Human Rights and Security External Monitoring Assessment ... · PDF fileBRM Bowman Risk...

Human Rights and Security External Monitoring Assessment of

the AGT Pipeline Projects in Georgia

BTC and SCP Pipeline Projects

May 2007

Prepared by:

Gare A Smith Partner

Foley Hoag LLP

A-1

ABBREVIATIONS AND DEFINITIONS

ABA/CEELI AGT

The American Bar Association’s Central European and Eurasian Law Initiative. Azerbaijan-Georgia-Turkey. The "AGT Projects" are the BTC oil pipeline and SCP (including Shah Deniz) gas pipeline Projects.

BRM Bowman Risk Management Ltd., a private entity contracted by AGT to train, monitor, and provide maintenance assistance to the SPPD.

BTC Baku-Tbilisi-Ceyhan.

CLO Community Liaison Officer.

EITI ESIA

Extractive Industries’ Transparency Initiative. Environmental and Social Impact Assessment.

FSO GYLA

Field Security Officer. Georgian Young Lawyers’ Association.

Host Government(s) The three governments with sovereignty over the territory on which the AGT pipelines, pumping stations, and related physical structures are located. Namely, the Republic of Azerbaijan, Georgia, and the Republic of Turkey.

Human Rights and Security External Monitoring Assessment

The immediate report, which evaluates the implementation of human rights commitments under the Voluntary Principles with respect to AGT Projects in Georgia.

ICRC International Committee of the Red Cross.

IGA Inter-Governmental Agreement.

ILO JPRI

International Labor Organization. Judicial Profession Reform Index.

MOIA Ministry of Internal Affairs.

A- 2

Monitor

Any person appointed by AGT to assess Project compliance with human rights commitments under the Project Agreements and the Prevailing Legal Regime.

NGO Non-Governmental Organization.

OSCE OSGF

Organization for Security and Cooperation in Europe. Open Society Georgia Foundation.

PPD Prevailing Legal Regime

Pipeline Protection Department -- a subset of SSPS security forces, which were responsible for pipeline protection in Georgia prior to the establishment of the SPPD. The legal framework that governs the construction and operation of the BTC pipeline.

Project Agreements PU RDI

The central documents underlying the AGT Projects, including the Inter-Governmental Agreement, the Host Government Agreements, the Joint Statement, and all other existing and future agreements, contracts, and other documents to which, on the one hand, any of the Host Governments and, on the other hand, AGT or its Business Partners are or subsequently become a party relating to the Project. Performance Unit. Regional Development Initiative.

SCP SPPD SRI

South Caucuses Pipeline. Strategic Pipeline Protection Department. Socially Responsible Investor.

SSPS Special State Protection Service.

Voluntary Principles The Voluntary Principles on Security and Human Rights.

USEUCOM United States European Command.

Table of Contents

Page

I. EXECUTIVE SUMMARY ...................................................................................................1

1.1 Overview..........................................................................................................................1 1.2 Summary of Compliance Findings and Recommendations.............................................3 1.2.1 High Priority -- Potential Breach of Voluntary Principles Commitments..............3 1.2.2 Priority -- Risk of Project Disruption or Reputational/Legal Damage ...................3 1.2.3 Recommended Action -- Low Risk of Breach, Disruption, or Reputational/Legal Damage ...............................................................................5 II. INTRODUCTION…..… .......................................................................................................9 2.1 Background ......................................................................................................................9 2.2 The Human Rights and Security External Monitoring Assessment ................................10 2.3 Scope of Monitoring Visit and Assessment.....................................................................11 III. IMPLEMENTATION OF THE VOLUNTARY PRINCIPLES IN GEORGIA ...................12 3.1 The Challenge of Operationalization ...............................................................................12 3.2 Stakeholder Expectations.................................................................................................14 IV. MONITORING: FINDINGS AND RECOMMENDATIONS.............................................16 4.1 Risk Assessment ..............................................................................................................16 4.1.1 Identification of Security Risks ..............................................................................16 4.1.2 Potential for Violence .............................................................................................17 4.1.3 Human Rights Records ...........................................................................................18 4.1.4 Rule of Law.............................................................................................................19 4.1.5 Conflict Analysis ....................................................................................................20 4.1.6 Equipment Transfers...............................................................................................21 4.2 Interactions Between AGT and Public Security ..............................................................22 4.2.1 Security Arrangements............................................................................................22 4.2.2 Deployment and Conduct .......................................................................................30 4.2.3 Consultation and Advice.........................................................................................36 4.2.4 Responses to Human Rights Abuses.......................................................................39 4.3 Interactions Between AGT and Private Security .............................................................42 4.3.1 Observance of Best Practices..................................................................................42 4.3.2 Prohibition on Human Rights Abusers ...................................................................43 4.3.3 Inclusion of the Voluntary Principles in Contractual Provisions............................43 4.3.4 Monitoring of Compliance......................................................................................44

2

4.3.5 Investigation of Alleged Abuses.............................................................................44 4.3.6 Consultation with Companies, the Host Government, and Civil Society...............45

* * *

About the Monitor..................................................................................................................47

I. EXECUTIVE SUMMARY

1.1. Overview

This Human Rights and Security External Monitoring Assessment (“the Assessment”) identifies the degree to which the Voluntary Principles on Security and Human Rights (“the Voluntary Principles”) are being effectively operationalized in the Republic of Georgia with respect to the Baku-Tbilisi-Ceyhan (“BTC”) Project and the South Caucasus Pipelines (“SCP”) (collectively, the Azerbaijan-Georgia-Turkey (“AGT”) Projects) as a means of promoting respect for human rights and managing security in a manner that minimizes legal and reputational risks. Commissioned by BP Exploration Caspian Sea Ltd., this is the first such assessment for Georgia published for the AGT Projects.

The Assessment finds that during the course of 2006 the AGT Projects demonstrated both good faith and noteworthy leadership in Georgia in seeking to meet commitments under the Voluntary Principles. Recognizing that the AGT Projects have just entered the operations phase and some aspects of the Voluntary Principles have yet to be fully established, implementation of the Voluntary Principles is both iterative and evolutionary, and compliance should be regarded as a process of continuous improvement, AGT took important steps to address ongoing challenges related to the nexus of human rights and security -- many of which were guided by the seminal Bilateral Security Protocol between AGT and Georgia. At the time of the Monitoring Visit, the AGT Projects were in material compliance with the Voluntary Principles, and frequently setting the standard for extractive industry participants.

* * *

In Georgia, BTC Co. is responsible for Project operations.1 The Government of Georgia bears primary responsibility for Project security, and BTC Co. works closely with the Government regarding security and operationalization of the Voluntary Principles. For this Assessment, AGT personnel provided the Monitor with access to all requested documents, AGT executives, Georgian government officials, public and private security personnel, contractors, diplomats at the U.K. and U.S. embassies in Tbilisi, and representatives of non-governmental organizations (“NGOs”) and multinational institutions.

