2008 Project Clean Hands Report: Cement Roadstone Holdings

15Apr10

Cement Roadstone Holdings: The Case for the Prosecution

2008

Introduction

In recent years human rights activists have used their own national courts to prosecute war crimes committed by their fellow citizens abroad. International humanitarian and human rights law are used to gain warrants for the arrest of senior members of Israeli military1 or to prosecute companies seen to be profiting from war crimes committed in the Israeli-Palestinian conflict2. The effectiveness of these campaigns can be gauged both from the reaction of the targeted companies, who frequently bow to applied pressure before a case is brought to court and from the reaction of opponents, who call these ‘frivolous’ cases ‘lawfare’.3 These efforts succeed on many levels. They can provide a practical change on the ground, they allow arguments in media and political circles to be framed correctly, and highlight the difference between local political rhetoric and national political actions. Finally, they set a precedent in law and public arenas for Palestine and for human rights in general. In Ireland such a campaign could be mounted against Cement Roadstone Holdings (CRH). This article outlines the bases of legal and ethical responsibility of CRH with regard to the operations of its Israeli subsidiary, Nesher. It begins by describing the structure of CRH, its subsidiaries, and its current status with regard to recent global financial upheavals. Its connection to the Apartheid Wall as the owner of 25% of the sole cement manufacturing company in Israel will be outlined. CRH is considered to have high standards of corporate social responsibility by most international Corporate Social Responsibility (CSR) indexes. These lists, along with its own stated ethical standards will be examined. The legal obligations under international law on CRH are compared to recent examples in courts in Ireland and abroad and the possibility of success before legal options are discussed. Finally the Irish context of political, public and media sympathies in which any legal or campaigning avenue would have to operate are assessed as well as those organizations within Ireland who would support such an action, or have already done so.

Cement Roadstone Holdings

Cement Roadstone Holdings (CRH) is an Irish registered building materials group which manufactures and distributes building material products. It has operations in 32 countries, employing approximately 92,000 people. Most of its operations are in Europe and the US. In 2007, profits before tax were €1.9 billion.4 In 2001, CRH acquired 25% of the Israeli company Mashav Initiating and Development Limited. Mashav owns 100% of Nesher, the sole cement producing company in Israel.5 In its 2001 annual report CRH reported that ‘‘despite the difficult political situation, Mashav performed satisfactorily in its first full year with the Group. The Israeli cement market was unchanged from 2001, while the West Bank and Gaza markets were 25% lower due to the additional security controls…Although the political climate in Israel remains uncertain, cement demand is forecast to grow by 4% as a result of a forecast GDP growth of 2% and additional infrastructure investment.’6

Since 2001 references to its Israeli subsidiary in its annual reports have narrowed considerably, possibly as a result of negative publicity it has received because of its Israeli holdings. While CRH continues to be affected by currency fluctuations and sector instability, the company is still considered a good investment opportunity. It was among six stocks recommended by Goodbody Stockbrokers as its key investment picks for 2009.7 At the start of 2008 its share price was at €23.95, in July this fell to €14.51. However following the announcement of the US planned infrastructure investment the share price increased again to over €20 by the middle of December.8 CRH is tipped to be a major beneficiary of this investment through its US subsidiaries. Other confidence factors are its recent renewal of its 1.5 billion euro of bank facilities9 and its predicted acquisition of the Indian cement giant, Andhra Cements. This confidence also expends to its operations in Israel where it still holds the right to acquire a further 25% in Mashav, an option it must activate or lose by the end of 2008.* This makes sense as the Apartheid Wall is the single largest infrastructure project in Israel. The total cost of the project has been estimated at approximately NIS 13 billion. Construction in the oPT using cement is not limited to the Separation Wall; in a report published in 2008 by Adva, an Israeli NGO, it was calculated that the Israeli government was responsible for 53% of construction starts and 43% of investment in housing construction in the oPT. This is an investment of NIS 11.3 billion over the 6 year period of the report.10

