In Paris this week on an official visit, Azerbaijan’s autocratic President Ilham Aliyev has already scored one photo op. Anyone reading yesterday’s Azeri media could see dozens of photos of Aliyev posing with leaders of top French companies, including Airbus, Suez, and Credit Agricole.

Azerbaijan's President Ilham Aliyev (L) shakes hands with his French counterpart Francois Hollande as they visit a local French school under construction in Baku, May 11, 2014.

© 2014 Reuters

Today, President Hollande will receive President Aliyev and host an official dinner at Palais de l’Elysee. Again, Parisian photo ops abound. But amid the flashing cameras, one has to wonder where Azerbaijan’s repression of critics and the jailing of opponents fits in the new relationship between Paris and Baku?

In the past few years, Azerbaijani authorities have aggressively gone after the country’s once vibrant civil society, jailing dozens of activists, journalists, and political opponents. It also adopted draconian legislation making it virtually impossible for independent non-governmental organizations to operate.

One year ago, as Azerbaijan’s economy started to suffer from falling oil prices, several of those detained on political grounds were released. That was an important first step, but hopes for progress were short-lived.

Many of those released face travel bans or obstacles to their activities. Dozens are still locked up on political grounds, including opposition activist Ilgar Mammadov, despite repeated calls by the Strasbourg-based Council of Europe for his immediate release. And more activists have been thrown in jail. Recently, one of the country’s most popular journalists and bloggers, Mehman Huseynov, was sentenced to two years in prison for allegedly defaming the police, in response to his brave public denouncement of the police abuses he suffered.

When visiting Paris, Brussels, or other European capitals, President Aliyev hopes to get more business opportunities and investment in Azerbaijan. But he prefers to ignore that the people of Azerbaijan want human rights protections, transparency, and good governance. Those standing up for these values are routinely exposed to attacks and harassment.

Yet what more clear message that Azerbaijan’s crackdown cannot be ignored by potential investors than last week’s decision by the Extractive Industries Transparency Initiative (EITI), an international coalition promoting better governance of resource-rich countries, to suspend Azerbaijan – precisely because of its actions against civil society.

President Hollande should reject a narrative that only finance and economy matter in Azerbaijan. Human rights should be as central to France’s foreign policy as other topics.

Hollande should publicly call for the release of Ilgar Mammadov and all those detained in retaliation for their activism and criticism. A failure to explicitly support human rights principles would be the worst message to those unjustly waiting behind bars.

Author: Human Rights Watch
Posted: January 1, 1970, 12:00 am

Arvind Ganesan is the director of Human Rights Watch’s Business and Human Rights Division. He leads the organization’s work to expose human rights abuses linked to business and other economic activity, hold institutions accountable, and develop standards to prevent future abuses. This work has included research and advocacy on awide range of issues includingthe extractive industries; public and private security providers; international financial institutions; freedom of expression and information through the internet; labor rights; supply chain monitoring and due diligence regimes; corruption; sanctions; and predatory practices against the poor. Ganesan’s work has covered countries such as Angola, Azerbaijan, Burma, China, Colombia, the Democratic Republic of Congo, Equatorial Guinea, India, Indonesia, the United States, and Nigeria. His recent research has focused on predatory lending practices and governance issues on Native American reservations in the United States. He has written numerous reports, op-eds, and other articles and is widely cited by the media.

Ganesan has also worked to develop industry standards to ensure companies and other institutions respect human rights. He is a founder of the Voluntary Principles on Security and Human Rights for the oil, gas, and mining industries and is a founding member of the Global Network Initiative (GNI) for the internet and telecommunications industries, where he also serves on the board. Ganesan has helped to develop standards for international financial institutions such as the World Bank, and regularly engages governments in an effort to develop mandatory rules or strengthen existing standards such as the Kimberley Process. He serves on the board of EGJustice, a nongovernmental organization that promotes good governance in Equatorial Guinea, and is a member of the International Corporate Accountability Roundtable (ICAR)’s steering committee.

Before joining Human Rights Watch, Ganesan worked as a medical researcher. He attended the University of Oklahoma.

Posted: January 1, 1970, 12:00 am

The European Bank for Reconstruction and Development (EBRD) on Wednesday approved a US$500 million loan for a crucial piece of a network of pipelines owned largely by the Azerbaijani government that will transport Azerbaijani gas to Europe. The bank made this decision even though an international oil and gas transparency initiative, endorsed by the bank, recently suspended Azerbaijan because the government would not end its crackdown on civil society groups.

Oil derricks are silhouetted against the rising sun on an oilfield in Baku, on January 24, 2013.

© 2013 Reuters
The bank’s decision was expected earlier this year, but was delayed when Azerbaijan was suspended from, and then quit, the Extractive Industries Transparency Initiative (EITI) in March. EITI is a coalition of governments, corporations, and independent groups that promotes better governance of resource-rich countries by fostering open public debate about how oil, gas, and mining revenues are used. The EBRD has endorsed EITI and is also the only multilateral development bank that has a political mandate, which includes the principles of “multiparty democracy and pluralism.”

The bank appeared to minimize the systematic dismantling of the country’s once vibrant civil society through the arrests and convictions of dozens of activists, human rights defenders, and journalists on bogus, politically motivated charges, as well as the closing of independent media outlets. The crackdown did not spare anti-corruption activists, such as Ilgar Mammadov, a vocal critic of Azerbaijan’s gas industry who had been actively involved in promoting revenue transparency. He’s been in prison for nearly five years on politically motivated charges. The EBRD knew this was happening since at least 2014 when its country strategy for Azerbaijan explicitly acknowledged Azerbaijan’s poor record on meeting its human rights commitments.

The bank claims Azerbaijan will still follow principles of transparency akin to EITI, but this is difficult to fathom given the crackdown on civil society and new allegations of massive corruption. The bank’s decision came just weeks after investigative reporting in The Guardian alleged that Azerbaijan maintained a secret slush fund of about US$2.9 billion that it used over a two-year period to bribe European politicians, including to help whitewash the government’s human rights record. Among those implicated in the scandal is one of the bank’s board members.

The Azerbaijani government is eager to get the pipeline funded. The EBRD could have used its leverage for much-needed reforms. Instead, its endorsement of transparency rings hollow.

Author: Human Rights Watch
Posted: January 1, 1970, 12:00 am

The recent release of 200,000 university students and some teachers and medical workers from forced labor picking cotton in Uzbekistan came shortly after World Bank President Jim Yong Kim’s first meeting with the country’s new president, Shavkat Mirziyoyev, on September 20, 2017. Kim urged Mirziyoyev at that meeting to end forced labor.

While more comprehensive reforms are necessary, Kim’s strong and public stance, and its near immediate impact in Uzbekistan, shows that the World Bank can convince governments to stop abusing human rights abuses when it chooses to use its leverage.

It isn’t all good news though. The government is making some of the recalled teachers and medical workers pay a significant chunk of their already low salary to hire people to replace them in the fields, and police have continued to arrest independent monitors and journalists documenting labor abuses. While some teachers and medical workers have been recalled, others have been instructed to lie about their professions and to remain in the fields or have been sent back to the fields after a short reprieve.

These developments came after the release of our joint report with the Uzbek-German Forum for Human Rights documenting systematic forced labor and ongoing child labor in Uzbekistan’s cotton sector, including in World Bank project areas. We found that the government threatened people’s jobs, welfare payments, or access to university education if they refused. Kim said the facts that we provided allowed him to have a “very honest, direct conversation” with Mirziyoyev.

The Uzbek government should stop forcing anyone to work in the cotton fields, not charge people to hire “replacement workers,” and allow human rights defenders to monitor and report on the labor situation in the fields without fear of reprisals. It should also address the root causes of forced labor, including by raising the state-established procurement prices for cotton and other agricultural products to reflect the costs of the market rate for voluntary labor and by making the country’s opaque agriculture fund, the Selkhozfond, transparent and accountable.

The World Bank should press the Uzbek government to make these reforms and allow unfettered independent monitoring. It should suspend projects linked to forced and child labor until government-led abuses in these project areas stop and engage a monitor completely independent of the government to identify abuses linked to bank projects.

Recognizing the significant impact of his intervention with the Uzbek government, Kim should urge other governments to address serious rights abuses that undermine development. 

Author: Human Rights Watch
Posted: January 1, 1970, 12:00 am

Members of the Boeung Kak Lake community in Cambodia demonstrate at a police blockade in December 2012 on the second day of community activist Yorm Bopha’s trial, on trumped up charges apparently brought for speaking out on forced evictions linked to a World Bank financed project.

© 2012 John Vink/Magnum Photos

When things go wrong with World Bank Group’s projects, it is often members of the community impacted who expose these problems. But they do so at their own risk. Finally, one of the bank’s accountability bodies is taking steps to make it safer for such members when they speak out.

Here’s why this move is so important: When a Cambodian villager filed a complaint about a World Bank Group project, a government official allegedly said, “Don’t be too strong in your advocacy, otherwise you may end up in prison.”

“I was afraid,” the community member said, “but felt I had to continue, because I was doing the right thing.”

This echoes other findings we documented in a 2015 report on whistleblowers in bank-financed projects. In 18 of the 34 cases we looked into, people who complained said they had been threatened or faced retaliation that they believed was linked to their concerns about the project. We found the bank does little to make sure it is safe for people to share their views about projects, and to prevent retaliation against these people.

Last week, the Compliance Advisor Ombudsman (CAO), the independent body within the World Bank Group’s private sector lending arm, the International Finance Corporation, published an “approach” outlining how it will work to prevent and respond to threats and reprisals. This is after the Inspection Panel – the accountability body for the bank’s public sector lending arms – released in March 2016 guidelines to reduce retaliation risks.

These efforts to make it safer for people to expose problems in World Bank projects are welcome, as are pledges from other international financial institutions’ accountability bodies to follow suit. Still, the CAO approach does not describe actions it will take in partnership with people who are retaliated against.

The World Bank and other financing institutions, which have far more power to prevent and respond to reprisals than their accountability bodies, should commit to taking stronger actions themselves. The Dutch development bank, FMO, which published a position statement on human rights that addresses human rights defenders last month, is the only financing institution to have overtly tackled these issues.

The World Bank says that it takes “all reports regarding harassment of independent monitors very seriously.” It should back up these words by working with its clients to make sure it’s safe for people to share their views about its projects, monitoring for threats, and responding strongly whenever reprisals occur. 

Author: Human Rights Watch
Posted: January 1, 1970, 12:00 am

Kentucky is one of several US states that allows private companies to supervise people on probation and requires people to pay companies for that service. Based on its experience researching the industry, last week, the American Civil Liberties Union (ACLU) of Kentucky released a report describing how opaque the industry is, and called for either ending the use of private probation in the state or implementing stronger regulations.

Human Rights Watch’s own research in other states has shown how a lack of transparency around the practices and finances of probation companies can allow abuse to proliferate unchecked, with devastating consequences for poor offenders.

Kentucky has six companies operating in at least a quarter of its counties, the first of which started operating in 1989. It wasn’t until 2000 that Kentucky took any steps to regulate private probation, though even then there was no way to ensure that companies were following the rules.

Over the past three years the ACLU of Kentucky has made multiple attempts to examine the state’s use of these companies. The ACLU’s attempts in 2015 to request information from judges about private probation companies – records judges were meant to collect under the state’s rules – yielded no results. Private probation companies also refused to provide details, saying they weren’t subject to the state’s open records laws.

New, more stringent private probation rules have since taken effect. In 2017 in partnership with Human Rights Watch, the ACLU sent new requests to a hundred district court judges about their use of private probation. This time, about 70 judges responded, showing varying use across the state with roughly a quarter of Kentucky’s counties using private probation. In one county, judges in the same courthouse took differing approaches to probation: while one uses a private probation company in certain types of cases, another judge does not require any kind of supervision for low-level offenders, meaning no additional fees. The fees private probation companies charge to people under their supervision also varied from county to county.

Despite a higher response rate, information on the number of people supervised by probation companies, the total each person pays for their supervision, and the outcomes of their cases were not available as Kentucky does not require courts to track this information.

