On 2 January 2016, Bruno Manser Fonds (BMF), an NGO based in Switzerland, filed a complaint with the Canadian NCP against the Ottawa-based Sakto corporation, a real estate and investment holding company with close ties to the family of Sarawak Governor and former Chief Minister Abdul Taib Mahmud. The complaint alleges that Sakto breached the OECD Guidelines’ disclosure requirements by failing adequately to disclose its sources of funding, beneficial owners, and other financial and governance data necessary to rule out suspicions the group has laundered the proceeds of corruption. The complainant sought good offices of the Canadian NCP to help it address its concerns with Sakto.
Relevant OECD Guidelines
The NCP acknowledged receipt of the complaint on 11 January 2021.
In October 2016, the Canadian NCP provided the parties with a draft Initial Assessment in which it proposed to accept the case for good offices, finding the company covered as a multinational enterprise under the Guidelines and the issues material and substantiated meriting further examination. BMF gave its approval of the Initial Assessment and agreed to participate in the NCP’s good offices.
But rather than issuing the finalized Initial Assessment, on 21 March 2017 the Canadian NCP issued BMF a draft Final Statement proposing to close the complaint without explanation, asserting only that offering its good offices would “not contribute to the purposes and effectiveness of the Guidelines.”
After repeatedly seeking an explanation from the NCP for the reversal in its stance, and concerned the NCP had faced undue pressure from the company, BMF released a press statement revealing the conflicting draft statements and alleging that Canadian officials appeared to have succumbed to corporate pressure.
On 11 July 2017, without consulting BMF, the Canadian NCP published a revised Final Statement concluding the case. In that statement, the NCP states that while it first considered offering facilitated dialogue between the parties, the NCP later changed its mind stating that actions of both parties “including communication to third parties about the case, breaching confidentiality and challenging the NCP’s jurisdiction, indicated in the NCP’s view, an absence of the requisite level of good faith and willingness needed from parties to engage in a constructive dialogue.” The July 2017 Final Statement asserts that BMF breached confidentiality provisions by holding a press conference revealing the draft statements. The July 2017 Final Statement also confirms BMF’s concerns that the NCP had faced pressure from the company, including “Sakto involving a Member of Parliament during the confidential NCP assessment process; (…) Sakto’s aggressive challenge of the NCP’s jurisdiction; (…) Sakto’s legal counsel making submissions to the Government of Canada’s Deputy Minister of Justice…”. The July 2017 Final Statement asserts that the complaint was “ultimately derailed” by BMF’s alleged confidentiality breach, a statement that cannot be true given that the NCP had already proposed in March 2017 to reject the complaint, before BMF blew the whistle on the NCP’s change in stance. The July 2017 Final Statement also recommends that Sakto implement the OECD Guidelines, including its chapter on disclosure, and asserts that, should Sakto approach the Government of Canada Trade Commissioner Service (TCS) in future to access trade advocacy support, the NCP recommends that the company’s actions during the NCP review process be taken into account by the TCS. The July 2017 Final Statement also notes that, given the behavior of BMF with respect to confidentiality in this case, should it file another request for review with the Canadian NCP in future, it would have to demonstrate that it is committed to honour, in good faith, the confidentiality undertaking of the Canadian NCP process before the NCP would consider the request for review.
Ten months after the July 2017 first Final Statement was made public on the NCP’s website, on 11 May 2018, without consultation or notification of BMF, the Canadian NCP removed the July 2017 first Final Statement and replaced it with a second, new one. The May 2018 second Final Statement makes no more mention of the pressure exerted on the NCP by Sakto, but does mention what the NCP calls a breach of confidentiality by BMF, and implies this is the sole reason for rejecting the complaint. The May 2018 second Final Statement also explicitly states that the October 2016 draft Initial Assessment “does not reflect the opinion or contain conclusions of the NCP.” Also on 11 May 2018, the Canadian Department of Justice, at the request of the Canadian NCP, issued letters to OECD Watch and BMF calling upon them to remove the draft October 2016 Initial Assessment from their respective websites.
On 16 May 2018, OECD Watch raised the case and the watchdog’s concerns with the NCP’s mishandling of it to the attention of the Secretary General of the OECD, as well as key figures in the OECD Investment Committee. On 19 July 2018, together with Canadian NGO MiningWatch Canada, OECD Watch issued a statement explaining in more detail its concerns about the NCP’s mishandling of the complaint.
On 22 September 2021, following numerous efforts to encourage the NCP to redress its mishandling of the complaint and implement overall reforms, OECD Watch filed a substantiated submission with the Investment Committee. The submission seeks confirmation by the Investment Committee that the NCP has failed to meet expected standards, and calls on the Committee to issue recommendations to the Canadian government to rectify the inequitable outcome for the notifier and reform the Canadian NCP’s structure and practices moving forward to regain the confidence of stakeholders. The submission also calls for the Investment Committee to condemn undue pressure by companies against the NCP grievance mechanisms and guide governments in ensuring their NCPs maintain impartiality when faced with pressure from corporations.
On 9 September 2022, the Investment Committee issued its response to the substantiated submission filed by OECD Watch. The Investment Committee found the Canadian government’s handling of the Sakto complaint:
- Lacked transparency and limited its accountability
- Was not fully equitable
- Contributed towards a perception of lack of impartiality
- Lacked predictability
- Was not fully compatible with the Procedural Guidance set by the OECD Investment Committee
The response also took seriously OECD Watch’s concern that Canada’s biased handling of the Sakto complaint may have resulted in harm to Bruno Manser Fonds, the organization that had brought the complaint against the Sakto Group. The committee recommended that the Canadian Government address this concern by following up with the parties and taking “any appropriate measure within its mandate to mitigate the adverse effects, if any, of this specific instance [complaint].”
On 26 September 2022, OECD Watch, MiningWatch Canada, and Bruno Manser Fonds issued a joint statement welcoming the Investment Committee’s response.