CRH has admitted in an interview with representatives from Amnesty Ireland that it was ‘in all probability’11 they who produced the cement used in the building of the Apartheid Wall and Nesher has a monopoly of the Israeli cement industry. But in other statements CRH insists that it is ‘not involved in the building of the wall and that it was not responsible for work carried out by other construction firms using its cement.’12 It also claims that ‘Nesher cannot, as a matter of law, refuse to sell or discriminate between any customer of whatever religion or political affiliation.’ 13 CRH does keep a record of the end uses of its products, as can be seen in each of its annual reports,14 and a court order could be used to request further information linking Nesher and the construction of the wall. This was the case in France in February 2008. Transport company Veolia who are building a tramway as part of the settlement project in the oPT, was forced by French courts to provide copies of the tramway contract with the city of Jerusalem and the Israeli government.15

Corporate Social Responsibility

CRH is seen within the construction sector and beyond as a leader in corporate social responsibility. It publishes an annual Corporate Social Responsibility Report16 and is updating its Code of Business Conduct, ‘insisting always on good quality, fair prices and ethical business practices’.17 In its 2002 annual report, one year after acquiring Mashav, CRH stated that ‘our policy is to acquire only businesses that are operated professionally and which provide a platform for further growth by ethical means.’18 Far from limiting the boundaries of its own responsibility CRH says that its social responsibility policy is ‘implemented in all subsidiaries’ and in the future it will ‘continue to refine & extend policy as CRH moves into new regions, particularly developing economies, preserving the CRH federal approach and culture’.19 CRH is ranked ‘AA’ by Innovest, the Social Responsibility index, has been awarded ‘Silver Class’ and ‘Sector Mover’ by the STOXX Sustainability Indexes and was cited by Vigeo as one of the top three companies for its ‘positive and stable performances for… human rights’.20 It is a constituent member of the FTSE4Good and Dow Jones Sustainability Indexes, and won the IR Magazine award for best corporate governance for six years running.21 In Ireland the Leinster Society of Chartered Accountants awarded CRH the 2005 award for Corporate Social Responsibility. Its 2007 its Corporate Social Responsibility (CSR) report was externally verified by Det Norske Veritas.22 It reports to the Global Reporting Initiative, a voluntary sustainability reporting network, which recently called for greater company support of the UN Global Compact.23

In its March 2007 report, Storebrand Investments, which helps ‘establish responsible investment criteria’24 included a review of CRH. Its human rights section admitted that, ‘[o]nly a few companies make reference to the Universal Declaration of Human Rights or the UN Global Compact principles’, but states that ‘[t]here were no major human or labour rights violations reported (by media or others) involving the companies analysed.’ Under the governance section, which includes the assessment of a company’s code of conduct/ethics, it singled out CRH as providing ‘thorough reporting’.25 This status brings manifold intangible advantages to CRH’s business.

Human rights criteria have in recent years begun to be the norm in lists of responsible investment. Most of the organisations listed above contain some reference or section on human rights. For example the FTSE4Good list opened a Human Rights category in 2003, some of the sub categories in criteria are the International Labour Organisations (ILO) Core Labour standards, the UN Global Compact Guidelines, and the Universal Declaration of Human Rights (UDHR). Companies must state clearly their commitment to the UDHR and to respect the rights of indigenous people.26 The criteria instructs management to monitor the implementation of its human rights policy, remedy any non-compliance, train employees, consult with independent local stakeholders in the countries of concern, identify major human rights issues it faces, and produce a human rights report. CHR is listed as a constituent member.27

It is clear from this initial examination that there is not a rigorous enough examination applied to companies listed with regard to their human rights records by these indexes. It is not sufficient for a company to state that it would insist on ethical business practices implemented in all subsidiaries, unless proof of doing so is sought from independent sources. These standards are regularly used to guide ethical choices made by investors, and must be questioned. Given that CRH is considered one of the standard bearers of corporate social responsibility, a campaign detailing its involvement in human rights violations while being singled out for praise by indexes listing human rights as their concern would serve to extend the criteria of responsible investment.