This access, and the interviews conducted, produced a "snapshot" of the state of AGT’s efforts to implement the Voluntary Principles in Georgia. In addition, prior to and following the field visit, the Monitor met with representatives of the National Security Council, at the White House; the U.S. State Department; the U.K. Foreign and Commonwealth Office; international NGOs in Washington and London, including Human Rights Watch, Amnesty International, and International Alert; as well as other company participants in the Voluntary Principles to contextualize the AGT Projects efforts to operationalize the Voluntary Principles.

1 The BTC Project is being implemented concurrently with the SCP Project. During construction, it utilized the same BP-led project team and external construction contractors and subcontractors. BP Exploration Caspian Sea, Ltd. is the manager of the BTC Project that, pursuant to the BTC/SCP Cooperation Agreement, has had the lead in project construction and operations.

2

The Assessment finds that the AGT Projects are taking appropriate steps to comply with each of the three key elements of the Voluntary Principles. The Monitor found no breaches of Voluntary Principles commitments, but did find that additional action needs to be taken with respect to the effective implementation of certain principles. Notably, some of the initiatives undertaken by AGT and the Government of Georgia to operationalize the Voluntary Principles establish models for the industry.

BTC Co. articulated its policies regarding respect for internationally-recognized human rights and the Voluntary Principles at an early stage, incorporated these policies as commitments in the Prevailing Legal Regime governing the BTC Project,2 and made the commitments public by publishing key documents on the Project website. To promote effective implementation of these commitments, BP Exploration (Caspian Sea) Ltd. entered into a Bilateral Security Protocol with the Government that addresses the provision of security for BTC, SCP, WREP, and the Supsa Terminal. This protocol obligates the state security forces to follow the Voluntary Principles and establishes an official mechanism pursuant to which AGT and the public security forces can discuss specific security and human rights issues. To date, no other company participant in the Voluntary Principles has established such a security protocol or so deeply and transparently embedded its commitments under the Voluntary Principles into the legal regime governing a project.

In addition, AGT worked with the Government of Georgia to ensure that the public security forces tasked with protecting the Projects participate in a world-class human rights and security training regime. This regime is designed to ensure that all individuals providing security for the AGT Projects receive practical instruction regarding the provision of security in a manner consistent with respect for the human rights of impacted individuals. Such education is provided through a “train the trainers” format designed to make the program self-sustaining over the course of the Projects’ lives. This program marks the first time that a company participant in the Voluntary Principles has instituted human rights training for public security personnel associated with project protection.3

Overall, the incorporation of the Voluntary Principles in the Prevailing Legal Regime, publication of key Project documents, training of public security forces protecting the Projects, independent monitoring of compliance, and publication of findings with respect to Voluntary Principles commitments, set global standards for the extractive industry. At the same time, AGT has yet to fully operationalize some key aspects of the Voluntary Principles in Georgia, and will need to follow through with commitments to do so. Moreover, outstanding risks related to the nexus of security and human rights make it imperative that during the course of operations AGT not back away from its efforts to operationalize the Voluntary Principles. Indeed, failure to 2 The Prevailing Legal Regime is the legal framework that governs the construction and operation of the BTC pipeline. It is founded on an inter-governmental agreement among the Republic of Azerbaijan, the Republic of Georgia, and the Republic of Turkey (the "Inter-Governmental Agreement ("IGA")), and is supported by the Host Government Agreements, the Environmental and Social Impact Assessments (“ESIAs”), the Joint Statement issued by BTC Co. and representatives of the Host Governments, the BTC Human Rights Undertaking, the Security Protocol, existing national law, applicable public international law, BP policies, certain lender institution policies, and additional documents are entered into between BTC Co. and the Host Governments.

3 An analogous training program was instituted by the AGT Projects in Azerbaijan.

3

follow through with respect to implementation initiatives at this time could lead to the loss of support from stakeholders who currently regard the AGT Projects as a model.

It is equally important that AGT urge the Government to take additional steps to meet its commitments under the Voluntary Principles. Many of the pending risks stem not from AGT’s failure to operationalize its commitments, but from lack of capacity by the Government of Georgia that could lead to legal and reputational problems for all parties associated with the Projects. In the coming year, successful implementation of the Voluntary Principles will increasingly hinge on the Government’s willingness to assume greater responsibility, such as by fully institutionalizing human rights training, following through with commitments to legal reform and transparency, and improving communication with local communities.

As the AGT Country Manager recognized on a broad scale in the 2005 Sustainability Report, “one overriding challenge we have faced, and continue to face, is operating in a manner which is truly sustainable.”4 Recognizing the four-decade lifespan of the Projects, and that AGT’s leadership in operationalizing the Voluntary Principles will only be sustainable if the processes and procedures developed thus far are institutionalized, this Assessment encourages AGT management to implement the following recommendations as a means of promoting respect for human rights and minimizing legal and reputational risks.

1.2. Summary of Compliance Findings and Recommendations

1.2.1. High Priority -- Potential Breach of Voluntary Principles Commitments

There were no breaches of Voluntary Principles commitments. Indeed, a number of the initiatives undertaken by AGT and the Government of Georgia to operationalize the Voluntary Principles have established models for the industry.

1.2.2. Priority -- Risk of Project Disruption or Reputational/Legal Damage

(a) Rule of Law (See Section 4.1.4); ); Training and Observance of International Law Enforcement Principles (See Section 4.2.3.2)

AGT should support initiatives to promote the rule of law in Georgia. This can be done under the auspices of a number of capacity-building programs. The Regional Development Initiative (“RDI”), for example, seeks to support sustainable development at the regional and national levels, and one of the program’s central objectives is to promote good governance. AGT could consider funding initiatives to train police, prosecutors, and judges. AGT could also seek to leverage and expand upon training initiatives regarding respect for human rights and rule of law by the U.S., the U.K., the Organization on Security and Cooperation in Europe (“OSCE”), and/or other international organizations.

4 “BP in Georgia: Sustainability Report 2005” (2006), at 1.

4

(b) Communicating Ethical Conduct and Human Rights Policies to Security Providers (See Section 4.2.1.2)

AGT should encourage the Ministry of Internal Affairs (“MOIA”) to standardize the security and human rights syllabus and training, as well as the pooling of training resources and facilities for the police and the SPPD.

(c) Competency and Appropriateness of Public Security Forces (See Section 4.2.2.1); Use of Force and Refraining from Violating Human Rights (See Section 4.2.2.3)

The inexperience of SPPD recruits highlights the importance of AGT and the Government working together to ensure that security providers are appropriately trained with respect to human rights, security, and the use of firearms. The ongoing training to this end by Bowman Risk Management Ltd. (“BRM”) and the SPPD trainers is essential and should be continued. AGT should work with the SPPD to ensure that this training is continued in an effective manner as the SPPD assumes responsibility for making the training course self-sustaining.