The uneven use of private probation across the state means starkly different experiences for people in Kentucky’s criminal justice system. As a result, the ACLU is recommending ending the use of private probation, short of which it calls on the state to ensure greater transparency, regulation, and oversight of the industry. 

Author: Human Rights Watch
Posted: January 1, 1970, 12:00 am

A private probation company in Tennessee recently reached an important settlement in a class action suit alleging wide-ranging abuses, a victory for those fighting the industry’s predatory practices that hurt the poor.

Providence Community Corrections (PCC) agreed to pay US$14 million to settle the suit in Rutherford County, Tennessee. The county was also a defendant for contracting PCC, and agreed to pay plaintiffs US$300,000. Rutherford County also committed to ending its use of private probation companies, to waiving fees and fines for people living in poverty, and to stop imposing probation on people purely because they are unable to pay court costs.

The complaint alleged PCC engaged in numerous questionable practices, describing the conflicts of interest that can arise when a company profits from probationers’ fees and the dangerous incentives to employ every tool – some illegal and unconstitutional – to ensure payment.

For example, individuals had to pay a multitude of fees directly to PCC – everything from supervision and random drug tests to unlawful surcharges, like “picture fees.” Those who were too poor to pay were put on supervised probation, incurring additional costs. In some cases, these fees exceeded the criminal fine. The complaint alleges that when plaintiffs, many of whom depended on government benefits, tried to get fee waivers, PCC’s complex process made them unobtainable. Many said they lost their homes, jobs, and cars trying to keep up with payments.

The complaint also maintains that when someone fell behind on payments, PCC officers had the discretion to “violate” them, threatening jail time to coerce payment. One plaintiff claimed PCC even falsified drug tests as a way to pressure him to pay.

If the judge signs off on the settlement, the complainants will be eligible for compensation. But this is just for people in one county. Private probation companies continue to operate across the United States – often without anything close to the kind of strict government oversight needed to prevent serious abuse. Human Rights Watch documented private probation abuses in Georgia, Alabama, and Mississippi in a 2014 report and is examining companies in other states. Around the country, lawsuits similar to the Tennessee case have led jurisdictions to reconsider the use of companies to supervise probationers.

With growing scrutiny and outcry, counties and state governments cannot deny knowing about serious problems with private probation, and should make sure abuses don’t take place in their jurisdiction.

Author: Human Rights Watch
Posted: January 1, 1970, 12:00 am

Oil-rich Angola and Equatorial Guinea have long shared the infamous distinction of having the longest-serving presidents in Africa – 38 years.

That will change this week when Angolan President José Eduardo dos Santos is scheduled to hand over power to João Lourenço, who had been his defense minister. It is an open question whether the change in leadership will lead to more transparent and rights-respecting governance in Angola.

But in Equatorial Guinea, President Teodoro Obiang Nguema Mbasogo has just begun a new seven-year term, with his eldest son as his appointed vice president.

Dos Santos tightly controlled his country's economy, and installed family members in some of the most important ministries and state institutions. His daughter, Isabel dos Santos, among her many interests, leads the state-owned oil company Sonangol. She is reportedly worth $3.2 billion, which would make her Africa's richest woman. His son controls the country's massive sovereign wealth fund.

Dos Santos secured immunity and a prominent presidential advisory role before stepping down, but he endorsed someone from outside his family to lead the ruling party and become the next president.

Similarly, President Obiang – who became president a few weeks before Dos Santos in 1979 – handed out key government positions to family members, who have amassed enormous wealth from the country's resources. Unlike Dos Santos, Obiang remains in power and appears to be grooming his eldest son, known as "Teodorin," to succeed him.

Teodorin has been infamous for his extravagant lifestyle, which for many Equatoguineans has become a painful symbol of the corruption that has kept them mired in desperate poverty despite the country's wealth.

He has displayed an appetite for high-end real estate, exotic sports cars, and luxury goods, which he likes to flaunt on his Instagram account. He criss-crosses the world in a private jet and luxury yachts, but perhaps his most famous purchase is a million dollars' worth of Michael Jackson memorabilia, including the crystal-studded glove the pop star wore on his "Bad" tour. Much of this spending took place when Teodorin was agriculture minister, earning less than $100,000 per year.

His lavish spending, and its sordid contrast with the poverty of most of his countrymen, caught the attention of law enforcement authorities in the United States, France, and Switzerland. But rather than investigate the source of his wealth at home, his father's government claims his activities are legal—and the threat of prosecution abroad appears to have hastened Teodorin's rise to power, in part for the coveted immunity it entails.

On May 26, 2016, after years of litigation, a French court ordered Teodorin to stand trial in Paris for allegedly laundering tens of millions of euros. At an earlier stage of the case, Teodorin had been promoted to the newly created position of second vice-president. The government promptly filed suit with the International Court of Justice, claiming France was breaching Teodorin's diplomatic immunity. Days later, the president appointed his son vice president in an apparent effort to shore up the immunity defense, since the country's constitution doesn't provide for a second vice-president.

Several months before Teodorin was made second vice-president, the U.S. Department of Justice sued him for allegedly laundering $70 million and French authorities seized his Paris mansion and 11 supercars. The Obiangs failed to convince an American court that Teodorin had immunity, and he ultimately settled the case for $30 million. (The fact that no one succeeded Teodorin in the second vice-president role adds to the sense that it was invented solely as a ploy to shield him from prosecution.)

The International Court of Justice also dismissed Equatorial Guinea's immunity claim, as did the French court when Teodorin was tried in absentia this June. A decision is expected next month. If found guilty, he could face up to three years in prison and stands to lose millions of euros in seized assets.

Even if the verdict in this case is favorable to him, another potential trial is waiting in the wings. Switzerland opened a money-laundering investigation focused on Teodorin last year and seized his $100 million yacht in December.

As vice president, Teodorin is close to gaining unassailable immunity if he replaces his father. Under Equatorial Guinean law, Teodorin would become president if his father steps down or is no longer able to serve in the position.

After decades of rule by one man, the transition to a new president, whenever it happens, will be a momentous occasion for Equatorial Guinea. The country has only known two heads of state – the current president and his uncle, whom Obiang deposed in 1979. Two decades of oil wealth have enriched the ruling elite while doing little to protect and realize the economic and social rights of ordinary citizens. Oil production is already declining and the country now faces the difficult challenge of diversifying its economy while investing in the long-neglected health and education of its citizens.

Many Angolans may be feeling cautiously optimistic about the idea of a president with a new last name. On the other hand, it's hard to feel optimistic about Equatorial Guinea's chances if the Obiangs engineer a dynastic transition of power.

Sarah Saadoun is a business and human rights researcher at Human Rights Watch. Tutu Alicante is the founder and executive director of EG Justice, an independent organization that monitors human rights abuses and corruption in Equatorial Guinea.

Correction: This article has been amended since initially published to reflect a change in the date of the scheduled inauguration of Angola's new president.

Author: Human Rights Watch
Posted: January 1, 1970, 12:00 am

In September 2016, another factory burned in the same district. Here, firefighters stand at the site of a fire at a packaging factory outside Dhaka, Bangladesh, September 10, 2016.

© 2016 Reuters

A fire in Ideal Textile Mills in Bangladesh killed at least six workers this week, reportedly after sparks from welding set ablaze inflammable chemicals stored close by.

Soon, the blame game will begin. Perhaps there’ll be a government-ordered inquiry. Maybe someone will be sent to jail. Then it will be business as usual, and the six workers will join a growing list of those who died in factory tragedies there.

Earlier this year, the Bangladesh Accord on Fire and Building Safety, a legally binding agreement between clothing brands and unions, was renewed. The accord covers more than 1,600 garment factories. Under the revised agreement, the accord steering committee can opt in textile mills. This means the mills could also be subject to fire and building safety inspections, and management and workers could be trained on safety measures.

Instead of rallying around the Bangladesh Accord, the Bangladesh government has protested its extension. Unhelpfully, the government also announced it will begin a “new” initiative on fire and building safety.

The Bangladesh government authorities already inspect about 1,550 garment factories not covered by the accord or the Alliance for Bangladesh Worker Safety (another fire and building safety initiative led by American brands). In addition, government authorities inspect factories in sectors not covered by the accord or alliance, including textiles.

Over the past few years, the accord brands cut ties with 76 garment factories that failed to make their buildings safer. Similarly, the alliance brands terminated business with 158 garment factories. These factories are now the responsibility of government inspectors.

How have these terminated factories fared? Has the government ensured that the factories took steps to make the workplaces safer? Were any of these factories closed down as unsafe?

Who knows. In 2017, Human Rights Watch spoke with workers from four terminated factories. They had no knowledge about whether the government had inspected their factory and declared it safe. As one worker said, “We came to know it [the factory is not safe] only from some staff. We also asked the owner about it once. He only said that everything will be fine. ... We used to see fire drills here on the first Thursday of every month. But we haven’t seen this in the last three months – I don’t know why… I get worried when I think that our factory building is unsafe. But still I have to continue the job because I need it.”

If the government wants to be considered a credible labor inspectorate, it should at least publish reports on how factories terminated from the Accord and Alliance are faring. It’s not just an investment in transparency. It’s also a strategic investment in business.

 
Author: Human Rights Watch
Posted: January 1, 1970, 12:00 am

Dear Member/Senator:

The undersigned organizations, which are dedicated to protecting privacy, civil liberties and human rights, write to outline our serious concerns regarding proposed legislation that would provide a new process for cross-border access by foreign governments to electronic communications and related data held in the United States. We urge you to oppose this legislation in its current form if it is introduced as either a stand-alone bill or as part of another legislative vehicle. We would appreciate the opportunity to discuss how best to improve the current cross-border process in a rights-protective manner.  

At present, when a foreign government seeks to obtain electronic communications content held in the United States by U.S. service providers, they generally follow a process laid out in a “mutual legal assistance treaty” (MLAT) between that country and the United States. Under an MLAT, individual requests for the content of communications are evaluated by the U.S. government, and if the required standards are met, the U.S. Department of Justice (DOJ) will seek an order from a U.S. court to provide the content of communications to the foreign country. Importantly, through this review process, the DOJ and U.S. judges take additional steps to protect the rights of individuals in the United States and abroad, including requiring the minimization of data, ensuring the request does not violate the Constitution and will not cause serious human rights violations, and evaluating whether responding to the request is consistent with U.S. treaty obligations.    

The current MLAT process is time consuming, and the U.S. government and foreign governments have argued that a less cumbersome procedure is needed. But rather than improve or devote more resources to the MLAT process, the proposed legislation would empower certain foreign governments to bypass it. Specifically, it would amend U.S. law to permit U.S. communications providers to respond directly to foreign government requests for stored data, and would even allow companies to conduct wiretaps (i.e. collect data in real time) for foreign governments, something that the current MLAT process does not allow. In doing so, the proposed bill eliminates many key safeguards provided under current law that protect the rights of individuals inside and outside the United States. For example, the new approach eliminates the individualized review presently conducted by the U.S. government to ensure that requests for data are not likely to be used to commit serious human rights violations. Thus, without significant amendments, this legislation poses threats to privacy, civil liberties, and human rights.

Our principal concerns with the proposed legislation are as follows:

Provides broad discretion to the Executive Branch to enter into agreements without appropriate oversight: The bill gives the Executive Branch broad discretion to enter into bilateral agreements with other countries without appropriate congressional involvement. Under the current proposal, Congress would not need to approve, ratify, or otherwise endorse such agreements and there is no mechanism for Congress to review implementation of such agreements . Instead, similar to extradition treaties, the bill should require that Congress ratify each individual bilateral agreement, and review such agreements on a periodic basis to determine whether they should be extended.  Further, the bill bars any judicial or administrative review of whether the approval requirements were met. Such unilateral power in the hands of the executive branch without congressional or judicial oversight is a recipe for arbitrariness or decisions based on political factors that do not take adequate account of the rights of people inside or outside the United States.