Legal and Reporting Avenues

In its judgement on the legality of the Separation Wall, the International Court of Justice found that ‘Israel cannot rely on a right of self-defence or on a state of necessity in order to preclude the wrongfulness of the construction of the wall. The Court accordingly finds that the construction of the wall, and its associated régime, are contrary to international law.’28 It further found that other states, such as Ireland, were under an obligation not to recognise the illegal consequences of the building of the wall, and ‘They are also under an obligation not to render aid or assistance in maintaining the situation created by such construction… and to ensure compliance by Israel’29 A company supplying cement for the construction of the wall could be seen as rendering assistance. But a company is not a state, so can it be held accountable?

Although international laws are primarily devised for state actors, in a report on a Swedish company who operated a factory in the Barkan Industrial Complex, SwedWatch states that individual criminal responsibility means that individuals such as CEOs of companies, ‘can be held individually responsible for certain grave violations of international law, including war crimes.’30 It is has not been made clear what extent private companies can be made bear legal responsibilities under international law, but the OECD Guidelines, the ILO declarations and the UN Global Compact clearly sets out standards of behaviour for companies that closely correspond to the international legal obligations of states. The UN Global Compact for example, states that businesses should support and respect the protection of internationally proclaimed human rights; and make sure that they are not complicit in human rights abuses.  It specifically references the Universal Declaration of Human Rights and the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work. The Red Cross, which offers advice to businesses operating in conflict areas, points out the possibility of being held criminally responsible for the commission of war crimes if they have provided ‘practical assistance, moral support or encouragement that has a substantial effect on the commission of a war crime’ in the knowledge that it was helping a war crime.31 The Red Cross further states that ‘…because all States have an obligation to investigate and prosecute certain war crimes irrespective of where the acts occurred, business enterprises or their managers may face proceedings in countries other than those in which they operate’ and warns that business enterprises and their managers may also face civil liability as individuals seek compensation through national courts.

The most recent example of this type of legal action is the ongoing case in the Superior Court of Quebec against Annette Laroche who has been named as a defendant by the Bil’in Village Council. Ms. Laroche is the director of Green Park International Inc and Green Mount International Inc. who have been involved in constructing, marketing and selling residential units in the illegal Israeli settlement of Modi’in Illit in the occupied West Bank, on the land of the village of Bil’in. Bil’in’s suit against her and the two companies was placed before a Canadian Court last July. She was specifically named as personally responsible for the actions of her company.32 The case against the companies is that by constructing the residential units they were ‘aiding, abetting, assisting and conspiring with Israel, the Occupying Power in the West Bank, in carrying out an illegal act.’ The case is being heard as a violation of international law but also of domestic Canadian law. This and other cases have opened a real and permanent avenue of practical solidarity, particularly since the case can be tried outside the area of conflict. This ensures as far as possible that external pressure is not applied unfairly on those seeking prosecution, and that the case is tried as justly as possible. There are other routes to successful change on the ground other than through the courts. Amnesty cites cases in Sudan, the Democratic Republic of Congo, Columbia, Sierra Leone, and Angola where companies have found reputational damage on moral grounds to be ‘as strong an incentive as legal action’.33

An oil company which provided aviation fuel to the Sudanese airforce withdrew from its contract with the Sudanese government after it was named and shamed in a campaign by Amnesty International. The lock making company Assa Abloy withdrew its operations from the oPT after a report published by Diakonia, the Church of Sweden and SwedWatch, which outlined the legal vulnerabilities of operating in the West Bank.34 However in these cases and in others, the report and the publicity accompanying it was necessary in order to change the companies practice.