(d) Recording and Reporting Human Rights Abuses (See Section 4.2.4.1); Investigation of Alleged Abuses (See Section 4.3.5)

AGT should encourage the Government of Georgia to agree to its own independent monitoring of SPPD efforts to operationalize Georgia's commitments under the Voluntary Principles. In addition, AGT's security risk management team should follow through with the SPPD with respect to the guidelines established under the Bilateral Security Protocol to promote the establishment of a credible system by which allegations of human rights abuses are appropriately investigated and addressed. To the greatest extent possible, such a system should be open and transparent to external stakeholders. To facilitate this effort, AGT might share with the SPPD the “BP-Az SPU Human Rights Response Plan,” and recommend that it be used as a starting point for investigating and addressing allegations of human rights abuse. AGT should encourage the private security contractor to take similar steps.

(e) Observance of Best Practices (See Section 4.3.1); Monitoring of Compliance (See Section 4.3.4)

Private security guards need to be provided with formal training regarding human rights and security. Inasmuch as their responsibilities are not as broad as those of the public security providers, they could be offered in a condensed version of the human rights training course taken by members of the SPPD -- either by BRM or SPPD instructors who have already been trained regarding security and human rights. Once the guards have been provided appropriate training, AGT will need to establish a monitoring program with respect to the fulfillment of the private security provider’s obligations under the Voluntary Principles.

5

1.2.3 Recommended Action -- Low Risk of Breach, Disruption, or Reputational/Legal Damage

(a) Consistency Across Project Lines (Overall Issue)

AGT should urge the Government to harmonize SCP Project commitments with the BTC Joint Statement. At the time of the monitoring visit, the SCP Board of Directors had agreed to both a unilateral Human Rights Undertaking and a Joint Statement setting out the parties’ mutual commitments to promoting respect for internationally recognized human rights principles, including those set forth in the Universal Declaration of Human Rights, the United Nations Basic Principles on the Use of Force and Firearms by Law Enforcement Officials, the United Nations Code of Conduct for Law Enforcement Officials, the European Convention on Human Rights, national legislation, and the Voluntary Principles. In addition, the Bilateral Security Protocol commits both AGT and the Government to practical implementation of the Voluntary Principles. A decision by the Government to sign the Joint Statement would underscore its institutional commitment to other key international human rights standards, as well as its leadership in seeking to implement respect for these standards in the context of its business relationships.

(b) Consultation with Host Governments and Local Communities (See Section 4.2.1.1)

AGT should support the community meetings held by the SPPD and assist with extending those meetings to include Community Liaison Officers (“CLOs”), local police, executive authorities, and community leaders. AGT might also suggest that the SPPD consider inviting representatives of impacted communities to the SPPD headquarters in Tbilisi for periodic meetings.

(c) Consultation with Host Governments and Local Communities (See Section 4.2.1.1)

Currently, CLOs register community concerns regarding security (and other) issues in a grievance logs. Security related concerns are directed to the AGT Security Manager, and then forwarded to the SPPD for consideration. To speed up the process and be more responsive to community concerns, AGT should encourage the SPPD to ensure that affected communities are aware that concerns can also be raised with the local SPPD Area Commander, the MOIA General Inspection Department, or the public defender ombudsman.

(d) Consultation with Host Governments and Local Communities (See Section 4.2.1.1)

Citizens who believe their rights may have been abused by a member of the SPPD can share their concerns with the local police. The SPPD also offers several grievance channels by which such complaints can be lodged -- including via a hotline, with the SPPD headquarters, and directly with the Commander of the SPPD. Although the SPPD has made efforts to publicize these channels, one international organization and one local NGO indicated that they are still unknown to many members of local communities. AGT should encourage the SPPD, in the course of reaching out to impacted communities, to continue its efforts to ensure that community members are made aware of these grievance systems.

6

(e) Consultation with Host Governments and Local Communities (See Section 4.2.1.1)

According to one NGO, some villagers are concerned about the open display of AK-47s by SPPD forces in villages and at checkpoints. Indeed, armed guards at the SPPD temporary quarters in the village of Tsikhisjvari, in Bakuriani, directly abut an elementary school. In the absence of a significant security threat, AGT might consider encouraging the security forces in such relatively safe areas to dispense with the display of guns as a means of reducing potential friction with some local villagers.

(f) Consultation with Host Governments and Local Communities (See Section 4.2.1.1); Meetings Regarding Security and Human Rights (See Section 4.2.3.1)

In the past, some of AGT’s governmental and stakeholder consultations were formalized and documented, and others were not. AGT should consider documenting the dates of and topics discussed at all information-gathering meetings regarding security and human rights, inasmuch as such strict record keeping could prove valuable in the event of a security incident.

(g) Communicating Ethical Conduct and Human Rights Policies to Security Providers (See Section 4.2.1.2)

AGT, in tandem with the SPPD, should encourage the MOIA to provide the SPPD with access to firing ranges and training facilities so that the security providers can ensure that their weapons are working and are appropriately adjusted. This is a safety concern and should be addressed in the near future.

(h) Communicating Ethical Conduct and Human Rights Policies to Security Providers (See Section 4.2.1.2)

AGT should encourage the MOIA to consider providing funding for nonlethal weaponry -- such as nightsticks, tear gas, and sticky foam sprays -- that can be used in the continuum of the “proportional use of force.” Although the selection of any such non-lethal options will need to include a review of the practical, legal, and political factors that could impact their use, the absence of a non-lethal alternative between verbal warnings and the threat or actual use of potentially lethal force could lead to an undesirably rapid escalation of force and attendant injuries.

(i) Communicating Ethical Conduct and Human Rights Policies to Security Providers (See Section 4.2.1.2); Training and Observance of International Law Enforcement Principles (See Section 4.2.3.2)

Representatives of the International Committee of the Red Cross, (“ICRC”), the OSCE, and the Georgian Young Lawyers’ Association (“GYLA”) reiterated to the Monitor their interest in playing a supportive role with respect to the human rights and security training course. The leadership of the Open Society Georgia Foundation (“OSGF”) office in Tbilisi has also offered to participate in human rights training. AGT should be certain to follow-up with these organizations, and should encourage both the BRM trainers and the SPPD instructors, who will be assuming responsibility for continuing the course in the future, to take advantage of these mutually beneficial offers.

7

(j) Communicating Ethical Conduct and Human Rights Policies to Security Providers (See Section 4.2.1.2)

AGT should encourage the BRM training instructors to specifically identify the Voluntary Principles, as well as the international normative standards espoused in the Voluntary Principles, during the course of their instruction. In addition, to ensure that the SPPD trainers are updated regarding evolving international standards and best practices, and are adequately communicating these developments, it would be wise to provide the SPPD trainers with periodic refresher courses.

(k) Communicating Ethical Conduct and Human Rights Policies to Security Providers (See Section 4.2.1.2)

AGT might consider, through BP, inviting a senior SPPD official, such as Gia Pantskharva, to the next annual plenary meeting of Voluntary Principles participants to showcase the Government of Georgia’s initiatives to operationalize the Voluntary Principles through the security and human rights training program and institutionalize respect for human rights by the security forces.

