IN-HOUSE ADVISOR TRAVEL

Transcription

1 IN-HOUSE ADVISOR High-risk TRAVEL Companies are increasingly taking pre-emptive steps to avoid and manage travel risks. In-house counsel need to be part of the crisis management team BY JULIUS MELNITZER ILLUSTRATION BY GARY NEILL THE CLIENT ROSTERS of Canadian law firms do not abound with references to the Chechen Republic. It s also unlikely that Canadian lawyers regard the Russian fiefdom as a prime target for their marketing efforts. Business trips to Chechnya, then, are not really the norm. That s a good thing. Chechnya is a very dangerous place. In fact, the region is the worst place in the world to be kidnapped, the only country in the world with an avoid rating on the Chubb Group of Insurance Companies kidnap risk scale. Negotiations with kidnappers, says a former CIA agent, start when the victim s finger arrives in the mail. But Chechnya is not alone. When Riyaz Dattu, who advises clients on international trade and investment matters from Osler, Hoskin & Harcourt LLP s Toronto office, travels to South America, he is frequently accompanied by bodyguards provided by his corporate clients. Most companies, especially large ones, have developed practices to ensure their people receive sufficient protection, he says. When I m in high-risk countries, I m never alone and I stay in a secure compound. Dattu s clients believe that his involvement in anti-corruption matters makes him a target, as does the remote nature of some of the places to which he travels. I think there s potential for trouble any time you re butting heads with governments and also when you re associated with what terrorists or drug cartels see as wealthy western companies, Dattu says. The mining and resource sector, densely populated by Canadian companies and Canadian lawyers, is an example of a business that is high on the kidnap risk thermostat. Extractive companies don t have the luxury of choosing where they re going to find the resources that are at the core of their business, says William Daly, Managing Director in the New York office of Control Risks 78 LEXPERT MAGAZINE OCTOBER 2014 Reprinted with permission Lexpert Magazine 2014 Thomson Reuters Canada Limited.

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3 IN-HOUSE ADVISOR: TRAVEL SAFETY Group, a political, integrity and security risk consultancy. Unfortunately, some of the companies at most risk also are not quite up to speed, to say the least, on kidnapping and ransom risk. The lack of preparation is incredibly scary, says Mark Lalonde the Vancouverbased Director, International Operations at CKR Global, a Canadian-based global provider of risk mitigation services. Most RIYAZ DATTU > OSLER, HOSKIN & HARCOURT LLP The US, which has an entire portion of the State Department analyzing, dealing with and providing education about kidnapping risk and other travel risks, is at the forefront of the issues. There s nothing like that in Canada. Essentially you re on your own when you re abroad. people approach the threats involved in going overseas simply by looking at travel advisories from the government, and that s woefully inadequate. When it comes to travel risk, then, inhouse counsel in a multinational company, or one with global expansion ambitions, should be paying attention. Not only are the company lawyers likely to be doing their fair share of the travelling, their expertise could well be called on to assess the potential liability involved and the nature of preventative and remedial action. As Dattu sees it, travel risk is often unavoidable because emerging countries are the locales where travel can be most important from a business perspective. My sense is that there is no substitute for being on the ground when different cultures are at play, the lawyer says. For this and other reasons, including rising lawlessness in certain countries and terrorists thirst for financing, the kidnapping and ransom business has become a big business that s getting even bigger. We are definitely in a growth market as companies put more emphasis on expansion in frontier and emerging markets, Daly says. According to The New York Times, al- Qaeda alone garnered at least US$125 million in ransoms since 2008, with more than half that sum paid in 2013 alone. The US Treasury, which says that kidnapping for ransom is al-qaeda s most significant source of financing, estimates the terrorist group s take in the past six years at US$165 million. To put things in perspective, letters discovered recently by the Associated Press described how al-qaeda commander Mokhtar Belmokhtar, subsequently killed in a raid by the Chadian army in March 2013, was scolded by his superiors for accepting a meagre ransom of only US$1 million in the 2008 kidnapping of Canadian Robert Fowler, the highest-ranking UN official in Niger, and his colleague Louis Guay. Most Western officials, it seems, had been ransomed for three times as much. Even so, neither Niger nor Chechnya rank in the top 20 countries for number of kidnappings-for-ransom in 2013 (see Inhouse Insight: Top 20 countries, p. 82). In absolute terms, that honour belongs to Mexico, with 5,000 to 7,000 such kidnappings annually. From a regional perspective, according to Control Risks, Asia and the Pacific accounted for the majority of recorded kidnappings, with more than onethird of global cases. Most of the region s incidents come from India, Pakistan, Afghanistan and the Philippines. Africa is also a high-risk region, particularly Nigeria, where the vast majority of kidnappings occur in the oil-rich Niger Delta. Mali, Niger, southern Algeria and Kenya also harbour significant threats. And while Latin American kidnappings have declined by half since 2005, and now represent less than one-quarter of the global total, Mexico, Venezuela and Colombia still rank high among individual countries. In the Middle East, kidnappings are common in both Syria and Lebanon. What the Control Risk statistics don t evaluate, however, are the nature of the targets at risk for kidnapping. So while Mexico may be the riskiest country in the world for kidnapping, it s predominantly Mexicans who are at risk, often local managers, followed by expatriates. That stands true for the Western Hemisphere in general. There are tons of Canadian and American companies operating in Mexico, but most hire Mexican managers, says Wes Odom of Salt Lake City, who is Executive Vice President, Operations, at The Ackerman Group LLC, a security and investigative consultancy that worked on executive protection at the recent World Cup in Brazil. And it s the Mexicans who are kidnapped, because they are perceived to have wealth or to come from wealthy families. The highest risks for foreigners, according to the Chubb Group of Insurance Companies, are in the Eastern Hemisphere, mainly in Africa, Pakistan, Afghanistan, Iraq and Chechnya. Travel risks can also take many forms. Let s say you re looking into investing in resources in Uganda and you send someone from the legal department to do some due diligence, Lalonde explains. And what if that person happens to be gay? Uganda is a country that s advocating the death penalty for gays and lesbians. However the statistics break down, there s little doubt that companies are becoming increasingly concerned about the risk of kidnappings. For obvious reasons, companies don t want to disclose whether they have ransom insurance. But according to The Economist, premiums paid for kidnap and ransom insurance doubled from $250 million in 2006 to $500 million in Premiums for a businessman in Iraq range from $3,000 to $6,000. Most major corporations take kidnapping risk pretty seriously, Odom says. Some do so more than others, some go overboard with policies and protocols, but everyone is taking a look at it. In many cases, companies are factoring 80 LEXPERT MAGAZINE OCTOBER 2014