The Irish Context

In similar cases within Ireland the application of international legal principles through Irish courts or the targeting of companies has not yet met with widespread support in the political mainstream. The two dominant political parties in Ireland, Fianna Fáil and Fine Gael both have a strong business support base. Of the 166 seats in the Dáil, or Irish parliament, these two parties control 128 seats.35 The popularity of these parties is relatively constant. There is strong central control of voting in both parties. Most of the issues around the Israeli-Palestinian conflict are covered by three select committees, the select committees on European Affairs, Foreign Affairs and Justice, Equality, Defence and Women’s Rights. Of these Fianna Fáil and Fine Gael have 85% of the member places. The Irish legal system is a dualist one, international agreement are not automatically entered into domestic law and so the Irish legal system is not as open to international law as the Canadian one. However one example of international principals applied in an Irish context occurred in 2006. Five activists were acquitted by Dublin Court after admitting they had attacked and damaged a US army plane in an Irish airport. The jury accepted that they were lawfully correct as they were protecting the lives and property of Iraqi citizens during the build-up for the invasion of Iraq. It should be noted that although this case had was based on international issues and standards, the reason used for the acquittal was domestic. The jury accepted the international illegality of the war in Iraq and combined with a criminal Irish law to release the defendants. This shows the possibility of using the Irish legal system exists.

While the legal case was successful, the media story was widely reported in a negative manner and was condemned by the main political parties.36 This was because of the perceived illegal actions of the participants rather than because of support for war, showing how mobilising support and media coverage for such a case would be a crucial element. There are several active groups who campaign on the Israeli-Palestinian conflict in Ireland. Trócaire is the official overseas development agency of the Catholic Church in Ireland and has worked on Palestinian issues since 2002. In Ireland Trócaire is a widely recognised NGO, seen as a reliable source of information and has a large independent funding base. In 2008 it ran a public awareness campaign to highlight the impact of 40 years of Israeli occupation of Palestine, and met with Minister Dermot Ahern to present a petition calling for a more active role for Ireland in the Middle East. The Church of Ireland is also currently deciding whether to disinvest from the Cement Roadstone Holdings, which is one of its larger investments.37 Amnesty Ireland is equally well respected in media, political and public circles. It has an active volunteer run Israel and Occupied Territories group. It was Amnesty Internationals’ Irish branch that first brought CRH’s actions to public attention.38 Other groups such as the Irish Palestinian Solidarity Group would strongly support such a campaign.39 The Irish Congress of Trade Unions, the largest civil society organisation in Ireland, has passed a boycott, divestment and sanction motion against Israel and can be expected to support a call to clarify the roles and responsible of companies and their directors. These groups could be the basis of a campaigning network.

Conclusion

According to Amnesty International a company’s complicity should be judged against three main criteria: knowledge and awareness, proximity and benefit.40 In the case of CRH, the company owns 25% of the Israeli company Mashav, which in turn owns Nesher, which has a monopoly on cement manufacturing in Israel41 providing between 70% and 90% of the Israeli market. This allows a very close proximity to be established between victim and company, and the company benefits financially. It is possible to build a successful campaign based on legal reporting and prosecution. In previous cases outside Ireland public pressure prior to prosecution through thorough reporting and constant questioning of its actions by the larger NGO’s has led to an admission of responsibility and withdrawal. This support framework could be built. Political and media circles would be harder to convince, particularly as it is one of the few construction firms that continue to prosper globally during the current recession; but because it is a legal action their direct influence would be reduced and as shown above, the legal system has previously gone against political will. This campaign would have a large impact on the ground – in Ireland and internationally. Success would mean the public removal of a large portion of financial backing to the cement supply for Separation Wall and could slow work on its construction. Even without complete success the case would stimulate debate within Israel by signalling a change in European standards to the Israeli public. It would also serve as a reminder of the possibility of public prosecution to all potential investors.