(l) Transparency and Accessibility of Security Arrangements (See Section 4.2.1.3)

AGT should continue to encourage the Government to follow-through with its commitments to promote greater fiscal transparency pursuant to the Extractive Industries’ Transparency Initiative (“EITI.”)

(m) Competency and Appropriateness of Public Security Forces (See Section 4.2.2.1)

In reviewing documents received from the SPPD/MOIA regarding the use of operational funds, Deloitte Touche found a lack of capacity with respect to accepted budgeting and accounting practices -- including that the security forces lacked a budgeting process, formalized reporting procedures, and specific internal monitoring and reporting requirements. AGT should urge the Government to commit appropriate resources to implementing internationally-recognized budgeting and reporting procedures.

(n) Mitigation of Foreseeable Negative Consequences Regarding Human Rights (See Section 4.2.2.2)

AGT should urge the SPPD to develop an effective internal auditing system by which to monitor the use of equipment provided by BTC Co. To the greatest extent possible without undermining security considerations, such a system, as well as the results attained from both internal monitoring and BRM’s review process, should be transparent and made accessible to the public. This could be done via the Internet, through the public release of the monitoring documents and findings, and/or in the course of stakeholder discussions.

8

(o) Training and Observance of International Law Enforcement Principles (See Section 4.2.3.2)

As co-authors of the Voluntary Principles, the U.S. and U.K. governments have a particular interest in and responsibility with respect to the success of the initiative. AGT could ask these governments, through their respective embassies in Tbilisi, to play a convening role, such as by hosting a conference regarding challenges associated with operationalizing the Voluntary Principles in Georgia.

(p) Inclusion of the Voluntary Principles in Contractual Provisions (See Section 4.3.3)

The contract between AGT and the private security company used in Azerbaijan includes a copy of the Voluntary Principles and requires the private security provider to develop and operate an internal assurance system to ensure that it is adhering to the Voluntary Principles. At the time of the Monitor’s visit, AGT was seeking to insert a variation order into the AGT private security contracts in Georgia that would do likewise. This is a constructive step, and AGT should follow through with this initiative to tie the Voluntary Principles into the contract.

(q) Monitoring of Compliance (See Section 4.3.4)

In Azerbaijan, AGT and the private security provider formed a joint Operational Committee to ensure that the security provider’s performance is in compliance with its commitments and address any attendant shortcomings. Human rights issues are monitored and discussed under the Committee’s jurisdiction, and the security provider’s performance with respect to the Voluntary Principles is assessed against designated expectations and criteria on a quarterly basis. AGT should consider adopting a similar process with the private security provider in Georgia.

9

II. INTRODUCTION

2.1. Background

Large energy infrastructure projects in the developing world, such as the BTC and SCP Projects,5 inevitably subject investor companies to legal and reputational risks. Human rights-related liabilities, ranging from lawsuits under the Alien Tort Claims Act to campaigns by external stakeholders, are increasingly prevalent and problematic for multinational investors involved in such projects. In today's globalized world, proactive management of the human rights-related risks associated with such business ventures is an important commercial strategy, not a conscience-driven add-on. This is particularly the case with respect to human rights issues related to project security, which have provided the basis for a disproportionately large number of legal actions and reputational challenges to members of the extractive industry. Proactive management of human rights-related risks is also increasingly understood as a critical factor for effective business security.

Seminal initiatives have been established to manage and mitigate human rights-related risks presented by the AGT Projects to their investors. Such initiatives include commitments to lenders regarding social and environmental issues, the adoption of provisions referencing international human and labor rights standards in the Host Government Agreements, and explicit commitments regarding the nexus of security and human rights standards, notably the Voluntary Principles, made by and among the parties -- including in the BTC Human Rights Undertaking, the Joint Statement, and the Security Protocol. These documents, which together comprise the BTC Project's Prevailing Legal Regime and the circumstances in which this regime may be applied, commit BTC Co. to respecting the highest of internationally recognized human rights standards. The SCP Project is in the process of committing to the human rights standards under similar agreements.6

AGT is also seeking to establish Bilateral Security Protocols between the Projects and the Host Governments to facilitate operationalization of these commitments to security and human rights on a country-by-country basis. A Bilateral Security Protocol between the Georgia and 5 With a construction cost of approximately $4 billion, the BTC Pipeline is the first direct oil transportation link between the Caspian and Mediterranean seas. It is designed to transport up to one million barrels of Azerbaijani crude per day via Georgia to the Turkish port of Ceyhan. The Government of Georgia will receive a transit fee of $0.12 per barrel transported through the pipeline: the total transit revenue for Georgia is expected to be over $700 million. The SCP Project runs parallel to the BTC Project in Georgia and is designed to provide for the export of gas from the Shah Deniz field to markets in Azerbaijan, Georgia, and Turkey. 6 Although a number of activities for BTC and SCP are joint (such as land acquisition and the required ESIAs), some key BTC rights-related components have yet to be incorporated into SCP, including the Human Rights Undertaking, the Citizen's Guide, and the publication of the principal documents on the Internet. The executive leadership of SCP is aware of this discrepancy and is working to harmonize the human rights commitments made by the BTC and SCP Projects. To this effect, the SCP Board of Directors has approved both its own Joint Statement and Human Rights Undertaking -- the latter of which is publicly accessible at http://subsites.bp.com/caspian/Security/HR/SCPC%20Human%20Rights%20Undertaking%20July%208th,05%20.pdf. The Government of Georgia has not yet signed the Joint Statement.

10

AGT was signed in 2004 and, since then, the AGT Projects have been working with the Government of Azerbaijan on a similar protocol. Since the establishment of the Prevailing Legal Regime, AGT has participated in information-sharing regarding the Voluntary Principles with the Host Governments, security providers, and other stakeholders, and has sought to align operationalization of the Voluntary Principles regimes in Azerbaijan, Georgia, and Turkey through the exchange and implementation of best practices with respect to the delivery of pipeline security. These efforts highlight AGT’s commitment to carry out its human rights commitments and have served as a key element of risk management and assurance.

To help ensure that these commitments regarding the nexus of human rights and security are effectively operationalized, AGT has asked external monitors who are experts in this area to visit the Projects, meet with key company and government representatives and affected stakeholders, independently assess the degree to which the Projects are in compliance, and offer recommendations. Earlier such assessments were undertaken during the Projects’ construction; this is the first such assessment to be undertaken in Georgia since the completion of the physical infrastructure of the Projects in all three countries and the commencement of full operations.

If internationally respected standards such as the Voluntary Principles are properly implemented, the initiatives embedded in the Prevailing Legal Regime will promote respect for human rights, help to manage legal human rights-related risks to the AGT Projects, and enhance the Projects' reputations -- as well as the reputations of their investors and the Host Governments. Conversely, failure to assure that these human rights-related obligations are properly discharged could exacerbate the very risks that the commitments were designed to mitigate.

2.2. The Human Rights and Security External Monitoring Assessment

This assessment of the AGT Projects was commissioned by BP Exploration (Caspian Sea) Ltd. as a means of monitoring and evaluating implementation of commitments under the BTC and SCP Project Agreements, with particular respect to implementation of the Voluntary Principles in Georgia. An assessment was also completed in Azerbaijan in 2006.

