of law, that guarantee equality before the law, that have transparent legislation in place, that believe in good governance, that seek to improve the quality of life of their people, and that respect human rights.

Although many corporations have adopted codes of conduct and social responsibility policies, few include human rights standards. Most lack implementation measures and independent audits that verify their stated achievements. Furthermore, many of these goals often disintegrate in practice — largely because companies fear being undercut by a competitor. This implies that the nous rests on the international political community, throug organisations such as the UNSecurity Council, should set common standards for the conduct of companies present in zones of conflict or in countries where governance is weak and predatory.

As Andrew Mack has pointed out, when they act individually, multinational corporations face many dilemmas when they operate in zones of conflict. If they fail to act, they risk being accused by non-governmental organisations (NGOs) of a lack of concern for human rights. If corporations seek to pressure corrupt or repressive governments to adopt greater transparency and accountability, or to show greater concern for human rights, they may put themselves at a political and, therefore, economic disadvantage. By doing nothing, companies risk being accused of complicity in human rights abuses and worse. If corporations attempt to promote positive change in government behind the scenes, they may be accused of doing nothing by outside critics. If they try to raise issues publicly, they risk being rebuffed by officialdom and accused of unwarranted interference. If corporations refuse the demands of corrupt politicians and officials, they risk losing business to less scrupulous competitors. If they accede to these demands, they risk being attacked for complicity in corruption. If corporations seek to compensate local communities for any environmental damage or loss, they can rarely be certain that the compensation will reach those for whom it is intended. Failure to offer compensation is certain to generate resentment. If corporations rely on governments to provide security for their operations, they risk being blamed if forces repress peaceful protest, or being associated with government repression. If corporations employ private security companies, they risk being blamed for the inappropriate behaviour of the latter’s staff.

The business environment for large multinational engagement in war-torn and undemocratic countries is therefore complex and challenging, implying an understandable demand for high returns on investments. But there is an increased expectation that responsible business should accept responsibility and play a more specific role through targeted action in partnership with the international community. This is a role hitherto placed in the vanguard by international watchdog organisations such as Amnesty International, Human Rights Watch and the media. But it is also a role that may increase through the establishment of common standards for business engagement in fragile, corrupt and war-torn societies where governance is weak and predatory. On the one side, consorted international political action such as binding treaties, negotiated through the G8, the European Union and the UN Security Council, are important measures. In this manner, home country regulations such as the Organization for Economic Co-operation and Development (OECD) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of 1977, could be expanded. Independent monitoring such as that of the logging industry by Global Witness in Cambodia is another. Voluntary codes may become part of national legislation or international treaties that tie political and other risk insurance to stringent standards of transparency and accountability. In whatever manner — on a country-by-country basis or through binding regional and international agreements — common standards have to be considered as a guide. These should be applied to protect all who wish to engage in the commercial exploitation of conflict-torn Africa’s deposits. Such developments would be to the ultimate benefit of corporations, the populace and the international community.

Few countries are more deserving than Angola of a coherent and co-ordinated approach by the international community, including private corporations. The insistence by some in business that ‘the role of business is to do business’ is nonsensical in a country where oil revenues will comprise 90.5% of the 2001 budget of about US $3.18 billion. Angola has only been able to avoid the transparency and good governance dictates of international financial institutions such as the World Bank and the International Monetary Fund by selling the household silver — a process that is soon to reach its limits. Having built up external arrears to the maximum that international banks would consider, given its low credit rating (its external debt reached US $9.6 billion by the end of 1999), Angola cannot obtain credit for military procurement and consumption through normal banking facilities or from official export credit agencies. Instead, it started using current oil revenue to make cash payments, using future oil revenue as collateral for loans. According to Tony Hodges, almost all the oil physically available to the government through SONANGOL (amounting to almost half of the government’s total oil revenue) was committed to the servicing of oil-guaranteed loans by the late 1990s. More recently, it has started to provide equity stakes to companies with linkages in the international arms industry as an alternative means of payment in kind for arms contracts. This is similar to the situation in Zimbabwe where President Mugabe has thrown any pretensions of black economic empowerment out of the window in the face of the need to sell off state assets in search of foreign exchange to fund his re-election.

Together with the decline in enthusiasm for peacekeeping, the international community, including the UN Security Council, is on the prowl, seeking alternative and effective ways to affect peace that would not require the risk of troop deployment. There will come a time when the international community will seek additional mechanisms to pressure African governments when the latter demonstrate their inability or unwillingness to govern in the interests of their populace. The trend is evident in the more active role that has been assigned to selective sanctions, travel embargoes, and the prominence achieved by non-military options for pressure towards peace in recent years. This is a welcome trend, and one that deserves the support of responsible business concerns throughout the world. Setting enforceable standards for business engagement in war-torn states under international sanctions provides a vehicle and a means to protect investment and shareholders from a potential backlash.