The impact of such a campaign could produce a practical and lasting victory for international law in Ireland. It would promote a discussion based on the framework of human rights and law rather than opinion. In the public sphere it would further cement the idea of the Apartheid Wall’s illegality, as well as Irelands complicity. It would reaffirm the need to enforce laws on Irish people and companies whether their actions are within Ireland or abroad and be a further step towards the practical implementation of human rights law. CRH is a large global group, with a high standing within the construction industry of corporate social responsibility. A campaign to remove its contribution to the construction of the Wall would be reported extensively, particularly in America, where it has well respected subsidiaries. A withdrawal of backing by CRH from Nesher would signal a sea change in how business can operate in conflict zones. It would join a growing number of cases worldwide where international law is being applied to those who profit from conflict. Corporate social responsibility indexes would also be forced into stricter surveillance of the companies claiming to uphold human rights and it would slow the number of businesses willing to risk the public prosecution of their companies, and civil prosecution of their CEO’s through involvement in the settlement project. CRH has never expressed any concern over its involvement with Nesher. Despite repeated requests form the NGO sector in Ireland to withdraw or investigate its own subsidiaries, it has never done so and there is the real possibility that it will pursue a deeper involvement with Nesher. A campaign is necessary now not only to affect a withdrawal but to prevent further investment by an Irish company.

December 2008

*Since the completion of this article the deadline for CRH to exercise its option to acquire 25% more of Mashav has passed. As of January 14th2009 the CRH has not issued any statement confirming or denying that it has exercised this option.

1 Palestinian Centre for Human Rights  ‘PCHR Submits Lawsuit against Israeli Officials via Spanish National Court’, 2008 June http://www.pchrgaza.org/files/PressR/English/2008/60-2008.html

2 Center for Constitutional Rights ‘Court of Appeals dismisses CCR case against Caterpillar for deaths and injuries in Palestinian home demolitions’ http://ccrjustice.org/newsroom/press-releases/court-appeals-dismisses-ccr-case-against-caterpillar-deaths-and-injuries-pal

3 Anne Herzberg, Wall Street Journal ‘Lawfare Against Israel’ 2008 November  http://s.wsj.net/article/SB122583394143998285.html

4 CRH ‘Annual Report 2007’ 2007 http://www.investis.com/crh/reports/ar07.pdf

5 Nesher official website http://www.nesher.co.il/new_site/en/index.htm

6 CRH 2002 ‘CRH Annual Report’ page 11 & 12

7 Laura Slattery ‘Goodbody lists its top stock picks for investors in coming year’ Irish Times,  2008December 13 http://www.irishtimes.com/newspaper/finance/2008/1213/1229035665115.html

8 Irish Stock Exchange CRH PLC listing http://www.ise.ie/app/equityHGraph.asp?INSTRUMENT_ID=517

9 CRH website http://www.crh.ie/crhcorp/media/press/2008/2008-11-21/

10 Adva, ‘Government Financing of Local Budgets: Settlements Get the Most, Arab Localities Get the Least’ 2008 http://www.adva.org/pages.asp?lang=en&navigate=5

11 IPSC ‘Nomination for Public Eye Awards’ 2005 http://www.evb.ch/cm_data/public/CementRoadeng1.pdf

12 Enda Leahy, ‘Church to sell €5m ‘tainted’ shares’ The Sunday Times, 2005 September 18 http://www.timesonline.co.uk/tol/news/world/ireland/article567937.ece

13 Enda Leahy, ‘Church to sell €5m ‘tainted’ shares’ The Sunday Times, 2005 September 18 http://www.timesonline.co.uk/tol/news/world/ireland/article567937.ece

14 CRH Official Website http://www.crh.com/crhcorp/divisions/

15 Adri Nieuwhof and Maria Lherm Electronic Intifada 2007 ‘PLO takes Veolia Transport and Alstom to court in France’ 2007 http://electronicintifada.net/v2/article9104.shtml

16 CRH ‘Sustainable Performance and Growth – The CRH Corporate Social Responsibility Report 2007’ 2007 http://www.investis.com/crhcorp/csrpres/CSR2007.pdf