This round of Human Rights and Security External Monitoring Assessments is the second such round of assessments undertaken with respect to the AGT Projects. The first round of external monitoring with respect to security and human rights in Georgia was undertaken for BP Exploration (Caspian Sea) Ltd. in 2005, for internal assurance purposes only. In the spirit of transparency promulgated by the Voluntary Principles, this Assessment, and subsequent Human Rights and Security External Monitoring Assessments, will be published on the BTC/SCP website, www.bp.com/caspian.

Foley Hoag created an AGT Human Rights and Security Assessment Regime to facilitate the monitoring and evaluation process. The Assessment Regime is comprised of three Project Commitments Implementation Checklists as well as verification points for the compilation of findings. These documents are designed to help assess the degree to which the AGT Projects are meeting their security commitments and any attendant exposure they may face with respect to security and human rights issues. The AGT Human Rights and Security Assessment Regime was used as the basis for this Monitoring Assessment.

11

2.3. Scope of Monitoring Visit and Assessment

The Monitor's mandate for the Assessment was to provide a "snapshot" of AGT's compliance with the Voluntary Principles in Georgia, with a focus on some of the thematic areas that have been the source of legal and reputational concern in these and other global extractive projects.

To fulfill this mandate, Foley Hoag attorney Gare Smith (the "Monitor") conducted research and met with an array of stakeholders in Georgia, the United States, and the United Kingdom. The Monitor also reviewed the Voluntary Principles to distill applicable human rights commitments, and incorporated these commitments into the AGT Human Rights and Security Assessment Regime for use during the Monitoring Visit. In addition, the Monitor studied a wide variety of internal AGT Project documents regarding security and human rights, as well as the best practices employed by other members of the extractive industry in operationalizing the Voluntary Principles.

The Monitor visited Georgia from November 10-16, 2006. During the visit, he met with and interviewed AGT personnel,7 including the companies’ senior leadership, management with responsibility for security, communications and external affairs, operations, legal affairs, and CLOs; Georgian government officials, including representatives of the Public Defender’s Office; the leadership of the SPPD -- an independent unit of the MOIA that is responsible for external security for the AGT Projects and the Supsa Terminal;8 public and private security providers; security and human rights trainers; representatives of multinational institutions operating in Tbilisi, such as the OSCE and the ICRC; representatives of local and international NGOs, ranging from the GYLA to the OSGF and the International Crisis Group; and diplomats at the U.S. and British Embassies in Baku with responsibility for human rights, economic, and political affairs as well as promotion of the Voluntary Principles.

Prior to and following the field visit, the Monitor met with representatives of the National Security Council, at the White House; the U.S. State Department; the U.K. Foreign and Commonwealth Office; international NGOs in Washington and London, including Human Rights Watch, Amnesty International, and International Alert; and other company participants in the Voluntary Principles, in order to contextualize the AGT Projects’ efforts to operationalize the Voluntary Principles.

7 Although neither BTC Co. nor SCP technically have employees, this Assessment uses the terms “BTC Co. personnel,” SCP personnel,” or “AGT personnel” to describe those persons seconded to BTC Co. and SCP by BP (as manager) and its shareholders, or retained directly by BP, BTC Co., or SCP as contractors.

8 The Special State Protection Service (“SSPS”)/Pipeline Protection Department (“PPD”), which previously provided external security for the AGT Projects and reported to the President, was moved into MOIA in January 2006.

12

III. IMPLEMENTATION OF THE VOLUNTARY PRINCIPLES IN GEORGIA

3.1. The Challenge of Operationalization

In an effort to guide members of the extractive industry in maintaining the safety and security of their operations within a framework that ensures respect for human rights, the U.S. and U.K. governments announced the establishment of the Voluntary Principles in December 2000. BP as well as ConocoPhillips and Chevron -- partners in the BTC Project9 -- were among the seven companies and nine NGOs that participated in their creation. Subsequently, the governments of Norway and the Netherlands joined the Voluntary Principles, and Statoil -- a partner in both the BTC and SCP Projects10 -- became a participant. Hess, also a partner in the BTC Project, later became a participant in the Voluntary Principles.

The Voluntary Principles have since gained recognition as the leading international standard articulating the human rights responsibilities faced by extractive companies in their global security operations. The International Finance Corporation has committed to implement the Voluntary Principles in its projects, and to expand their use beyond the extractive industry. In addition, an External Advisory Panel to the World Bank has recommended that the Bank examine and adopt standards such as the Voluntary Principles.

At the Plenary Meeting in January 2006, participants agreed to eliminate the pre-existing requirement that nation states needed to be participants before companies incorporated in those states could be affiliated with the Voluntary Principles. As a consequence, it is anticipated that additional members of the extractive sector from a range of other countries will become participants in the coming years.

The Preamble to the Voluntary Principles acknowledges the preeminence of the Universal Declaration of Human Rights and urges companies to "recognize a commitment to act in a manner consistent with the laws of the countries within which they are present, to be mindful of the highest applicable international standards, and to promote the observance of applicable international law enforcement principles." To this end, the Voluntary Principles cite the importance of the U.N. Code of Conduct for Law Enforcement Officials and the U.N. Basic Principles on the Use of Force and Firearms by Law Enforcement Officials. The Voluntary Principles then address three sets of issues for multinationals: (1) Risk Assessment; (2) Interactions between Companies and Public Security; and (3) Interactions between Companies and Private Security.

The Voluntary Principles are the central human rights template guiding security planning for the AGT Projects during the life of the pipelines. AGT uses the Risk Assessment section of the Voluntary Principles as a roadmap to identify key human rights factors to consider when planning security arrangements. These include the identification of security risks; potential for violence; the human rights records of public and private security forces; the strength of the rule

9 Other partners in the BTC Project include SOCAR, the state-owned oil company of Azerbaijan; Hess; TPAQ; Eni; Total; Itochu; and Inpex.

10 Other partners in the SCP Project include SOCAR, LukAgip, NICO, Total, and TPAO.

13

of law; conflict analysis; and equipment transfers. These risk factors feature in the planning for AGT project security and will remain key considerations for AGT throughout the operation of AGT Projects.

Adhering to these standards is critical but will not necessarily be sufficient to protect the human rights of stakeholders throughout the lives of the Projects. That challenge is defined not only by these external standards, but also by a range of risks, expectations, and constraints that AGT can influence, but not control. These factors include the Government of Georgia’s past human rights record and its current willingness to demonstrate respect for internationally recognized standards.