Allows foreign governments to obtain U.S. held data under a weak standard: The bill only requires that the order by the foreign government be based “on requirements for a reasonable justification based on articulable and credible facts, particularity, legality, and severity regarding the conduct under investigation.” This is a lower standard than the U.S. probable cause standard that applies to foreign requests for the content of communications under current law, impacting both the non-U.S. persons who may be targets of the foreign government requests and U.S. persons whose information may be incidentally collected. This standard may also be insufficient to meet the requirements of international human rights law. In addition, although the bill includes language stating that orders must “identify a specific person, account, address, or personal device, or any other specific identifier as the object of the Order,” this language is insufficient to prevent large-scale collection. For example, an “address” could be an IP address, which can cover numerous computers, or it could include an entire apartment building.

Does not adequately protect the rights of people in the United States: Although foreign governments would not be permitted to use this cross-border process to target U.S. persons (i.e., citizens and legal permanent residents) or individuals located inside the United States, they would still be likely to obtain the communications of Americans who were in contact with foreign targets through “incidental collection.”  In some cases, foreign governments could then voluntarily share such information about U.S. persons with the U.S. government, even though it was collected without the safeguards that would otherwise apply under the Fourth Amendment and the Wiretap Act. Specifically, foreign governments could share any metadata for Americans’ communications (such as the “to” and “from” lines of an email) with the U.S. government.  Additionally, they could share the content of U.S. persons’ communications if the foreign government believes the information “relates to significant harm, or the threat thereof, to the United States or U.S. persons,” which is a standard lower than what would be required for the U.S. government to obtain the information on its own.  Moreover, since the bill also permits foreign governments to voluntarily share collected U.S. person communications with third-party governments in certain situations, including those that do not meet baseline human rights standards, it further threatens the rights of people in the United States.

No requirement for prior individualized and independent review: Prior individualized review by an independent decisionmaker is a fundamental protection under the U.S. system of justice and under international human rights law. However, the bill only requires “review or oversight by a court, judge, magistrate, or other independent authority.”  By permitting foreign countries to rely only on "oversight” which may be generalized, the system fails to require both the prior individualized and independent review necessary to protect individuals inside and outside the United States.

Permits real-time or prospective surveillance for the first time and without adequate safeguards: Under current law, U.S. providers may only turn over stored -- and not real-time -- content to foreign governments through the MLAT process, and when the U.S. government conducts real time or prospective surveillance, the Wiretap Act provides additional safeguards beyond those required for access to stored content. The bill, however, would permit foreign governments, for the first time, to issue orders for U.S. providers to turn over the content of communications in real time without including protections comparable to those contained in the Wiretap Act.

Fails to prevent data localization mandates or requirements for encryption back doors: The bill does not include any language to prohibit foreign countries from requiring that U.S. communications providers store their data in that country (data localization). Although efforts by countries with strong data privacy requirements to apply those protections to data held by U.S. providers may be helpful, rules that simply require data to be stored in a specific country can impede the free flow of information on the internet. Nor does the bill bar foreign countries from requiring U.S. communications providers to create back doors to circumvent encryption. The bill thus fails to protect against many of the threats that the government has suggested it is intended to forestall. 

Fails to require review and establish standards for disclosure of sensitive metadata: Under current law, although foreign government requests for communications content are subject to the rights-protective MLAT process, U.S. providers may voluntarily turn over communications metadata based simply upon a request from a foreign government. This is true even for particularly sensitive metadata, such as email logs and other traffic data. In fact, it is often easier for foreign governments to obtain metadata from U.S. providers than it is for the U.S. government to do so. Any legislation governing cross-border data requests should include a requirement that foreign government requests for sensitive metadata must be subject to prior independent review, and should establish a meaningful standard for that review. The bill, however, fails to address this problem.

Does not appropriately limit the types of crimes that may justify a foreign government data request: The bill applies to data requests in connection with the prevention, detection, investigation, and prosecution of “serious crime, including terrorism,” but it does not list, define, or otherwise limit the “serious crimes” that are covered. Further, unlike the current MLAT requirements, the bill fails to include a dual criminality requirement to ensure that data requests to U.S. providers would only cover the types of crimes that U.S. law also recognizes as serious criminal behavior. The bill thereby creates risks that U.S. providers will be called upon to assist in investigations and prosecutions that violate human rights and civil liberties.  

Fails to ensure that the U.S. government only enters into agreements with foreign governments that meet strong human rights standards: The bill establishes requirements for the U.S. Attorney General, with the concurrence of the U.S. Secretary of State, to approve individual bilateral agreements with foreign governments under which they may seek the contents of communications directly from U.S. communications providers. However, the provisions for U.S. executive branch review and approval of such bilateral agreements only specify “factors to be considered” rather than making the listed factors mandatory for approval. For example, it should be mandatory (and not simply a factor to consider) that countries can only be approved where they adhere to applicable international human rights obligations and commitments, so that there can be no approvals for countries that the State Department has assessed to have committed serious human rights violations.

Fails to ensure notice to targets and others: The bill fails to require notice -- even after the fact -- to the target of a data request, or others whose communications will inevitably be “incidentally” collected. Yet notice is a key human rights protection that gives targets and others an opportunity to ask a court to vindicate their rights and seek redress where abuses occur. The bill does not even require notice to the U.S. government when a foreign government demands data stored in the United States from a U.S. company, to allow the U.S. government to recognize any patterns of abuse.    

For these reasons, without significant amendments to the bill, we urge you to oppose this legislation. We would welcome the opportunity to meet with you to discuss how to address the government’s concerns in a rights protective manner.

Sincerely,

Access Now
Advocacy for Principled Action in Government
American-Arab Anti-Discrimination Committee
American Civil Liberties Union
Amnesty International
Center for Democracy and Technology
Center for Media and Democracy
Constitutional Alliance
Council on American-Islamic Relations
Defending Rights & Dissent
Demand Progress
Electronic Frontier Foundation
Fight for the Future
Government Accountability Project
Government Information Watch
Human Rights Watch
National Association of Criminal Defense Lawyers
National Security Counselors
New America's Open Technology Institute
Project On Government Oversight
Restore the Fourth

Posted: January 1, 1970, 12:00 am
(Washington, DC) – Equatorial Guinean authorities arrested a political cartoonist and activist on September 16, 2017, Human Rights Watch and EG Justice said today. He has been held in detention since then and authorities may be preparing to file criminal defamation charges against him.
 
The arrest of the cartoonist, Ramón Nsé Esono Ebalé, is the latest episode of government retaliation against artists who have used their work to criticize the government. EG authorities should repeal the country’s colonial-era defamation statute, which allows for the criminal prosecution of people who criticize the president and top government officials. They should abandon any plans to charge Ebalé under that law and, if he is accused of no other crime, release him immediately and without charge.
 
“The Equatorial Guinea government has again demonstrated its hostility to any form of critical expression that escapes its heavy-handed censorship,” said Tutu Alicante, executive director of EG Justice, which monitors human rights violations in Equatorial Guinea.
 
Three state security officers detained Ebalé outside a restaurant in the capital, Malabo, at about 7 p.m. on September 16, along with two Spanish nationals who were with him. All three men were taken to the Office Against Terrorism and Dangerous Activities in the Central Police Station. The Spanish nationals were interrogated about their connection to Ebalé and freed after several hours.
 
Authorities continue to hold Ebalé without charge, exceeding the 72-hour period allowed under Equatoguinean law. Interrogators reportedly questioned him about his political cartoons, which often lewdly caricature President Teodoro Obiang Nguema Mbasogo and other government officials, and repeatedly told him that people may only participate in politics if they are associated with an official party.
 
Ebalé has lived outside of Equatorial Guinea for several years and had returned to the country to renew his passport. He has not been taken before a judge, which Equatoguinean law requires within 24 hours. Family members were allowed to see him on September 18 and 19, though prison guards refused to allow his sisters to visit on September 17 or to confirm he was being held there.
 
Based on the interrogators’ apparent questions, EG Justice and Human Rights Watch are concerned that Ebalé may be charged with violating Equatorial Guinea’s criminal defamation statute. In Human Rights Watch’s view, such laws are incompatible with the right to free expression and Equatorial Guinea’s statute should be repealed.
 
The arts have traditionally served as a safe space for independent voices to provoke public debate on social issues in Equatorial Guinea, a country with little tolerance for political dissent. But EG Justice and Human Rights Watch have documented an increasing number of incidents over the past two years in which the government has retaliated against artists and cultural groups.
 
In one recent incident, in July, authorities arbitrarily detained Benjamin Ndong, known as Jamin Dogg, after he released a song in support of taxi drivers protesting an increase in licensing fees. In August 2016, authorities suspended a UNICEF-funded theater production raising awareness about HIV after a comment from the audience questioning why the government hadn’t done more to stop the spread of the disease. And in August 2015, the interior minister closed an independent cultural center in Rebola after an artist performed a rap song critical of the government.
 
“Prosecuting a cartoonist for unflattering satirical drawings is incompatible with free speech and only highlights the power of the pen,” said Sarah Saadoun, researcher at Human Rights Watch.
Posted: January 1, 1970, 12:00 am

In July 2016, the United States Department of Justice released a legislative proposal that could vastly increase surveillance by other governments with the direct assistance of Silicon Valley. The unprecedented proposal would allow certain governments to demand the contents of Internet communications such as e-mails and chats directly from US companies, rather than going through cross-border law enforcement treaties that have long been in place to protect rights. The US has already negotiated the outlines of such a deal with the United Kingdom and the Justice Department proposal would extend it to other governments.

This development should raise alarm bells for any user of US-based Internet companies such as Google or Facebook. If enacted, privacy safeguards will get much weaker, collection much broader, and private information potentially more widely shared since governments will have increased access to user communications. While the legislative proposal generally conditions this access on a government’s general respect for human rights, it falls short of ensuring that rights will be adequately protected.

The proposal was introduced on September 14 in the US Congress as an amendment to a defense spending bill, and may be introduced in stand-alone legislation later this year.

The Rationale

Under current US law, Internet companies are prohibited from turning over the contents of communications directly to foreign governments, even for investigating crime. Instead, law enforcement agencies outside the US must make requests through Mutual Legal Assistance Treaties (MLATs), with the Justice Department and US judges serving as intermediaries between the requesting government and the company that holds the information.

As a byproduct of this process, the US extends the same strong constitutional privacy protections enjoyed by US citizens to surveillance targets outside the US. These protections have long promoted respect for rights in criminal investigations, despite the US reputation for excessive surveillance in the intelligence context.

Under this system, the requesting authority must convince a judge that there is “probable cause” the search will elicit evidence of a crime. This is a high standard. The requesting government has to put forward specific facts—and not just a hunch or belief—that demonstrate the communications sought are likely to be evidence of criminal activity. The request must also specifically describe the evidence sought, preventing governments from speculative “fishing” for evidence of crime. An impartial and independent judge must authorize the warrant and the US government also strips out communications that aren’t relevant to the request, all prior to disclosure. Finally, some treaties limit how the information may be used. While the MLAT process isn’t as transparent as it should be, it is rigorous and protective of rights—often more so than the domestic law of requesting governments.

Law enforcement agencies in the UK and elsewhere have become increasingly frustrated with this process, which can be slow. One 2013 review found that it takes an average of 10 months to fulfill a government request. This tortoise-like pace is not intrinsic to the process, which can be very quick for US authorities seeking warrants. The US has devoted insufficient resources to the process, leading to a large backlog, with the number of requests only increasing. Also, with US standards more rigorous than those in many requesting countries, requesting authorities must often devote more resources to gather evidence to meet them.

In response, the UK has claimed that they can extend their surveillance orders “extraterritorially” to Internet companies outside their borders to bypass this process. This places companies in the awkward position of deciding whether to comply with UK warrants in violation of US law. Major US Internet companies have also said that foreign governments’ frustration with the process is leading to calls for data localization worldwide, which would force companies to store user data locally in territories where they offer services, or even arrest of employees.

US companies believe that the Justice Department proposal would prevent this parade of horribles and are actively supporting the government’s move. Whether it would do so is an open question. But the proposal also means eliminating rights protections for many users outside the US.