17 CRH ‘Sustainable Performance and Growth – The CRH Corporate Social Responsibility Report 2007’ 2007 http://www.investis.com/crhcorp/csrpres/CSR2007.pdf

18 CRH ‘CRH Annual Report 2007’ 2007 http://www.investis.com/crhcorp/csrpres/CSR2007.pdf

19Sustainable Performance and Growth – The CRH Corporate Social Responsibility Report 2007’ 2007 http://www.investis.com/crhcorp/csrpres/CSR2007.pdf

20 CRH website http://www.crh.ie/crhcorp/media/awards

21 IR Magazine Awards 2007 http://www.thecrossbordergroup.com/pages/1918/2007+Awards+Roundup.stm

22 CRH ‘DNV Assurance Statement CRH plc 2007 CSR report’ 2007 http://www.crh.com/crhcorp/storage/indexed_pdfs/appendices07.pdf

23 GRI Website http://www.globalreporting.org/CurrentPriorities/HumanRights/

24 Storebrand Investments history section, website http://www.storebrand.no/site/stb.nsf/Pages/history.html

25 Storebrand Investments ‘Industry Overview Construction Materials SRI’ 2007, March

http://www.bwint.org/pdfs/Industry_Overview_Construction%20Materials_March_2007.pdf?AUD=CommunitySustainability&site=CI

26 FTSE Website‘FTSE4Good Index Series Inclusion Criteria’ 2006 http://www.ftse.com/Indices/FTSE4Good_Index_Series/Downloads/FTSE4Good_Inclusion_Criteria_Brochure_Feb_06.pdf

27 FTSE4 Good ‘Semi-annual Review of the FTSE4Good Indices March 2006 Appendix 1’ 2006 March http://www.ftse.com/Indices/FTSE4Good_Index_Series/Downloads/FTSE4Good_March_2006_Review.pdf

28 International Criminal Court, ‘Summary Legal Consequences of the Construction of a Wall

in the Occupied Palestinian Territory’ 2004 July 9

29 International Court of Justice ‘Legal Consequences of the Construction of a Wall in the Occupied Palestinian Territory (Request for advisory opinion) Summary of the Advisory Opinion of 9 July 2004’ 2004 http://www.icj-cij.org/docket/files/131/1677.pdf

30 SwedWatch, ‘Illegal Ground, Assa Abloy’s business in occupied Palestinian territory’ Report No 22 2008 October

31 International Committee of the Red Cross ‘ICRC Publication 2006  ref. 0882

Business and International Humanitarian Law: an introduction to the rights and obligations of business enterprises under international humanitarian law’ 2006

32 Al Haq 2008 http://www.alhaq.org/pdfs/Bilin-Green%20Park.pdf

33 Khan, Irene; Amnesty International ‘Understanding Corporate Complicity: Extending the notion beyond existing laws’ 2005

34 Assa Abloy ‘Press release’ 2008 October

35 Houses of the Oireachtas website http://oireachtas.ie/members-hist/default.asp

36 Michael Brennan and Bronagh Murphy; Irish Independent ‘Anti-war group found not guilty of plane damage’ 2006 July 26 http://www.independent.ie/national-news/antiwar-group-found-not-guilty-of-plane-damage-89784.html

37 Enda Leahy, ‘Church to sell €5m ‘tainted’ shares’ The Sunday Times, 2005 September 18 http://www.timesonline.co.uk/tol/news/world/ireland/article567937.ece

38 Irish Examiner Amnesty asks CRH to explain role 2004 February  http://archives.tcm.ie/irishexaminer/2004/02/19/story311813641.asp

39 Erklärung von Bern website http://www.evb.ch/cm_data/public/Cement%20Roadstone%20PublicEye_Awards_Nomination_0.pdf

40 Khan, Irene; Amnesty International ‘Understanding Corporate Complicity: Extending the notion beyond existing laws’ 2005

41 CRH ‘2002 CRH Annual Report’ page 26 2002

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