Since the dissolution of the Soviet Union and the establishment of the independent Republic of Georgia, the U.S. State Department’s annual Country Reports on Human Rights Practices have criticized Georgia’s police and security forces for failing to respect human rights as well as the country’s judiciary for lacking independence and capacity. In the latest report, which refers to events in 2006, the State Department concluded that “[t]he Government’s human rights record improved in some areas during the year, although serious problems remained.”11 This conclusion is consistent with recent reporting by human rights organizations.12

According to the State Department, Georgia’s human rights record was marred by the torture of detainees by law enforcement officers, the overuse of pre-trial detention, poor prison conditions, impunity in law enforcement, and reports of government pressure on the judiciary.13 At the same time, the State Department reported that “the Government took significant steps to improve the human rights situation” including by continuing “a broad reform of the justice system to improve the investigation and prosecution of some law enforcement abuses and increase the independence of the judiciary.”14

This historical backdrop of limited respect for human rights presents a clear risk to AGT in relying upon police and government forces for external project security. This risk underscores the importance of AGT taking steps within its sphere of influence to share with its Georgian partners best practices regarding the nexus of security and human rights -- as well as the value of 11 Country Reports on Human Rights Practices -- 2006, U.S. Department of State, Introduction to report on Georgia (released by the Bureau of Democracy, Human Rights and Labor on March 7, 2007). The section of the report regarding Georgia can be viewed on-line at http://www.state.gov/g/drl/rls/hrrpt/2006/41682.htm.

12 See e.g., World Report -- 2006, Human Rights Watch (2006)(“human rights abuses continue unchecked in many spheres” and “[t]orture, impunity, and denial of due process remain serious problems in Georgia,” ibid at p. 365-366).

13 Country Reports on Human Rights Practices -- 2006, U.S. Department of State, Introduction to report on Georgia (released by the Bureau of Democracy, Human Rights and Labor on March 7, 2007). See also id., Section I (c) (“conditions in prison and pretrial detention facilities generally remained poor, did not meet international standards, and even worsened during the year.”)

14 Ibid. See also id., Section I (d) (“”Public confidence in the patrol police remained high during the year due to a continuing low incidence of corruption.”)

14

aligning efforts to operationalize the Voluntary Principles. It also highlights the potential positive impact that Georgia’s adherence to the Voluntary Principles can have on its stature and reputation within the international community as it seeks to reform its law enforcement bodies and judiciary.

3.2. Stakeholder Expectations

The aforementioned human rights concerns notwithstanding, there are significant expectations both locally and globally regarding AGT's ability work with public security forces in Georgia to balance security arrangements with respect for human rights. These expectations developed in the events leading up to and during construction, and have grown since the commencement of operations. They are based on at least three commonly shared perceptions, and associated concerns, that emerged from the Monitor's meetings with AGT stakeholders.

First, there is a keen sensitivity to the lessons to be learned from mistakes made by multinationals (including some AGT investors) working with security forces to protect project assets in other countries, and there is optimism among those consulted that the AGT Projects present an opportunity to effectively implement global standards.

Socially Responsible Investors (“SRIs”), NGOs, and other stakeholders watching the AGT projects are familiar with the problems that members of the extractive industry have experienced elsewhere around the world with respect to the nexus of security and human rights, and the steps that have (and have not) been taken to address those challenges. They are interested in the lessons that AGT investor companies indicate they have learned from these projects. In addition, they acknowledge the leadership that some investor companies demonstrated in helping to develop the Voluntary Principles, as well as the commitment to human rights and corporate responsibility that BTC Co. and the Government of Georgia have shown with respect to the AGT Projects leading up to and during construction.

Second, virtually all stakeholders agree that the decision by AGT and the Host Governments to embed respect for human rights in the Prevailing Legal Regime sets a global standard and underscores the importance that these entities place on this issue. Likewise, in implementing these commitments, there is a striking degree of consensus among stakeholders that the individuals providing security should be trained to respect the rights of individuals along the Right-of-Way in a manner consistent with the Voluntary Principles. The fact that this belief is shared by the leadership of the SPPD, AGT investors, NGOs, SRIs, and affected communities, is cause for additional optimism and raised expectations.

Third, these high expectations are tempered by skepticism that the AGT Projects’ human rights leadership may be short-lived. Some stakeholders question whether the Projects’ public commitment to human rights while seeking loans from international financial institutions, and associated leadership with respect to the Voluntary Principles during the construction phase, will carry over during the much longer operations phase. Stakeholders ranging from the diplomatic community to NGOs and SRIs have expressed hope and concern regarding whether AGT will be able to “stay the course” with respect to its leadership initiatives. Specific questions have been raised with respect to whether the training program will prove sustainable, and whether AGT will continue with the monitoring of Voluntary Principles implementation.

15

These expectations and concerns will be accompanied by considerable scrutiny to assess whether AGT can and will deliver on its commitments over the long term.

16

IV. MONITORING: FINDINGS AND RECOMMENDATIONS

4.1. Risk Assessment

The first section of the Voluntary Principles addresses the commitment of participating companies to assess risks present in their operating environments that affect the security of personnel, local communities, and assets as well as the companies’ ability to promote and protect respect for human rights. Areas highlighted for consideration include the identification of security risks, potential for violence, human rights records, rule of law, conflict analysis, and equipment transfers. The AGT Projects have sought to address these variables in the following manner:

4.1.1. Identification of Security Risks

The Voluntary Principles urge participating companies to identify security risks, take measures to minimize risk, and assess whether company actions may heighten risk.

AGT has established specific processes, procedures, and positions to ensure that security risks are identified and mitigated, and that company activities are assessed to determine whether they contribute to such risks.

AGT has designated the Security Manager for BP Georgia, who is located within the AGT office in Tbilisi, to serve as the primary risk analyst for the AGT Projects in Georgia. During 2004 and 2005, the Security Risk Analyst collected, updated, analyzed, and disseminated information regarding political and security risks with respect to AGT construction. Since the commencement of operations in 2006, he has been performing these tasks with respect to AGT operations.

His mandate includes obtaining extensive background information from different sources and, with the support of the full AGT security team, ensuring that AGT seeks to monitor and adapt to changing political, economic, law enforcement, military, and social situations affecting security and human rights-related factors potentially impacting or impacted by the AGT Projects.

Information secured in this process is shared with the overall Security Risk Analyst for AGT who is located within the BP Azerbaijan Strategic Performance Unit (Az SPU), in Baku. The Security Risk Analyst distributes it to all appropriate AGT personnel, and when not breaching confidentiality or compromising the security of individuals or assets, other stakeholders, including governments, NGOs and SRIs. Such reporting is provided through a variety of means, including oral briefings; the “Az SPU Regional Risk Review,” a confidential monthly digest of security and political analysis for the Business Unit; and monthly assessment reports on security and risk mitigation.

AGT seeks to assure the quality of the information produced in its risk assessments by gathering regularly updated, credible information from a wide range of perspectives, including local and national governments, partners and other companies, Home Governments, multilateral institutions, and representatives of civil society knowledgeable about local conditions. The “Az SPU Quarterly Risk Matrix” and the monthly “Az SPU Regional Risk Review” identify security and human rights issues within the context of the pipeline projects.

17

The AGT Communications and External Affairs Manager for Georgia, works with the Georgia Security Manager in collecting information and identifying potential human rights and security risks. In addition, the Communications and External Affairs Manager maintains direct functional links to representatives of the Government.

