Traditional or “Tribal Lands” can create a significant headache for mining companies and others natural resource companies in developing countries.
Where the law identifies the legitimacy of both modern constitutional government an customary law and land rights, it can be difficult to identify government officials for FCPA and Anti-Bribery Act purposes.
Imagine this situation – You have untangled the mysteries of identifying the legal process to obtain permits in a country. And successfully gone through each step, successfully and legally navigating each of the opportunities for local government officials to hold up the process in exchange for some “compensation” or unexpected facilitation payment.
You’ve simultaneously worked out identities of the tribal leaders on the lands that own the surface rights, and made the appropriate corporate social responsibility arrangements.
Everyone seems happy. You hold the opening ceremony, get the pictures for the PR guys and you begin moving trucks along the roadways.
Eventually, a group comes out of the woods and blocks the roads, claiming that you owe them compensation for using the road in front of their house.
Brandishing machetes, and looking dangerous, your employees back off, and you contact the local police. Who promptly do absolutely nothing. After repeated contacts with the police, eventually you get to a “supervisor” who tells you “its tribal land” – as if that explains everything.
As you begin to discuss the problem with the tribal chief you thought was in charge, you find out that his authority is actually not so – authoritative. He has no legal standing to bind the smaller tribal group.
You attempt to argue that you’ve already compensated the tribes through your arrangement with the tribal chief, and the smaller tribal leaders point out that that compensation wasn’t distributed. You discover that nothing you say or do produces any movement on the idea that the big chief should distribute the compensation you gave him.
Worse, more groups begin to surface when they find out that you’ve made a payment. Each group claiming that you owe them compensation for passing through their lands.
Some of these groups are local tribes or clans, and some are merely rowdy and drunk men attempting to shake down the rich foreigners.
But you get nothing but bad press locally and are accused of treating the local leaders with disrespect.
Frustrated, you hire local lawyers who muddle about with the national government, but are also not able to make any progress, leaving you wondering if you would have done better throwing money out the window.
The government, to whom you paid hefty permit fees, shrugs is collective shoulders and tells you the same thing the police told you, “It tribal land and controlled by traditional law.”
The challenge with traditional law in many countries is that is it not codified (not written), and not reliably enforced. Thus, when you make the arrangement with the “big chief” you may find out later that he never shares the wealth, and thus, you have planted seeds for enormous resentment. Worse, you find out that this is normally the situation.
Worst case – you may have a situation where each family plot can be viewed as under the control of that family, and you’ll have to reach agreements with the big chiefs, and all of the lesser chiefs on down to the individual landowner family.
It can be a challenge to work through these formal and informal agreements in such countries. Even your local advisor may have only part of the picture because he will not know the interpretation of authority for each stretch of property, and each family or tribal group.
Compound that with a cultural notions that exist in many places that a contract is good only for the day you’ve agreed and only to the extent that your personal relationship has strength and longevity, and you’ve got your work cut out for you.
In the midst of this is the foreign official problem.
Where is the Foreign Official?
While sorting through these challenges during your due diligence operations, don’t overlook the step of identifying the government officials in the mix. There are at least two easy to miss anti-corruption due diligence issues:
The Overlap Between Government Officials and Tribal Authority.
The government official may be the the tribal chief who holds authority from the capital city. Or it may be that the tribal leaders are the immediate blood relatives of the government official. After all – tribal power often stays with families. Sorting out the family relationships is important.
Local or “Tribal Courts”.
In many countries with these sorts of legal and cultural complexities, the administration of justice requires the creation of some form of tribal court, with individuals in the community that have the authority of magistrates for many matters. Naturally, the individuals trusted with the authority to adjudicate smaller justice matters are the tribal chiefs. There is a strong argument to be made that tribal leaders are “foreign officials” within the meaning of the FCPA.
While the U.S. Department of Justice has not yet turned its eye to agreements involving such officials, it seems such individuals are more clearly “foreign officials” than many of the medical personnel at the heart of so many FCPA actions in the past few years.
Doing business overseas is challenging enough. Finding the path through the evolving FCPA minefield takes the challenges to a higher level. While the pathway through these legal challenges is complex, risk assessment by business leaders requires identification of the vague areas.
Add tribal family relationships and tribal courts to your ever expanding due diligence list.
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