4 IN-HOUSE ADVISOR: TRAVEL SAFETY kidnapping into their overall risk assessments, even for core investment decisions. We had a client inquiring about going into Pakistan, Odom says. What we told him was that it was doable if Pakistani nationals were involved, but not if the project was going to be staffed by Canadians, Americans or Brits, because the Taliban was on a tear against all Westerners. Increasingly, technology is playing a part. Service companies are looking at Extractive companies don t have the luxury of choosing where they re going to find the resources that are at the core of their business. - WILLIAM DALY, CONTROL RISKS GROUP high-risk areas. Unfortunately, Canadian companies are behind the curve here, at least partly because the federal government has not stayed on top of the problem. The US, which has an entire portion of the State Department analyzing, dealing with and providing education about kidnapping risk and other travel risks, is at the forefront of the issues, Dattu says. There s nothing like that in Canada. Essentially you re on your own when you re abroad. Indeed, Dattu believes that the Canadian government has not done enough for Canadians who have actually been abducted or detained. Sending a diplomatic note or making it apparent to foreign governments that Canada would stand behind its citizens is not something that has happened as often or as much as we d like it to, the lawyer says. Montreal-based Daniel Bureau, who is Director, Ethics and Compliance for Bombardier Inc., wouldn t talk about whether his company has kidnap and ransom insurance, but he did say that travel risk management processes were in place. The processes differ depending on the level of the people travelling, he says. If we re talking about top management and the CEO is going to Mexico, we arrange for things like information-based reservation systems that not only track itineraries but allow them to educate employees about the security and health risks in particular locations, important contacts and insurance requirements, Daly says. These systems also allow clients to assess the business case and perhaps mandate approval for travel to IN HOUSE INSIGHT TOP 20 COUNTRIES for kidnap-for-ransom for MEXICO 02 INDIA 03 NIGERIA 04 PAKISTAN 06 LEBANON 07 PHILIPPINES 08 AFGHANISTAN 09 COLOMBIA VENEZUELA 82 LEXPERT MAGAZINE Features.indd 82 IRAQ 11 SYRIA 12 GUATEMALA 13 YEMEN 14 LIBYA 15 EGYPT =16 BRAZIL =16 KENYA 18 NEPAL =19 MALAYSIA =19 SOUTH AFRICA special care there. Contrary to cinema-induced perception, however, the bodyguards aren t always armed. In urban areas, the bodyguards will be armed, Odom says. But in the hinterlands, we don t allow them to carry weapons because it s not going to be a fair fight: we only carry pistols the attackers are likely using AK-47s. For employees generally, Bombardier has put in place several tools to help individuals define where the risks are and to deal with a situation if it actually arises. To that end, the company engages various partners, including HRG, a worldwide international corporate services provider that specializes COURTESY OF CONTROL RISK (as of September 30, 2013) OCTOBER :54 PM