The Proposal

The proposal would allow qualifying countries to request the contents of communications directly from US companies, bypassing the MLAT process, for the investigation of undefined “serious crime.” The proposal actually goes beyond the existing system since it would allow governments to demand real-time wiretapping from US tech companies for the first time. But the requirements governments would have to meet fall well short of what international human rights law requires of the US and its partners—that an independent authority consider whether, in each individual case, the request is necessary and proportionate and subject to challenge and redress.

For a government to qualify, the US would have to negotiate a bilateral agreement with the country and certify that it has “robust substantive and procedural protections for privacy and civil liberties.” But the proposal only lists “factors to be considered,” not firm requirements. The factors include whether the country generally has respect for the rule of law and human rights and “sufficient mechanisms to provide accountability and appropriate transparency” for surveillance.

This blanket determination is far weaker than the case-by-case judicial authorization that the current process requires, and it overlooks the fact that the authorities of any country—no matter how well intentioned—may make mistakes or overreach. It also makes the certification process vulnerable to politics, where the US might ignore serious abuses to certify key allies.

Once a country is certified and an agreement is in place, its law enforcement agencies could request stored communications or real-time wiretaps directly from US companies. Generally, those requests would be subject to the country’s own domestic procedures and standards, although the proposal would require them to ensure there is a “reasonable justification based on articulable and credible facts.” The meaning of that standard remains unclear, though it appears to be less than “probable cause.” The proposal doesn’t compel companies to comply, though the requesting government may try to do so. If a company denies a request, the government can resubmit its order through the usual MLAT process.

Under the proposal, requesting governments would have to subject requests to undefined “review or oversight” by an independent authority, but officials would not have to seek prior judicial authorization. Such review could also be generalized rather than specific to each request. This is a major weakness since the current system requires an independent examination by a US judge of the justification for the request (and the potential impact on rights) before disclosure.

Many of the proposal’s terms are undefined, and it is unclear how they will be interpreted and applied under vastly different legal systems. For example, the proposal requires requesting governments to specify a “person, account, address, or personal device” to target, which in theory might deter some sweeping data requests. In practice, however, a single request could involve disproportionate amounts of data, depending on how specific provisions are defined. For example, an “address” could be interpreted to include an “Internet Protocol address,” which could be shared by thousands of computers. The onus will be on the requesting government to “segregate” non-relevant information.

Finally, the proposal does not require governments to provide notice to surveillance targets. Yet notice is a critical human rights protection that enables individuals to seek redress for surveillance abuses. Participating countries are also allowed to share information collected under this regime with the US and other governments in some circumstances.

Impact on User Rights

Agreements negotiated under the proposed framework would undoubtedly lead to far more user information flowing from US Internet companies to the UK and other governments than under the current process. The proposal would protect US companies from liability for complying with requests made in “good faith.” This removes incentives for companies to scrutinize or deny such requests, given other legal or political pressures they may face from requesting governments.

For users outside the US, the proposal’s shift of human rights scrutiny from US courts back to the institutions of the requesting country means the impact on privacy and other rights depends first and foremost on whether their country’s laws are more protective than the current MLAT system. In the UK, the protections are weaker.

The US government contends that the new system would encourage other countries to reform their own surveillance laws to qualify for speedier access to data held by US firms. But whether that is likely depends on political interests of both the US and the participating government. What countries may qualify—or could qualify with some reforms—is uncertain. The draft agreement appears designed to require no changes to UK law, which Edward Snowden described as legalizing “the most extreme surveillance in the history of western democracy.” From conversations with companies and other stakeholders, Brazil and India may also be on a desired short list for data sharing under the proposal.

People in countries like Brazil or India should decide whether they are willing to trade privacy protections provided by the current MLAT system for some hazy incentive to improve domestic laws. The proposal’s criteria fall short of international human rights law, including the Necessary and Proportionate Principles, which would likely limit any reforms, even if a government were willing to change its laws.

Finally, there is a question of accountability. The MLAT system subjects users’ rights to standards their own governments did not enact, under a process they cannot contest. This is not ideal, yet it manages to provide strong protections for people outside the US. The new proposal would simply remove many of these protections and defer to the participating government’s domestic processes, which may be even more opaque and unaccountable.

Internet users should assess whether their domestic system would adequately prevent their government from abusing the arrangement, and whether local law enforcement can be held accountable, given how much more data would be available to them under the deal.

What Alternative?

The US should adequately fund the current process so that government requests can be properly reviewed in a timely way. The US could also streamline the MLAT process, for example, creating a standardized online system for requests that would not require weakening rights protections. Both technology companies and the US should prioritize these solutions before pursuing a proposal that could allow a potentially vast expansion of surveillance, with lower safeguards.

To be truly viewed as an improvement, any cross-border data request proposal should strengthen privacy protections and improve human rights accountability, not merely shift the burden to systems that have fewer protections. The current proposal doesn’t come close to achieving this.

Author: Human Rights Watch
Posted: January 1, 1970, 12:00 am

Women work in the sewing division of a factory in Phnom Penh, Cambodia’s capital. Women constitute about 90 percent of the workforce in Cambodia’s garment industry, which produces for many international apparel brands. Human Rights Watch has documented that workers in Cambodia frequently experience forced overtime, pregnancybased discrimination, and denial of paid maternity leave.
 

© 2014 Samer Muscati/Human Rights Watch

Mobile phones, clothes, or food: these products and others we use every day can be produced through processes that don’t respect rights. Human Rights Watch has documented the catastrophic things that can happen in leather tanneries in Bangladesh, clothes factories in Cambodia, and gold mines in the Philippines.

At the end of 2016, the German government adopted a National Action Plan for Business and Human Rights, urging German businesses to commit to human rights due diligence – safeguards to make sure they are respecting rights – across their entire supply chains. The Action Plan is based on the UN Guiding Principles on Business and Human Rights, considered the standard for businesses’ responsibilities in this area. Germany aims to have 50 percent of businesses with more than 500 employees implement its plan by 2020. Should businesses fail to meet this goal, the German government will consider legally binding measures.

Human Rights Watch supports the adoption of such action plans, and we also recommend binding human rights due diligence rules for companies irrespective of their size. Experience has shown that voluntary standards are simply not enough.

Germany will hold federal elections on September 24, and its next government will monitor and evaluate the Action Plan’s implementation and decide whether there should be binding rules for businesses.

Some political parties appear more likely to do so than others.

While the manifestos of all parties represented in the Bundestag recognise the need to protect rights across global supply chains, their positions diverge significantly when it comes to binding human rights due diligence. A survey of German parties on resource policy carried out by the Christian Initiative Romero highlights this, as did the arduous negotiations during the National Action Plan’s development. For example, the CDU, much like the FDP, opposes binding standards for businesses. In contrast, the manifestos of the SPD, the Green Party and the Left Party explicitly demand binding due diligence codes for businesses. The SPD is the only party to demand in its manifesto that the Action Plan be “put into practice consistently”.

Unfortunately, the issue of international corporate social responsibility has barely been touched upon in this election campaign. The fact that seamstresses in Cambodia’s factories and children working in Bangladesh’s tanneries have no vote is no reason to avoid adding German business practices to the election debate topics.

Author: Human Rights Watch
Posted: January 1, 1970, 12:00 am

(Jerusalem) – Despite their claims, Israel’s largest banks are not required by domestic law to provide many of the services and financing that help support, maintain, and expand unlawful settlements in the occupied West Bank, Human Rights Watch said in a report released today.

In doing so, these banks violate their international law responsibilities to avoid contributing to human rights and other abuses, including unlawful land seizures, discrimination against Palestinians, and de facto annexation of the West Bank by Israel. Without these banking activities, settlement maintenance and expansion would be more difficult.

“Israeli banks are financing settlement construction and facilitating settlement expansion as a matter of choice, not because they are somehow required to do so under domestic law,” said Sari Bashi, Israel and Palestine advocacy director at Human Rights Watch. “Institutional investors should insist that the banks clarify the extent of their settlement activities and which if any laws would prevent them from ending these activities.”

Customers use ATMs outside a bank branch in the Israeli settlement of Modi'in Ilit. 

© 2016 Human Rights Watch

For years, some foreign investors have raised concerns about the involvement of Israeli banks in furthering settlement maintenance and expansion, including by financing construction projects, providing loans to settlement councils, which are similar to municipalities, and mortgage loans to home-buyers in settlements, and operating bank branches there. Investors such as the United Methodist Church pension fund and the Dutch pension fund PGGM have divested from Israel’s five largest banks, citing their involvement in settlements as being inconsistent with those funds’ human rights policies.

Settlements are unlawful under international humanitarian law. They contribute to the Israeli authorities’ discriminatory regime in the occupied West Bank, restricting and stunting Palestinian development while subsidizing and supporting Israeli settlements built on land unlawfully seized from Palestinians. International humanitarian law forbids an occupying power from using land except for military purposes or for the benefit of the local population living under occupation.

Human Rights Watch reviewed arguments made by Israeli banks that they are obliged by Israeli domestic law to provide these services and therefore cannot cease their activities in settlements.

While Israeli law does require banks to open accounts for qualifying settlement businesses and institutions that apply and requires some service provision to settlers inside bank branches, Human Rights Watch found no domestic law obligating them to provide many of the services they provide inside and to settlements, including providing financing and mortgage loans that facilitate building homes for Israelis, on land unlawfully seized from Palestinians and off-limits to them.

Advertisement for a new housing construction project in the Israeli settlement of Dolev: “The new neighborhood in Dolev for young couples”. 

© 2017 Human Rights Watch

Settlements inherently contribute to serious human rights abuses. The transfer of an occupying power’s civilians into occupied territory constitutes a war crime. Because these abuses are inherent in Israel’s settlement enterprise – businesses do not have the ability to give back the land, allow Palestinians to access it, or dismantle the roadblocks set up to protect settlers – businesses have a responsibility to cease doing businesses in or with Israeli settlements, including locating or carrying out activities inside settlements; financing, administering, or otherwise supporting settlements or settlement-related activities and infrastructure; and contracting to purchase settlement-manufactured goods or produce.

The United Nations Guiding Principles on Business and Human Rights, which most large companies accept, require businesses to refrain from contributing to or benefiting from serious violations of human rights or international humanitarian law.

Israeli banks should cease their settlement-related activities. Institutional investors should engage the Israeli banks in which they invest on their settlement-related activities as part of their responsibility to conduct human rights due diligence, Human Rights Watch said. They should determine the extent of the banks’ involvement in settlement-related activities, their future plans, their understanding of the domestic legal framework, and their willingness to ensure that investor funds are not used for these activities. These institutional investors should ensure that their business relationships are free from settlement-related products or investments.

“Israeli banks are making business decisions that contribute to serious human rights abuses,” Bashi said. “Their investors should insist on getting answers about the activities their money is funding.”

Posted: January 1, 1970, 12:00 am

Customers use ATMs outside a bank branch in the Israeli settlement of Modi'in Ilit. 

© 2016 Human Rights Watch

Introduction

The activities of Israeli banks in Israeli settlements in the occupied West Bank raise serious human rights concerns. By providing services to and in settlements, which are illegal under international humanitarian law (IHL), and partnering with developers in new construction projects, Israeli banks are making existing settlements more sustainable, enabling the expansion of their built-up area and the take-over of Palestinian land, and furthering the de facto annexation of the territory. All of this contributes to serious human rights and IHL abuses.

When faced with such concerns over their banking activities in and with Israeli settlements in the West Bank, Israeli banks have said that they are required by Israeli law to provide those services.

However, Human Rights Watch can find no Israeli domestic law that requires Israeli banks to provide many such settlement-related activities. In other words, Israeli banks could stop many of their settlement-related activities – notably financing new construction, providing mortgages, and operating service points -- branches and ATMs – without necessarily incurring adverse domestic legal consequences.

Even if that were not the case, Israeli banks would have a responsibility in all circumstances to seek ways to honor the principles of internationally recognized human rights.

