British firms trading in Zimbabwe refuse to sign ethical code

<i>IoS</i> revelations force ministers to campaign for voluntary scheme to prevent 'silent complicity' in Mugabe's regime

Ministers mounted a secret campaign to persuade huge British firms to adopt "an ethical approach" to their investments in Zimbabwe, amid concerns that some could be "silently complicit" in Robert Mugabe's reign of terror, documents obtained by The Independent on Sunday have revealed.

A clutch of internal Foreign Office (FCO) emails lay bare the Government's deepening fears over the damage 16 companies trading with the pariah state could do to Britain's reputation as it struggled to defuse the crisis over Mr Mugabe's "stolen election".

But they also demonstrate how ministers were powerless to control the firms, including Barclays, Shell and BP, by persuading them to sign up to a voluntary agreement to uphold human rights in Zimbabwe. The FCO last night confirmed that ministers had failed to thrash out an "optional ethical code" with investors.

The Prime Minister's hard-line stance on Mr Mugabe, urging firms not to "prop up" the regime, was undermined by a series of revelations about the billions of pounds British firms still had invested in Zimbabwe. The IoS also revealed that seven MPs owned significant shareholdings in companies trading in the country.

The documents, obtained under Freedom of Information legislation, disclose that FCO officials and the Cabinet Office were under intense pressure to respond to the public mood and find a way to exert some "leverage" on the firms. An internal email last month revealed that the IoS revelations in particular had intensified the pressure on ministers attempting to resolve the crisis.

"There is a lot of public interest in additional measures against the regime in Zimbabwe," the memo, from 1 July stated. "One angle is financial, centred on current Zimbabwean legislation that requires banks to surrender part of their foreign currency to the government – see coverage inter alia in The Independent on Sunday yesterday.

"We discussed this at this morning's Whitehall Zimbabwe crisis meeting."

Another email between senior FCO officials on the same day said: "We're looking into how UK businesses with links to Zimbabwe can help. How can we encourage an ethical approach from British Businesses (inc banks or their subsidiaries) trading in /with Zimbabwe? What leverage do we have over the behaviour of British businesses, and how can we apply it most effectively?"

However, the response pointed out that only nation states, not corporations, were bound by international human rights legislation. The email continued: "It is to be hoped that UK companies are not directly complicit or beneficially complicit in human rights abuses. Some may however be silently complicit by failing to raise the question of systematic or continuous human rights violations in their interactions with the appropriate authorities.

"For example, inaction or acceptance by companies of systematic discrimination in employment law against particular groups (which in the context of Zimbabwe might be interpreted as those opposed to Mugabe)."

The departments came up with a proposed voluntary code comprising seven key principles that they hoped British firms would agree to outlaw in their dealings with Zimbabwe. But the code, including an obligation to oppose human rights abuses and discrimination, failed to gain support from the firms.

John Hilary, executive director of the charity War on Want, said the Government had been "misguided" to expect that a voluntary code would work. "Hoping that companies would abide by an optional code flies in the face of experience, and the Government should know that that is the case," he said.

A spokesman for Barclays said the bank had abided by sanctions against Zimbabwe. He added: "We have been there for the best part of 100 years and a lot of people depend on us, for their food, if nothing else."