The aforementioned individuals, with support from six CLOs and seven Field Security Officers ("FSOs"), and overall guidance from the Onshore Operations Performance Unit Security Manager, work as a broad-based "security risk management team” with responsibility for human rights elements of the Voluntary Principles. Together, they consult on an ongoing basis with members of Government of Georgia, civil society, and the private sector as part of a continuous effort to collect, analyze, and disseminate information related to security risks to AGT and the communities in which the Projects operate.

When human rights risks are identified, action is taken to manage and mitigate such risks -- the nature of such responses necessarily depending on the magnitude of the situation. Specific accountability for risk management, and timelines for responses, are generally shared between the security risk management team and, when appropriate, members of the Business Unit. The Security Risk Management Plan outlines the actions and responsibilities of AGT personnel in identifying, reporting, and seeking to mitigate human rights risks associated with security activities. In addition, as described in more detail in “Monitoring Status of Investigations and Resolutions,” (Section 4.2.4.2), the “BP-Az SPU Human Rights Response Plan” details a response process to be followed by the Business Unit in the event that an alleged human rights abuse is brought to the AGT's attention.

Finding: AGT is taking appropriate steps to comply with this principle.

Recommendation: None.

4.1.2 Potential for Violence

The Voluntary Principles urge participating companies to identify risks presented by the potential for violence and patterns of violence in areas of company operations for educational, predictive, and preventative purposes.

The Communications and External Affairs Manager and the Security Manager, with field support from CLOs and FSOs and broad-based support from other members of the AGT security risk management team, consult on a regular basis with representatives of the government (at the national and community levels), civil society, and the private sector regarding the potential for violence. Some of the governmental consultations are formalized and documented.

AGT risk assessments examine the patterns and causes of regional violence so that steps can be taken to diminish the possibility of violence related to the Projects. Analyses consider the potential for violence in the context of both broad issues, such as violence related to crime, and specific geo-political tensions, such as concerns regarding South Ossetia, Abkhazia, Chechnya,

18

and Georgia’s increasingly strained relationship with Russia.15 The Georgia Project Risk Matrix updates such risk assessments on a monthly basis.



4.1.3 Human Rights Records

The Voluntary Principles urge participating companies to consider the human rights records of public and private security forces and the capacity of those entities to respond to violent situations in a manner consistent with applicable international standards.

AGT gave due consideration to the human rights records of public and private security forces in Georgia, as well as the capacity of those forces to respond in a manner consistent with international standards, prior to utilizing these individuals to protect the Projects.

To this effect, AGT's Security Risk Management Plan considers both the capacity of security forces to respond to violence in a lawful manner and how to avoid violations of international standards by security forces. In addition, AGT's monthly risk assessment includes information regarding any allegations and reports of human rights abuses that come to the attention of the AGT Projects.

AGT requires background checks to be completed on all prospective security providers -- both public and private. Individuals credibly linked to human rights abuses are prohibited from providing security for the Projects. The Government is specifically committed to such a background check pursuant to Chapter II, Article 4.1 of the Bilateral Security Protocol, and the SPPD, which provides external security for the Projects, conducts background checks on all prospective public security providers as part of its hiring process. Moreover, as discussed below in “Interactions Between AGT and Private Security: Prohibition on Human Rights Abusers,” (Section 4.3.2), background checks are also conducted on all prospective private security providers.

To ensure that the public security forces protecting the Projects understand the applicable international standards governing respect for human rights, and hence an appreciation for the importance of the prohibition on the hiring of individuals who have abused the human rights of others, AGT, in partnership with Equity International, the ICRC, the OSCE, and the private advisory company BRM, has provided human rights training to those security forces. For additional detail, see below, “Security Arrangements,” (Section 4.2.1).


Recommendation: None. 15 Notably, Georgia was already dealing with Russian support for its breakaway provinces, as well as a Russian embargo on wine, mineral water, and citrus fruit, when on November 7, 2006 the Russian state gas company announced that it would more than double the price of gas exported to Georgia during 2007 -- leaving some Georgians to wonder whether they could afford heat during the coming winter.

19

4.1.4 Rule of Law

The Voluntary Principles urge participating companies to consider the local prosecuting authority and the judiciary's capacity to hold those responsible for human rights abuses and other violations of international humanitarian law.

AGT security risk assessments specifically consider the ability of local authorities to effectively and transparently enforce the rule of law with respect to alleged violations of internationally recognized human rights.

In 2004, the AGT Projects commissioned an independent study regarding the capacity of the judiciary and the strength of the rule of law in Georgia. The study concluded that the local legal regimes are weak and lacking in capacity.

Likewise, the first Judicial Profession Reform Index (“JPRI”) issued for Georgia, which was released in early 2006, indicates that although the country is making improvements there is still much to be done before the judiciary is an equal third branch of government. The JPRI was developed by the American Bar Association’s Central European and Eurasian Law Initiative (“ABA/CEELI”) to assess the process of judicial reform in developing countries. It examines a cross-section of factors that contribute to the development of an accountable, effective, independent judiciary. In Georgia, of the 30 JPRI factors, only two received a positive correlation, 13 received a neutral correlation, and 15 received a negative correlation -- including most factors related to judicial accountability and efficiency.

Virtually all the stakeholders with whom the Monitor met, including representatives of the Government, international organizations, NGOs, and the diplomatic community, agree that Georgia’s judicial system lacks basic capacity and is in serious need of reform.

According to one diplomat, “Public trust in the judiciary is nonexistent.” The office of the Public Defender expressed a similar sentiment, noting that the reason is multifaceted: “The judicial system is not independent. There is a presumption of guilt. And there is a lack of accountability for human rights abuses generally.” Representatives of the ICRC and OSCE stressed that torture is common in prisons, and that there is no separation of powers between the three branches of government. At the time of the Monitor’s visit, the selection of judges, for example, was done by an advisory board and the president.

The Government recognizes these problems, and is seeking to address them. Consideration is being given to reforming the judicial selection process and transferring it from the executive branch to an independent counsel of judges. At the beginning of 2006, as part of an effort to combat corruption, judicial salaries were increased significantly. In addition, a law on the High School of Justice was adopted to support capacity-building within the judiciary. With guidance from ABA-CEELI, the school is offering training for sitting judges and will begin the training of judicial candidates in 2008.

Efforts have also been made to address broad-based corruption associated with the judicial system. Of direct impact to the AGT Projects, during 2006 the MOIA took steps to prevent and prosecute the “hot-tapping” of pipelines, and the criminal justice system began to hand out criminal penalties to individuals caught stealing oil. Previously, the most significant

20

penalty imposed by the local judiciary on individuals arrested for hot-tapping was to fine them the value of the oil they stole. Local prosecutors had been unwilling to seek criminal punishment, such as imprisonment, for the perpetrators -- who typically had family or business ties to members of the local township and judiciary. During the course of 2006, however, some of the same thieves previously caught hot-tapping and fined were caught again: this time they were sentenced to terms in prison.