In this paper, Human Rights Watch analyzes Israeli domestic law governing banking activities, including recent amendments to anti-discrimination and consumer protection legislation and a law addressing calls to boycott Israel or its settlements. This paper outlines which activities Israeli law does and does not require banks to undertake in settlements, and makes recommendations to Israeli banks, their investors, the Bank of Israel, the Israeli government and third-party states. It also addresses the human rights responsibilities that foreign institutional investors in these banks have and provides recommendations for how they might meet those responsibilities. The analysis in this paper is limited to the activities of Israeli banks in and with settlements and does not address other kinds of activities undertaken by Israeli banks.

Human Rights Watch does not believe it is possible for businesses to operate in the settlements in compliance with their international responsibilities, due to the inherent IHL and human rights violations that characterize settlements. Human Rights Watch is calling for banks, like other businesses, to comply with their own human rights responsibilities by ceasing settlement-related activities.

Under Israeli banking, consumer, and anti-discrimination law, banks cannot reject customers based on their place of residence, which could be interpreted by Israeli courts to include residence outside of Israel, in Israeli settlements in the West Bank. But it is Human Rights Watch's assessment that banks can, under domestic law, avoid providing many services that support settlements and settlement activity, and that doing so is necessary to fulfill their human rights responsibilities. Banks are not obliged to provide their services everywhere and are not prohibited from refusing to offer services based on business or other considerations, regardless of where a would-be customer lives. Israeli law prohibits discrimination against an individual based on the individual's place of residence, not differentiation based on the geographic location where services will be provided or other substantive elements of a service or transaction. Indeed, Israeli consumer protection law allows businesses to refrain from offering goods and services in settlements, provided they notify customers in advance of this choice and apply the policy to all customers, irrespective of their place of residence. Israeli anti-discrimination law forbids banks from discriminating in services or goods provided in the place of business, based on the client's place of residence, but does not bar declining financial services in a certain area based on other considerations.

For these reasons, Human Rights Watch believes that while banks cannot, under Israeli law, reject settlers as customers, they do not have to provide financial services that involve settlements, such as financing construction projects or mortgages for settlement properties, when the grounds for refusal are not the place of residence of the customer but rather the business and human rights considerations stemming from the location of the activities, for example the nature of the property rights in the housing unit and the construction's implications on Palestinians’ human rights.

Based on Human Rights Watch’s analysis of Israeli law and the international humanitarian and human rights standards applicable to businesses and settlements, this means that banks can refuse to offer many services that “touch” settlements, as long as they disclose that policy and as long as the grounds for the refusal are perceived by courts not as relating to the clients themselves, but as stemming from the special business and other implications that arise from the nature of the transaction. For example, banks could refuse to offer a service if that transaction originates, terminates or passes through a settlement as long, as they disclose that they decline to provide services in settlements and apply that policy to all customers. Israeli regulatory law also provides banks a kind of safe haven by allowing them to propose policies of this type to the Bank of Israel for approval. This is just one of the many steps that Israeli banks can and should take to fulfill their human rights responsibilities and cease doing business in or with settlements.

Methodology

Human Rights Watch has reviewed information published by the Bank of Israel and reports on banking activities in Israeli settlements recently published by the Israeli nongovernmental organization Who Profits,[1] the Danish media and research group Danwatch,[2] and a coalition of French groups.[3] Human Rights Watch made field visits to bank branches and construction sites in settlements and reviewed information about service points in settlements published by the Bank of Israel and Israeli banks. Human Rights Watch also reviewed settlement local and regional council meeting minutes, company reports on settlement construction, and publicly available information regarding new settlement projects.

Advertisement for a new housing construction project in the Israeli settlement of Dolev: “The new neighborhood in Dolev for young couples”. 

© 2017 Human Rights Watch

This research shows that all five of Israel’s largest banks are operating in settlements.

Human Rights Watch reviewed current Israeli legislation and court decisions, legislative proposals, Israeli parliamentary research reports, articles by Israeli scholars in the field of banking and an expert opinion on Israeli domestic law and banking activities in the settlements that Who Profits commissioned.

Human Rights Watch wrote to the Bank of Israel, the Association of Banks in Israel (the industry’s association) and to the five largest Israeli banks, requesting details of banking activities in the settlements and explanations about their understanding of the domestic legal framework. Bank Leumi and the Bank of Israel provided brief comments. The other four banks, Hapoalim, Bank Discount, Mizrahi Tfahot and First International Bank of Israel, did not respond. The Association of Banks in Israel provided written responses to questions posed by Danwatch for a January 2017 publication,[4] which Human Rights Watch reviewed, but its spokesperson declined to answer Human Rights Watch’s questions for this publication.[5]

Human Rights Watch also consulted with Israeli lawyers and legal scholars with expertise in Israeli corporate, banking, property and anti-discrimination law.

In addition to the response by the Bank of Israel, which is detailed below, a spokeswoman for Bank Leumi wrote in an e-mail, in response to a list of questions,[6] that “Bank Leumi operates in accordance with the laws of the State of Israel” and referred Human Rights Watch to the Association of Banks in Israel for further questions.[7]

Why Banking in Israeli Settlements Violates International Law

Human Rights Watch has previously documented how businesses in Israeli settlements in the West Bank contribute to and benefit from serious violations of human rights and international humanitarian law (IHL): they violate the prohibition on transferring an occupying power’s civilians into occupied territory, are located on land that has been unlawfully taken from Palestinians, exploit natural resources that belong to Palestinian society but are allocated in a discriminatory manner in favor of Israelis, and are part of a discriminatory system that privileges Israeli businesses while inhibiting the development of Palestinian businesses, social, and cultural institutions, and infrastructure. Settlements trigger serious abuses such as restrictions on Palestinian freedom of movement, unlawful seizure of Palestinian land, home demolition, and displacement. Transferring an occupying power’s civilian population into occupied territory is a war crime.[8]

Settlement businesses depend on and benefit from Israel’s unlawful confiscation of Palestinian land and other resources and facilitate the functioning and growth of settlements. Settlement-related activities also directly benefit from Israel’s discriminatory policies in planning and zoning, the allocation of land, natural resources, financial incentives, and access to utilities and infrastructure. These policies result in the forced displacement of Palestinians and place Palestinians at an enormous disadvantage in comparison with settlers. The World Bank estimates that restrictions on Palestinian economic development and construction in Area C alone, the 60% of the West Bank where most settlements are located, cost the Palestinian economy $3.4 billion annually, a third of Palestinian GDP.[9]

Banks’ Human Rights Responsibilities

Following international standards articulated in the United Nations Guiding Principles on Business and Human Rights, businesses are expected to undertake human rights due diligence to identify and mitigate contributions to human rights violations of not only their own activities but also activities to which they are directly linked by their business relationships.[10] They are also expected to respect IHL standards. Businesses are expected to take effective steps to avoid or mitigate potential human rights harm and to consider ending business activity where severe negative human rights consequences cannot be avoided or mitigated.

Based on extensive prior research, it is Human Rights Watch's view that adequate due diligence would show that business activities in or in contract with Israeli settlements or with settlement businesses contribute to rights abuses. Human Rights Watch has concluded that businesses cannot mitigate or avoid contributing to these abuses so long as they engage in such activities, as they contribute to the operation and expansion of settlements that violate international law.[11] In Human Rights Watch’s view, the context of human rights abuse to which settlement business activity contributes is so pervasive and severe that businesses cannot fulfill their human rights responsibilities if they continue carrying out activities inside or for the benefit of settlements, including financing, providing services to, or otherwise supporting settlements or settlement-related activities and infrastructure.

None of the five largest Israeli banks responded to questions about whether they implement the UN Guiding Principles. Human Rights Watch did not find publicly available documents relating to such implementation. Many of the major foreign institutional investors in these banks, however, including pension funds such as the Norwegian Government Pension Fund[12] and the Dutch Government Pension Fund (ABP),[13] have publicly committed to respecting human rights throughout their investment decisions. These two funds have withdrawn funding from some Israeli companies on human rights grounds, including involvement in cluster weapons[14] and settlement construction in the West Bank[15] but have remained invested in Israeli banks that engage in settlement-related activities.

Israeli Banking Association Claims

While a spokesman for the Association of Banks in Israel declined to comment on questions Human Rights Watch posed, the association did provide a detailed response[16] to questions posed by the Danish media and research center Danwatch for its January 2017 report on investments in Israeli settlements.[17] In its response, the association suggested that it was legally obliged to offer financial services in the settlements to comply with a previous version of Israel’s Anti-Discrimination Law.

The banking association referred to an Israeli statute, The Prohibition on Discrimination in Products, Services and Entry into Places of Entertainment and Public Places, 5761-2000 (“Anti-Discrimination Law”).[18] The association wrote:

[The Anti-Discrimination Law] prohibits banks, who provide banking services and credit, from discriminating in the provision of banking services and credit due to race, religion, religious group, nationality, country of origin, gender, sexual orientation, point of view, partisan affiliation, personal status or parenthood. It also provides that discrimination includes setting irrelevant conditions in the provision of services.

Therefore, setting a policy at a bank, whereby banking services or credit would not be provided in connection with activity, such as mortgages, financing of building projects or provision of credit, in Judea and Samaria [the biblical name for the West Bank commonly used in official Israeli discourse] constitutes discrimination due to nationality, race, religious group and point of view which is prohibited under the law.

The association’s statement did not explain how refusing to provide services in West Bank settlements, most of which are outside the boundaries of the State of Israel as defined by Israeli law, would constitute discrimination against individuals based on nationality, race, religion or point of view. None of the Israeli banks responded to a Human Rights Watch request to explain that position. Since the association made its statement, the Anti-Discrimination Law has been amended, as will be discussed below.

A spokesperson for the Bank of Israel, which is responsible for ensuring that Israeli banks operate according to domestic law, wrote in an e-mail that questions posed by Human Rights Watch[19] “relate to legal aspects of activities of banks in Israel. The answers are complicated and dependent on the circumstances of each and every case on its merits, and therefore, in general, we do not address questions of this nature.”[20]

Analysis of the Obligations Imposed on Banks by Israeli Law

Based on its previous research on the involvement of business with unlawful settlements, Human Rights Watch takes the position that providing banking services in or to settlements contravenes the international human rights responsibilities of Israeli banks. Indeed, were Israeli law in fact to require businesses to provide such services – and some Israeli lawmakers have proposed amending the law to impose such a requirement, thus far unsuccessfully – it would make compliance by these businesses with their human rights responsibilities difficult or impossible and would necessitate other companies to reevaluate any relationships with these businesses.

Israeli banking customer service is governed by The Banking Law (Customer Service), 1981 (“Banking Law”)[21] and other laws relating to anti-discrimination and customer service. A close reading of these laws by Human Rights Watch shows that banks can, under Israeli law, decline to provide many of the services they provide in Israeli settlements in the West Bank based on business and human rights considerations. Research and an analysis of the applicable law strongly suggest that, rather than being obligated to operate in or with settlements, Israeli banks are choosing to provide many of these services, each according to its own business judgment.

Application of Israeli Banking Law in West Bank Settlements

A preliminary question to be addressed is whether and how Israeli law applies at all to banking in West Bank settlements. Like most Israeli statutes, the Banking Law’s territorial reach is limited to the boundaries of the State of Israel as recognized by Israeli law, which do not include the settlements in the West Bank, except in East Jerusalem, which Israel claims to have annexed and where it applies its domestic laws.[22] However, the Israeli military, which acts as both legislator and regulator in the West Bank, has ordered that Israeli law will apply to the branches of Israeli banks that it licenses to operate in the West Bank.[23] The military also exempts those Israeli branches from compliance with the Jordanian banking law otherwise in place in the West Bank.[24] So while there is no obligation for Israeli banks to operate in settlements, as detailed below, once they do, the Israeli military will apply Israeli law to their operations.

International humanitarian law requires the occupying power to respect the pre-occupation laws of the territory, with limited exceptions for security or to benefit the population living under occupation.[25] Extending Israel’s domestic banking laws and enforcement authority to occupied territory, for services extended to Israelis settlers unlawfully present in the West Bank, as though Israel were the lawful sovereign there, therefore violates IHL.

