7.5.7 Due diligence: when?

As has become apparent from the various reports of the Special Representative, a company is typically expected to perform a human rights due diligence investigation in a situation where it intends to engage in new operational contracts with a local government or with a local third party. In comparison, in precisely such situations, companies obtain the services of forensic accounting firms that have in-depth knowledge of the country and the business to perform due diligence operations to uncover possible corrupt practices or accounting fraud.1 The motivation for a company to do so can be varied: trying to be a responsible corporate citizen, or a fear of falling within the jurisdictional ambit of the US Foreign Corrupt Practices Act.2 It would not be too big a hurdle to add to the investigation team one or more HRIA specialists in order to find out about the local human rights situation.

The same remark is valid for a situation in which a company plans to acquire a local company or to purchase operational assets or land to expand its business operations. As has been demonstrated in section 7.3 supra, in such a situation, any well organised company will perform a commercial, legal and tax due diligence investigation.

Furthermore, regarding all existing operations, the Ruggie Report advises carrying out human rights due diligence assessments on an on-going basis. This could for instance be included in the annual process that a company has to go through to collect the relevant information to have its tax return, annual accounts and report, and - as the case may be - its sustainability report prepared.