5 IN-HOUSE ADVISOR: TRAVEL SAFETY in travel and acts as a central travel agency, medical advisors, security advisors and personal protection advisors. Companies like Control Risks and Ackerman also provide training and protocols on minimizing risk when travelling, a key component of staying safe that is often a condition of obtaining and maintaining high-risk travel insurance. We take a preventative approach to MARK LALONDE > CKR GLOBAL The lack of preparation is incredibly scary. Most people approach the threats involved in going overseas simply by looking at travel advisories from the government, and that s woefully inadequate. helping clients anticipate next steps and define a strategy to deal with incidents, says William Daly of Control Risks. There are no standard programs as yet, but benchmarks are being created as companies take up the challenge. Ackerman, for example, offers a day-anda-half long course focused very heavily on street security, including how to navigate, how to dress, how to behave, and how to keep a low profile. And if the traveller is going into a high-risk kidnapping area, we teach kidnap prevention tactics that focus on behaviour modification in terms of varying patterns and being unpredictable, Odom says. We also do specialized training for expats who are going to be living in high-risk countries. Training can go so far as to involve roleplaying that emulates the circumstances of a kidnapping and the resulting detention. It can also include evacuation planning. The idea is to protect people by minimizing surprise, says Casie Neitzke, Lalonde s colleague at CKR. It is, of course, good to know that the service providers are out there. But just who in the corporate structure engages them? Responsibility can be set up in a number of different ways, Odom says. Some corporations will have a corporate security officer working under either the general counsel or the risk manager. But typically the travel risks are the responsibility of the risk manager or the human resources manager. Odom says that s not necessarily a good way to go because those managers are focused on so many other duties. Security often gets short shrift because it s an expense, not a revenue producer, Odom says. But those who are wise know it s a revenue producer in the sense of preventing loss. At Bombardier, Bureau, who is responsible for travel risks, does not report to general counsel Daniel Desjardins. It s not part of the GC s function, Bureau says. Still, whether or not general counsel is KIDNAPPINGS ABROAD WESTERN HEMISPHERE RISKS - EXPATRIATES AND LOCAL MANAGERS ARE TYPICALLY AT HIGH RISK Mexico Severe problem; Mexicans mainly at risk Venezuela Underreported; Government hostile Haiti Serious problem Honduras Locals at risk Guatemala Locals at risk El Salvador Improving Dominican Republic Occasional cases Ecuador Occasional cases Colombia Improving but government forbids ransom payments Brazil Brazilians at risk Argentina Mainly locals involved directly, it s not likely that legal departments are or can remain totally detached from the issue. At the very least, general counsel or their delegates should be part of an internal group appointed to manage a kidnapping or similar crisis. Regardless of the outside help available, every company needs an internal group to manage this type of crisis, Odom says. After all, we are talking potential liability here. I know of companies in the US who have been sued on the basis that they didn t provide employees with proper warning or security with respect to kidnap risks, Odom says. But quite apart from liability, there are moral issues involved. Moral issues aside, however, the jurisprudence on this issue, especially in Canada, is not really developed. That makes legal input and judgment all the more valuable. There are a lot of unanswered questions such as the degree to which the duty of care extends to family members and other relatives of travelling employees and whether it extends only to time spent on business or to leisure time as well, Dattu says. However that may be, legal departments and in-house lawyers travelling to high-risk areas are going to have to ask themselves a lot more questions than these. After all, there are no law school courses to teach you this stuff, Dattu says. EASTERN HEMISPHERE RISKS - FOREIGNERS ARE TYPICALLY AT HIGH RISK Algeria/Southern Sahara Niger, Mali, Mauritania, Northern Nigeria, Northern Cameroon Nigeria Foreigners at risk in Delta, Lagos and throughout Kenya Somalia Kidnapping and piracy Pakistan Foreigners highly sought Afghanistan Foreigners India Indians at risk Iraq Both locals and foreigners remain at risk Syria/Lebanon May be temporary Philippines Mindanao China Wrongful detentions Russia Occasional cases Chechnya Avoid Western Europe Odd cases involve super rich BASED ON RESEARCH CONDUCTED BY THE CHUBB GROUP OF INSURANCE COMPANIES AND THE ACKERMAN GROUP. 84 LEXPERT MAGAZINE OCTOBER 2014