Obligations Imposed by Israeli Banking Law on Israeli Banks

Israel’s Banking Law lists the three services that Israeli banks are prohibited from unreasonably refusing to provide: receiving deposits; opening and managing, under certain conditions, a current account (also known as a checking account) in Israeli shekels; and issuing bankers’ checks. The law allows banks to determine their own policies on credit-worthiness, explicitly stating that “no obligation shall exist to provide a service involving the provision of credit to a customer.”[26] It also allows banks to set policies to guide decisions about service provision, subject to approval by the Bank of Israel, and decisions made according to approved policies are presumed to be reasonable.[27]

Israeli banking law, applied to settlements via military orders and applying in Israel as a matter of course, could be interpreted to require Israeli banks to agree to individual requests to open and manage current accounts and sell bank checks for residents of Israeli settlements, institutions, businesses and organizations in Israeli settlements, and settlement local councils, under appropriate conditions. Of course, a bank wanting to avoid any such requirement could, subject to Bank of Israel permission, create a policy declining to open accounts for settlement businesses and local authorities – for example to comply with its international human rights responsibilities. In that case, for businesses and settlement entities, the differentiation is based on the substance of the transaction and the support it provides to settlements, not the place of residence of the customer. Approval of such a policy by the Bank of Israel would offer the bank a kind of safe haven from adverse legal action, as decisions made pursuant to approved policies are presumptively reasonable.

The Banking Law does not, however, appear to require banks to provide many of the additional services they offer to or in settlements, as elaborated below.

No Obligation to Establish Bank Branches

The Bank of Israel is responsible for approving new branches of banks, but the rules largely relate to commercial considerations regarding when and where branches are opened or closed. There does not appear to be any legal requirement that banks have branches in settlements. Indeed, most settlements do not have service points; according to information published by the Bank of Israel and the banks’ web sites, just six of the 126 settlements in the West Bank, not including East Jerusalem, have bank branches or ATMs set up by the banks.[28]

Information on the Bank of Israel’s division of Supervision of Banks website says that Israeli banks make decisions to open and close branches “according to their business considerations.”[29] The Banking Law (Licensing) 1981 requires permission from the Bank of Israel to open or close a branch, which considers, among other factors, the “public welfare.”[30] It would be difficult, therefore, to read into Israeli law an obligation to open bank branches in settlements, as banks are actually prohibited from doing so until they affirmatively request and receive permission. Israeli law does require permission from the Bank of Israel to close existing bank branches in Israeli settlements (or anywhere else). Since 2015, Israeli banks have closed four bank branches in the Israeli settlements of Beitar Ilit, Modi’in Ilit and Oranit, according to the Bank of Israel’s online listing.[31]

Anti-Discrimination Law Does Not Appear to Require Service in Settlements

Israel’s recently amended Anti-Discrimination Law and consumer protection law require businesses, which would include banks, to notify customers if they decline to provide services in settlements, but they do not require them to provide those services. As detailed below, this new amendment was not primarily aimed at banking services but rather focused on services such as the delivery and repair of appliances and other physical goods. While the courts have yet to interpret this amendment, it applies to the banking sector as well, and is therefore worth reviewing.

Here too, the question of applicability should be noted. While Israel’s Anti-Discrimination Law would ordinarily be limited to the territory of Israel, it would also appear to apply to Israeli banking activities in settlements via the military order applying Israeli law to bank branches operating in settlements[32] and, to a lesser extent, a 2017 amendment that will be discussed below. Among other things, the law governs the provision of financial services, including banking and credit extension.

The law was amended in March 2017 to prohibit discrimination based on place of residence, but only for goods and services provided within the place of business.[33] It may be interpreted by Israeli courts to prohibit banks from rejecting customers based on place of residence, even if the place of residence is outside Israel, in Israeli settlements in the West Bank.[34] However, it does not oblige banks to provide their services everywhere and does not prohibit them from refusing to offer services based on business or other considerations, which can include human rights responsibilities. In the case of settlements, as noted, the law allows businesses to avoid offering goods and services there, provided they notify customers of this choice. Indeed, attempts to amend the Anti-Discrimination Law to require businesses to provide services and supply goods to settlements (and other geographical locations) failed.[35]

The amendment as adopted changes the Consumer Protection Law, 1981, to require businesses to clearly notify customers if they do not provide goods or services in settlements (or any other geographic location).[36] The official parliamentary explanatory remarks accompanying the bill note that the amendment:

[d]etermines that the place where the consumer will be supplied with the asset or service will be considered a substantial part of the transaction … so that the business will be barred from doing something, by action or inaction, in writing, orally in or any other way, including after the transaction is undertaken, that could mislead the consumer regarding the location where he will be supplied with the asset or service, including regarding supplying the asset or service to the area of Judea and Samaria [Biblical name for the West Bank].[37]

In other words, under a reasonable interpretation of the new law, businesses may still decline to supply goods or services in settlements, provided they notify customers in advance.

The chair of the parliamentary Economic Affairs Committee, Eitan Cabel, confirmed this interpretation at the parliamentary session at which the bill was passed into law.[38] Referring to delivery and service of large goods like appliances, which were the focus of parliamentary discussions, he said, “We are not even talking about a situation in which we say ahead of time: he [the business operator] must travel to this or that place, but rather that the business did not notify ahead of time that he is not prepared to come to Elkana [an Israeli settlement in the West Bank]. Let him say so ahead of time.”

There is room for interpretation in determining how to apply the amendment’s provisions on “place of business” to banking services, whose physical location can be hard to pin down. The law would appear to bar a bank from discriminating in the provision of services within the physical building of the bank branches only, based on a client’s place of residence, but would not prohibit a bank from declining to provide other services in the settlements themselves, such as mortgage loans secured by properties in Israeli settlements, loans to settlement local councils secured by collateral or guarantees originating in settlements, operating bank branches in settlements or partnering with developers to finance new settlement construction projects. These latter activities could require banks to evaluate title and property rights in settlements, assess planning and zoning regulations there, and send representatives to the settlements, for example to monitor progress of a construction project,[39] assess value, take possession of property in settlements in case of default, establish a service center or engage in other activities that pass-through settlements, none of which appear to be required under the amendment. They are not confined to the bank’s physical place of business, meaning the branch office itself.

New housing construction project in the Israeli settlement of Dolev. 

© 2017 Human Rights Watch

In other words, under the Anti-Discrimination Law, banks cannot refuse banking services to anyone, within the bank branches, based on place of residence. However, banks are not obliged to provide banking services in settlements as long as they disclose it. While this interpretation has not been tested in the courts, it does appear to be consistent with the law. Banks are not obliged to provide all services to everyone anywhere under the law, since that is something the banks have to determine based on credit-worthiness, business decision-making, and other factors.

Indeed, Israel’s Anti-Discrimination Law permits differentiation, if the differential treatment is relevant to the substance of the good or service being provided.[40] This would include ethical responsibilities such as protecting human rights. Under Israeli law, people may be treated differently if their circumstances present differences relevant to the issue at hand, and the purpose of the differential treatment is related to the substance of the issue at hand, rather than related to a forbidden category of discrimination.[41]

There are numerous substantive differences between transactions in settlements and transactions in Israel. Doing business in or with settlements inherently contributes to serious violations of human rights and IHL. The land on which settlements are built is territory occupied by Israel. Even under Israeli domestic law, with the exception of East Jerusalem, the land is only held temporarily by the military, which does not hold legal title to it and whose authority to dispose of the land would be extinguished with the end of the military occupation. There are also relevant differences in the planning and zoning regime and land registration procedures in settlements that affect the banks’ risk calculations.[42] Doing business in settlements creates risks for Israeli banks and exposes them to reputational harm abroad, including by investors concerned about their human rights responsibilities. Israeli law allows banks to take these differences into account in determining policies about service provision in settlements.

Under international law, at least, it is also hard to define differentiation based on international illegality as discrimination, under circumstances in which the aim of the differential treatment is to avoid contributing to serious human rights and IHL violations. Like Israeli law, international law distinguishes between unjustifiable discrimination based on a person’s membership in a protected social group and differential treatment based on differences in factual circumstances. The UN body responsible for interpreting the International Covenant on Civil and Political Rights notes that differential treatment does not constitute discrimination if the criteria for differentiation are reasonable and objective, and the purpose is legitimate under the convention.[43] In the Israeli legal system, where possible, courts are to interpret domestic law as consistent with the international obligations that Israel has assumed.

Providing financial services in and to settlements contributes to severe human rights abuses including discrimination against Palestinians, who are not permitted to set foot in settlements except as laborers bearing special permits and whose land is unlawfully seized and used for settlement construction and expansion. Therefore, a bank choosing to differentiate in service provision by declining to provide services in settlements would be acting in furtherance of the principle of equality and other important human rights, one of the many valid arguments it could and should make, within the Israeli legal system, that it is acting in pursuit of a legitimate aim.

To summarize, while a bank cannot discriminate against individuals based on place of residence under Israeli domestic law, it is not obliged to agree to give them any service or financing they request. A bank may choose not to provide mortgages in settlements or finance settlement construction projects and apply that policy to all would-be borrowers, including those who live in settlements and those who live in Israel but seek to buy or build properties in settlements.

Human Rights Watch was also not able to find evidence to support the claim of the Association of Banks in Israel, made prior to the March 2017 amendment to the Anti-Discrimination Law, that refusal to provide services in settlements would constitute discrimination based on “nationality, race, religious group and point of view.” Living in a settlement is not a proxy for these categories that the Anti-Discrimination Law protects.

According to data from the Israeli Census Bureau, residents of Israeli settlements are overwhelmingly Jewish citizens of Israel, as are most residents of Israel itself.[44] They are heterogeneous in their ethnicities, political views, and party affiliations, as voting records also indicate.[45] They include secular and religious Israelis,[46] Israelis who move to the settlements for economic and quality-of-life reasons, and those who move there for a variety of religious and political reasons.[47]

Little Obligation to Provide Loans to Settlement Municipalities

The Israeli Interior Ministry, which among other things supervises municipalities and local and regional councils, affirmed that banks are under no obligation to provide loans to local or regional councils in the settlements or anywhere else. The ministry’s assistant director general at the time, Dovrat Silberstein, told lawmakers at a June 19, 2007 parliamentary finance committee hearing that even in cases in which the ministry provides a struggling local council with 50 percent of its shortfall in the form of grants, thereby making it a more attractive prospective borrower, banks are under no obligation to provide loans: “We can’t require the banks to give the money,” Silberstein said. “We are dependent on the banking system, and they are not obligated to do anything. They are not a government entity, they are a business entity.”[48]

The parliamentary hearing was called following reports that, under pressure from foreign investors, the Dexia Israel Bank was refusing to grant loans to settlement local or regional councils, a claim that Dexia representatives denied.

Since that hearing, the Anti-Discrimination Law was amended, as noted above, and it is possible that an Israeli court could interpret it to limit the ability of banks to treat settlement local or regional councils differently in granting loans, provided that such loans would be considered a service granted inside the bank branch itself. If the loan were secured by property located in settlements or an income stream located in the settlement, such as municipal taxes and other fees, it is less likely that the domestic law prohibition on discrimination based on place of residence would apply, as such loans require the banks to assess the value of income and property outside the bank branch and, ultimately, foreclose on such property in the event of default. These activities are not confined to the bank branch itself, and declining to accept settlement property as collateral could be interpreted as a substantive aspect of the transaction, rather than discrimination based on place of residence.

Possibility of Civil Lawsuits

There has been at least one effort by Israeli shareholders to sue financial institutions for allegedly refusing to operate in settlements.

In 2014, amid reports that Dexia Israel Bank was refusing to grant loans to settlement local councils, a claim it steadfastly denied, a group of Israeli shareholders filed a derivative lawsuit, claiming that Dexia and its directors were violating their fiduciary duties to maximize profits and undermining the bank’s reputation by turning down potentially lucrative business opportunities in settlements. The suit was subsumed into a much larger and unrelated class action shareholder suit and ultimately settled in 2016.[49]

There was no final ruling on these matters. Dexia Israel Bank claimed that no such ruling was necessary, because, as part of the court-approved settlement, it stated that it had not in the past adopted a policy not to grant loans to settlement local councils and that it would not do so in the future.

It is worth noting that in 2011, the Israeli parliament enacted a law authorizing civil suits to recover damages from those who publicly call for a boycott of Israel or of Israeli settlements, defined as “deliberately refraining from economic, cultural or academic ties with another person or actor only because of his ties with the State of Israel, one of its institutions or an area under its control, in such a way that may cause economic, cultural or academic damage.”[50] That civil liability portion of the law would not apply to a policy by banks to refrain from operating in settlements, because it targets those who publicly encourage others to boycott Israel or its settlements, not those who themselves choose to refrain from settlement-related activities. However, the law also authorizes the Finance Minister to establish directives restricting participation in public tenders for those who undertake to participate in a boycott, using the same definition as cited above.[51] No such directives have yet been established, so it would be premature to speculate about what they might mean for banks.

Businesses’ International Human Rights Responsibilities

Israeli law does not appear to require Israeli banks to provide services in settlements, with the apparent exception of maintaining bank accounts for settlement entities and residents of settlements and refraining from discrimination in service provision inside the bank branches themselves. However, providing services to and in settlements contravenes Israeli banks’ international human rights responsibilities.

The UN Guiding Principles require businesses to conduct due diligence, to determine whether their activities contribute to or benefit from serious human rights abuses or violations of IHL standards. Such diligence would show that by contributing to building, buying, and selling homes on unlawfully seized land, providing support to local councils that provide services to Israelis but not to West Bank Palestinians, and establishing service points on Palestinian land that is off-limits to Palestinians, banking activities in or with settlements contribute to serious abuses.

Based on the UN Guiding Principles and their commentary, businesses have a responsibility to comply with local laws and to respect human rights wherever they operate. Where the domestic context makes it impossible to respect human rights fully, “business enterprises are expected to respect the principles of internationally recognized human rights to the greatest extent possible in the circumstances, and to be able to demonstrate their efforts in this regard.”[52]

In the case of opening current accounts for settlement entities and the few other banking services required by domestic law, there is an apparent contradiction between the international human rights responsibilities of Israeli banks and their domestic legal obligations. For this limited set of activities for which an apparent contradiction exists, Israeli banks have a responsibility “to seek ways to honor the principles of internationally recognized human rights” and to demonstrate “ongoing efforts to mitigate the impact” of the human rights abuses.[53] At the very least, Israeli banks should demonstrate their efforts to comply with their international human rights responsibilities, including by proposing policies restricting the operation of financial services for settlement businesses and local authorities and seeking to persuade the Bank of Israel not to veto such proposed policies.

If local law could be interpreted in a number of ways, Israeli banks should pursue the interpretation that is consistent with their international human rights responsibilities. And for the many services in settlements that are not required by Israeli law but that contravene the banks’ human rights responsibilities—including operating service points, financing settlement construction and providing loans secured by real and other property or income streams located in settlements—banks need to avoid providing them in order to avoid contravening their human rights responsibilities.

Should the Israeli parliament pass additional legislation requiring Israeli businesses to provide services in Israeli settlements, as lawmakers unsuccessfully proposed for the recent amendment to the Anti-Discrimination Law, Israeli banks would have responsibilities under the UN Guiding Principles to demonstrate their best efforts to limit its applicability to their operations.

Especially for foreign businesses, for which the relationships with Israeli banks are not “crucial,”[54] any additional Israeli domestic legislation requiring businesses to do business in or with settlements should be a red flag that would require them to reconsider their relationships with companies subject to such requirements. Indeed, the Commentary to the UN Guiding Principles notes that: “There are situations in which the enterprise lacks the leverage to prevent or mitigate adverse impacts and is unable to increase its leverage. Here, the enterprise should consider ending the relationship, taking into account credible assessments of potential adverse human rights impacts of doing so.”[55]

The Israeli authorities, including quasi-state organs such as the statutorily-created Bank of Israel, have a responsibility to ensure that “laws and policies governing the creation and ongoing operation of business enterprises, such as corporate law, do not constrain but enable business respect for human rights”.[56] Israeli laws and regulations should encourage – not hinder – respect for international human rights law.

Recommendations

Israeli Banks

In order to comply with their human rights responsibilities, Israeli banks should stop providing services in settlements, including financing construction projects, providing mortgage loans and loans to local or regional councils, and operating bank branches and ATM’s in settlements. They should refrain from opening new service points in settlements and request permission from the Bank of Israel to close their existing service points. They should also propose service provision policies ending or eliminating the creation of current accounts for settlement businesses and local or regional councils, subject to approval from the Bank of Israel. They should demonstrate ongoing efforts to change any domestic legal requirements that require them to provide services in Israeli settlements in the West Bank and should pursue interpretations of the current domestic law that are consistent with their human rights responsibilities.

Institutional Investors in Israeli Banks

As part of their responsibility to conduct heightened human rights due diligence in situations of occupation, institutional investors in Israeli banks should engage the banks in which they invest on their settlement-related activities. They should determine the extent of the banks’ involvement in settlement-related activities, their future plans, their understanding of the domestic legal framework, and the willingness and ability of the banks to verify that investors’ funding is not contributing to or assisting settlement activity. In particular, Human Rights Watch suggests that they ask the following questions of the Israeli banks in which they invest:

  1. Which, if any, domestic law obligations require you to provide services to the settlements and to locate business activities there?
  2. What, if anything, have you done to change those domestic law obligations, to propose interpretations that are consistent with the UN Guiding Principles on Business and Human Rights and/or to seek exemptions from them by making policy proposals to the Bank of Israel?
  3. Have you or will you send an internal policy to the Bank of Israel declining to provide financing services, municipal loans, branch or ATM services and mortgages in Israeli settlements?
  4. Have you or will you submit a request to close your bank branches in Israeli settlements in Area C?
  5. What if any new bank branches or ATMs do you plan to open in Israeli settlements in the West Bank?
  6. What new housing projects in the settlements do you plan to finance?
  7. How many construction projects in the settlements are you currently financing? What is their monetary value?
  8. How many construction projects in settlements have you pre-approved for mortgage loans?
  9. How many mortgage loans are you currently providing for properties in settlements? What is their monetary value?
  10. Please detail any loans or bank guarantees you are providing to settlement local or regional councils and municipalities in the West Bank, beyond the Green Line.
  11. Do you currently hold any government contracts that require you to provide financial services to settlement local or regional councils and municipalities, including loans, to transfer funds or to provide any other support? Please provide details, including their expected expiration (dates) and whether you intend to renew them, if applicable.

These institutional investors should ensure that their business relationships do not contribute to or benefit from serious human rights or IHL violations.

Bank of Israel

By regulating the activities of Israeli banks in settlements, applying Israeli banking law to those activities, and approving the opening of service points there, the Bank of Israel is contributing to violations of international law. The Bank of Israel oversees a single legal Israeli banking regime that applies to Israel and the occupied West Bank, including Israeli settlers but excluding West Bank Palestinians. It also has the authority to approve policies by banks that would limit the scope of their activities in settlements or, conversely, expand such activities.

Human Rights Watch recommends that the Bank of Israel take all measures within its authority to limit the scope of banking activities in the settlements, in order to create a regulatory environment that enables and encourages banks to meet their human rights responsibilities. That includes refusing requests to open additional service points (bank branches or ATMs) in Israeli settlements, approving any requests to close settlement service points, and approving policies proposed by banks that would limit or eliminate services provided in or for settlements.

Government of Israel

Israeli authorities should dismantle all Israeli civilian settlements in the West Bank. The Israeli Knesset should ensure that domestic laws comply with international standards and do not require businesses to participate in violations of human rights or IHL. As required by the Israeli legal system, Israeli courts should, to the extent possible, interpret Israeli domestic law in such a way that it is consistent with Israel’s international legal obligations.

Third Party States

Third party states that have domiciled in their jurisdictions institutional investors in Israeli banks should provide guidance on implementing the UN Guiding Principles on Business and Human Rights to companies operating in conflict-affected areas, including in the context of military occupations such as the occupied Palestinian territories. This could include, among other steps, individual outreach to institutional investors in Israeli banks, to advise them of existing business advisories warning of the legal and financial risks of doing business in Israeli settlements in the West Bank.

 

[1] Who Profits, Financing Land Grab: The Direct Involvement of Israeli Banks in the Israeli Settlement Enterprise, February 2017, https://whoprofits.org/content/financing-land-grab-direct-involvement-israeli-banks-israeli-settlement-enterprise (accessed August 23, 2017).

[2] Danwatch, Business on Occupied Territory, January 31, 2017, https://www.danwatch.dk/en/nyhed/europes-largest-pension-funds-heavily-invested-in-illegal-israeli-settlements/ (accessed August 23, 2017).

[3] Association France Palestine Solidarité et al, French Banks’ Dangerous Liaisons with Israeli Settlement Enterprise, March 2017, https://www.banktrack.org/news/report_reveals_links_between_five_french_banks_and_insurance_companies_and_the_israeli_settlements (accessed August 23, 2017).

[4] “Unedited response from the Association of Banks in Israel,” Danwatch, https://www.danwatch.dk/wp-content/uploads/2017/01/Unedited-response-from-the-Association-of-Banks-in-Israel.pdf (accessed June 1, 2017).

[5] Letter from Human Rights Watch to the Association of Banks in Israel, February 12, 2017, available at https://www.hrw.org/sites/default/files/supporting_resources/israel_banking_association_letter_english.pdf.

[6] Letter from Human Rights Watch to Bank Leumi, March 26, 2017. English translation available at https://www.hrw.org/sites/default/files/supporting_resources/israel_leumi_letter_english_web.pdf. Similar letters were sent to the other four Israeli banks noted in this publication.

[7] Bank Leumi email correspondence with Human Rights Watch, March 28, 2017. Unofficial English translation available at https://www.hrw.org/sites/default/files/supporting_resources/letter_from_leumi_english_web.pdf.

[8] Human Rights Watch, Occupation, Inc.: How Settlement Businesses Contribute to Israel’s Violations of Palestinian Rights, January 19, 2016, https://www.hrw.org/report/2016/01/19/occupation-inc/how-settlement-businesses-contribute-israels-violations-palestinian.

[9] World Bank, Report No. AUS2922, West Bank and Gaza, Area C and the Future of the Palestinian Economy, October 2, 2013, http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2014/01/23/000442464_20140123122135/Rendered/PDF/AUS29220REPLAC0EVISION0January02014.pdf (accessed August 23, 2017).

[10] United Nations Guiding Principles on Business and Human Rights, No. 13(b), available at http://www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf (accessed August 23, 2017),

[11] Human Rights Watch, Occupation, Inc.; Human Rights Watch, Separate and Unequal, Israel’s Discriminatory Treatment of Palestinians in the Occupied Palestinian Territories, December 19, 2010, https://www.hrw.org/report/2010/12/19/separate-and-unequal/israels-discriminatory-treatment-palestinians-occupied.

[12] The Norwegian Government Pension Fund notes that it will exclude companies that contribute to “serious violations of the rights of individuals in situations of war or conflict” or that otherwise contribute to serious violations of fundamental ethical norms. Council on Ethics for the Norwegian Government Pension Fund Global, Guidelines for observation and exclusion from the Government Pension Fund Global, December 18, 2014 (English translation), https://www.regjeringen.no/globalassets/upload/fin/statens-pensjonsfond/guidelines-for-observation-and-exclusion-14-april-2015.pdf (accessed August 23, 2017). As of 2016, the Norwegian Government Pension Fund lists investments in all five of Israel’s largest banks: Bank Hapoalim, Bank Leumi, Discount Bank, First International Bank of Israel and Mizrahi Tfahot. It owns between 0.5% and 3% of each bank. The fund’s online listing is available here: https://www.nbim.no/en/the-fund/holdings/ (accessed August 23, 2017).

[13] ABP has committed, by 2020, to implement a new policy limiting investment to companies that, among other things, pay sufficient attention to respecting human rights: Stichting Pensioenfonds ABP, Sustainable and Responsible Investment 2016, p. 10, https://www.abp.nl/images/responsible-investment-report-2016.pdf (accessed August 24, 2017). ABP lists investments in Bank Hapoalim and Bank Leumi as part of its portfolio as of March 31, 2017: https://www.abp.nl/images/listed-investments.pdf (accessed August 23, 2017).

[14] ABP, List of “Companies and countries excluded by ABP” as of July 1, 2017, available at https://www.abp.nl/images/excluded-companies.pdf (accessed August 23, 2017).

[15] Norges Bank Investment Management, Observation and Exclusion of Companies, January 1, 2015, available at https://www.nbim.no/en/responsibility/exclusion-of-companies/ (accessed August 23, 2017).

[16] “Unedited Response from the Association of Banks in Israel”, Danwatch.

[17] Danwatch, Business on Occupied Territory.

[18] Prohibition on Discrimination in Products, Services and Entry into Places of Entertainment and Public Places, 5761-2000.

[19] Human Rights Watch email correspondence with the Bank of Israel, December 22, 2016. Unofficial English translation available at https://www.hrw.org/sites/default/files/supporting_resources/israel_boi_letter_english_web.pdf.

[20] Bank of Israel email correspondence with Human Rights Watch, January 10, 2017. Unofficial English translation available at https://www.hrw.org/sites/default/files/supporting_resources/letter_from_boi_english_web.pdf.

[21] Banking (Service to Customer) Law, 5741-1981. Unofficial English translation available at http://www.boi.org.il/en/BankingSupervision/BankingLegislation/Bank%20of%20Israel%20%20Bank%20Legislation%20and%20Notices/150.pdf (accessed August 23, 2017).

[22] This annexation is not recognized by other states or the United Nations, and the area remains occupied territory under international humanitarian law. See e.g. Advisory Opinion on the Legal Consequences of the Construction of a Wall in the Occupied Palestinian Territory, International Court of Justice, July 9, 2004.

[23] “Order Regarding Amendment to Banking Law (No. 1177), para. 19,” in Israeli Military Attorney General, Manifestos, Orders and Appointments for Judea and Samaria Area, No. 75, 3 Heshvan 5750, November 1, 1989 (Hebrew). The amendment authorizes the military government to exempt from local law banks that operate in the West Bank but are branches of Israeli banks, if such branches follow the dictates of Israeli law. The order then applies Israeli law to such exempt branches. See also “Order Regarding Amendment to Banking Law (Amendment No. 2), Judea and Samaria (No. 1397) (1993), in Israeli Military Attorney General, Manifestos, Orders and Appointments for Judea and Samaria Area, No. 149, 5753-1993 (Hebrew), https://www.nevo.co.il/law_html/law70/ZAVA-0149.pdf#xml=http://www.nevo.co.il/Handlers/Highlighter/PdfHighlighter.ashx?index=5&type=Main (accessed August 23, 2017). The Israeli military is both legislator and regulator throughout the West Bank. It delegates some of that authority to the Palestinian Authority in about 40% of the West Bank, none of which includes Israeli settlements. All Israeli banks in the West Bank are located in Israeli settlements and are under direct Israeli authority.

[24] Ibid, Order Regarding Amendment to Banking Law (No. 1177).

[25] Hague Regulations of 1907, Art. 43. See also Geneva Convention relative to the Protection of Civilian Persons in Time of War (Fourth Geneva Convention), adopted August 12, 1949, 75 U.N.T.S. 287, entered into force October 21, 1950, art. 64.

[26] Banking Law (Customer Service), Ibid, para. 2(a).

[27] Ibid, para. 2(d).

[28] The Bank of Israel’s web site includes a database of bank branches by geographic location in Israel and the settlements: http://www.boi.org.il/he/BankingSupervision/BanksAndBranchLocations/Pages/LocatingBankBranches.aspx (accessed June 1, 2017).

[29] Bank of Israel web site, “Information on Opening and Closing Bank Branches” (Hebrew), available at http://www.boi.org.il/he/BankingSupervision/BanksAndBranchLocations/Pages/BankInfo.aspx (accessed June 2, 2017).

[30] Banking (Licensing) Law, 5741-1981, para. 28a-29. Unofficial English translation available at http://www.boi.org.il/en/BankingSupervision/BankingLegislation/Bank%20of%20Israel%20%20Bank%20Legislation%20and%20Notices/124.pdf (accessed August 23, 2017). Instructions issued by the Bank of Israel note that a bank wishing to close its branch must consider the needs of its current branch clients as well as the availability of alternative branches in other locations. Bank of Israel, Supervisor of Banks, Directive 400, “Closing Bank Branches and Reducing Teller Services,” January 9, 2017 (Hebrew), http://www.boi.org.il/he/BankingSupervision/SupervisorsDirectives/DocLib/400.pdf (accessed June 2, 2017).

[31] Bank of Israel, online search of bank branches. The listing includes bank branches that have been closed (Hebrew), http://www.boi.org.il/he/BankingSupervision/BanksAndBranchLocations/Pages/LocatingBankBranches.aspx (accessed July 1, 2017).

[32] Anti-Discrimination Law.

[33] Prohibition on Discrimination in Products, Services and Entry into Places of Entertainment and Public Places, 5777-2017 (Amendment 4), Reshumot, Laws of Israel, Vol. 2608, March 1, 2017, p. 442, http://fs.knesset.gov.il/20/law/20_lsr_381088.pdf (accessed August 23, 2017).

[34] There is a valid argument to be made that the provision that prevents discrimination based on place of residence would not apply at all to residence in the settlements, because of the presumption against extra-territorial application of Israeli law. The provision barring discrimination based on place of residence, unlike a separate provision requiring notification of refusal to deliver goods and services to certain geographical locations, does not specify application beyond the borders of Israel. The disposition of that argument would depend on a court’s interpretation of the law, but there is a tendency for Israeli courts to apply Israeli law to settlers on a personal basis, and the legislative history could suggest that lawmakers intended both parts of the amendment to apply to residence in settlements. In any event, as will be discussed in the recommendations section, to the extent possible, banks should pursue the interpretation of domestic law that allows them to fulfill their human rights responsibilities.

[35] An earlier version of the bill from May 2015 included a prohibition on refusing to provide goods and services in Israeli settlements (or other areas) while providing goods and services in areas of similar geographic proximity. See Draft Bill Amending the Prohibition on Discrimination in Products, Services and Entry into Places of Entertainment and Public Places, 5775-2015 (P/20/897), para. (1)(1a)(2)(a) (Hebrew), https://www.knesset.gov.il/privatelaw/data/20/897.rtf (accessed August 23, 2017). The minutes of parliamentary discussions document a failed attempt to require businesses to deliver goods and extend services to settlements. See Knesset Minutes, Vol. 17, 98th session of the 20th Knesset, Wednesday, February 3, 2016, 11 am (Hebrew), http://online.knesset.gov.il/eprotocol/PLAYER/ProtocolEPlayer.aspx?ProtocolID=49581&DateTor=03/02/2016 (accessed June 2, 2017). Supporters of the earlier version of the bill argued in favor of a clause, which was deleted from the final version, that would require businesses employing more than 100 people to supply goods and services inside Israeli settlements in the West Bank, if they provided those goods and services to towns within Israel located a similar distance away. However, the Knesset (Israeli parliament) rejected that requirement, and the final version of the law allows businesses to continue to differentiate based on geographical location in the provision of goods or services outside the place of business, for example delivery or service provision inside settlements or any other activity that would require travel to settlements or conducting activities there.

[36] Consumer Protection Law, 5741-1981, para. 2(a)(3a). The amendment entitles consumers to collect money damages from a business, if it misleads the consumer regarding “the place where the consumer will be provided the good or service”, including settlements in the West Bank.

[37] Draft Bill Amending the Prohibition on Discrimination in Products, Services and Entry into Places of Entertainment and Public Places, 5776-2016 (No. 4), June 13, 2016, H.H., 638, (Hebrew), http://fs.knesset.gov.il/20/law/20_ls1_343075.pdf (accessed August 23, 2017).

[38] Knesset Minutes, Vol. 17, 207th session of the 20th Knesset, Monday, February 20, 2017, 16:00, p. 67 (Hebrew http://fs.knesset.gov.il/20/Plenum/20_ptm_369184.doc (accessed August 23, 2017).

[39] When contractors choose to obtain bank guarantees for apartment buyers under the terms of Israel’s Sale Law (Apartments) (Guaranteeing Investments of Apartment Buyers) (1974), buyers make payments to the bank, not to the contractor, and the bank releases those payments to the contractor only after it confirms that the agreed-upon stage of construction has been completed.

[40] Anti-Discrimination Law, para. 3(d)(1).

[41] HCJ 6845/00 Niv v. National Labor Court, 57(6) PD 663, 680-1. See also AAP 343/09 The Jerusalem Open House for Pride and Tolerance v. Jerusalem Municipality 64(2) PD 1, 46; HC 11956/05 Bashara v. Minister of Housing and Construction (unpublished, judgment given December 13, 2006). See also See HCJ 528/88 Avital v. Israel Land Authority, 43(4) PD 297, 298, holding that “differentiation between different circumstances is not discrimination”.

[42] Human Rights Watch telephone interview with Dr. Ronit Levine-Schnur, senior lecturer in the Radzyner Law School, Interdisciplinary Center, Herzliya, August 15, 2017.

[43] United Nations Human Rights Committee, General Comment 18, para 13. A number of international human rights bodies have found that Israeli treatment of Palestinians in the West Bank constitutes unlawful discrimination. See for example Human Rights Committee, “Concluding Observations on the Fourth Periodic Report of Israel,” CCPR/C/ISR/CO/4, November 21, 2014, paras. 9, 16, 17.

[44] Israeli Central Bureau of Statistics, 2008 Census, Area Profile, Judea and Samaria, http://www.cbs.gov.il/census/?MIval=%2Fcensus%2Fpnimi_sub2_profiles.html&id_topic=11&id_subtopic=1&id_subtopic2=2&Mahoz=7 (accessed August 15, 2017).

[45] A database of voting outcomes for the 2015 national elections, broken down by town, shows that residents of Israeli settlements voted for a range of political parties. Hebrew language database available at http://votes20.gov.il/cityresults (accessed August 31, 2017).

[46] Settlers’ Council, New Data on the Population of Judea, Samaria and the Jordan Valley in 2016, Position Paper, January 31, 2017, noting that settlers in the West Bank, excluding East Jerusalem, are approximately one third secular, one third national religious and one third ultra-Orthodox (Hebrew), http://www.myesha.org.il/?CategoryID=335&ArticleID=7428 (accessed July 1, 2017).

[47] United Nations Human Rights Council, A/HRC/22/63, Report of the international fact-finding mission to investigate the implications of the Israeli settlements on the civil, political, economic, social and cultural rights of the Palestinian people throughout the Occupied Palestinian Territory, including East Jerusalem, para. 19.

[48] Knesset Finance Committee Hearing minutes, 17th Knesset, second session, June 19, 2007, p.3, www.knesset.gov.il/protocols/data/rtf/ksafim/2007-06-19-02.rtf (accessed August 23, 2017).

[49] D.L (D.C. T.A.) 14224-10-14 Shenhav v. Bank Dexia Israel, Ltd., Decision of June 6, 2016.

[50] Law for Preventing Harm to the State of Israel through Boycott, 5751-2011, para. 2(a). An unofficial English translation of the text of the law in bill form is available at http://adalah.org/Public/files/Discriminatory-Laws-Database/English/34-Bill-to-Prohibit-Imposing-Boycott-2011.pdf (accessed August 23, 2017).

[51] Boycott Law, Ibid, para. 3.

[52] UN Guiding Principles, No. 23 and Commentary on Principle No. 23.

[53] UN Guiding Principles, No. 23(b) and Commentary on Principle 19.

[54] UN Guiding Principles, Commentary on Principle 19.

[55] UN Guiding Principles, Commentary on Principle 19. See also UN Office of the High Commissioner for Human Rights, Mandate of the Working Group on the issue of human rights and transnational corporations and other business enterprises, Statement on the implications of the Guiding Principles on Business and Human Rights in the context of Israeli settlements in the Occupied Palestinian Territory, June 3, 2014, p. 10.

[56] UN Guiding Principles, No. 3(b).

Posted: January 1, 1970, 12:00 am