Members of the diplomatic community give the Government considerable recognition for these and other recent efforts to reform the judiciary -- including improved jail conditions, an improved penitentiary system, and efforts to hire more qualified and honest judges -- but report that there is still considerable corruption, and the overall judicial system is among the worst worldwide. These diplomats cite particularly serious problems with lengthy pre-trial detention, noting that 40-50% of individuals in pre-trail detention are incarcerated for 6-9 months. There are about 12,000 individuals in the prison system, and as many as 70% are in pre-trial detention. Representatives of the diplomatic community and the ICRC have discussed with the Government the adoption of an effective bail system as one means of addressing this problem.

The AGT security risk management team is well aware of these challenges with respect to rule of law and the Government’s initiatives to address them.

Finding: AGT is taking appropriate steps to comply with this principle, but the absence of effective rule of law underscores the importance of AGT acting within its sphere of influence to promote judicial reform and capacity building.

Recommendation: AGT should actively support initiatives to promote the rule of law in Georgia.

Such an effort can be undertaken through a number of different means. RDI, for example, seeks to support sustainable development at the regional and national levels, and one of the program’s central objectives is to promote good governance. AGT could consider funding initiatives to train police, prosecutors, and judges. AGT could also seek to leverage and expand upon training initiatives regarding respect for human rights and rule of law by the U.S., the U.K., the OSCE, and/or other international organizations, as discussed in more detail below in “Training and Observance of International Law Enforcement Principles,” (Section 4.2.3.2).

4.1.5 Conflict Analysis

The Voluntary Principles urge participating companies to identify and understand the root causes and nature of local conflicts and the potential for future conflicts.

AGT security risk assessments include a root cause analysis with respect to local conflicts.

Members of the security risk management team regularly consult with local communities; local and Host Governments; security forces; local NGOs; international NGOs (including Human Rights Watch, the Open Society Institute, Amnesty International, and the International Crisis Group); multilateral institutions (ranging from the ICRC to the OSCE); and other companies to better understand local conflicts. In 2004 and 2005, the security risk management

21

team also interfaced with the United States European Command (“USEUCOM”) with respect to security, human rights, and regional conflict.

The risk of future conflicts, particularly with respect to Russia, South Ossetia, and Abkhazia, are regularly included in the AGT security risk assessment for Georgia.



4.1.6 Equipment Transfers

The Voluntary Principles urge participating companies to consider the risks attendant to the provision of equipment to public or private security forces.

AGT has assessed the legal and reputational risks associated with providing equipment to public and private security forces and created strict guidelines governing the provision of such logistic assistance.

With respect to public security forces, pursuant to these guidelines AGT may give equipment to security providers only to the extent that:

• No lethal aid is provided to the host governments;

• The assistance is fully documented, transparent, and duly witnessed;

• Whenever possible, support is provided in the form of equipment, rather than money;

• The reasons governing the decision to provide assistance are made public;

• Whenever possible, the use of assistance is monitored and publicly documented;

• Security equipment for public forces is procured using the standard company procurement process; and

• The equipment provided contributes directly or indirectly to the Project’s operational security.

In accordance with the above guidelines, AGT is not providing lethal equipment to public security forces in any of the three countries in which the pipelines run. Moreover, AGT will in no instance provide lethal equipment to private security providers.

Notably, AGT risk assessments consider the legal and reputational impact of past incidents with investor companies and other industry members in which transferred equipment has been misappropriated and misused.

Implementation of the AGT guidelines regarding the provision of equipment to public security forces in Georgia is discussed in additional detail below, under “Mitigation of

22

Foreseeable Negative Consequences Regarding Human Rights,” (Section 4.2.2.2), and “Responses to Human Rights Abuses: Equipment Monitoring,” (Section 4.2.4.3).



4.2 Interactions Between AGT and Public Security

Although governments bear primary responsibility for maintaining law and order, security, and respect for human rights, multinationals have an interest in ensuring that actions taken by governments -- particularly the actions of public forces providing security for company projects -- are consistent with the protection and promotion of human rights. In an effort to reduce the risk of human rights abuses, the Voluntary Principles outline specific criteria to guide relationships between companies and public security forces with respect to security provided for those companies.

These criteria include guidelines regarding security arrangements, deployment and conduct, consultation and advice, and responses to human rights abuses. AGT has sought to address these in the following manner:

4.2.1 Security Arrangements

4.2.1.1 Consultation with Host Governments and Local Communities

The Voluntary Principles encourage participating companies to consult regularly with Host Governments and local communities regarding the impact of their security arrangements on those communities.

AGT's security risk management team is in daily contact with representatives of both the Government of Georgia and local communities regarding the impact of the AGT Projects, including associated security arrangements.

The signing of the Bilateral Security Protocol with the Government of Georgia on October 19, 2004 to operationalize the Voluntary Principles obligates the SPPD to the Voluntary Principles and establishes an official mechanism pursuant to which AGT and the SPPD can dialogue with regard to security and human rights issues. Pursuant to the Protocol, “the Government shall endeavor to cooperate with the appropriate local authorities and consult with and involve the local communities in matters related to Government Security in a manner consistent with the [Voluntary] Principles.” Chapter II, Article 2.2. In addition, “[t]he Parties will consult regularly between themselves regarding Government Security … and regarding compliance with the [Voluntary] Principles and any human rights issues arising from the provision of Government Security (including such issues that arise in relation to the Parties’ consultations with local communities).” Chapter III, Article 8.1.

AGT's security risk management team interfaces on a daily basis with representatives of the SPPD both at its headquarters in Tbilisi and among its 720 security providers along the Right-of-Way and at the Supsa Terminal. FSOs and CLOS, all of whom received instruction

23

during 2006 with respect to AGT’s commitments under the Voluntary Principles, are also in continuous contact with members of local communities regarding the impact of AGT Project security arrangements on those communities. The Security Manager for BP Georgia has been specifically tasked with supervision of security-related consultations with local communities and oversees the efforts of FSOs working in the various parts of Georgia affected by the Projects. Security issues of concern to local communities are factored into and addressed, as appropriate, in the “Az SPU Quarterly Risk Matrix” and the “Az SPU Regional Risk Review."

To some extent, minutes are taken of meetings with government officials and notes are taken summarizing meetings with stakeholders. These minutes and notes are distributed, as appropriate, among the AGT team working in Georgia.

The degree to which the SPPD consult with local communities regarding the impact of their security activities, however, remains ill-defined and is not formally recorded. On one hand, most SPPD security providers come from the local communities in which they will be working. Such community-based policing is highly desirable inasmuch as it facilitates open channels of communication between security providers and local communities regarding the impact of security arrangements. The SPPD leadership also discusses security issues with the leadership of local municipalities, community representatives, and other authorities and has been complimented on the reduction of criminal activities and the positive impact on safety in the areas in which it operates.

On the other hand, according to GYLA, a local NGO, even after the commencement of operations many members of local communities do not understand and remain skeptical of the role that the security forces play with respect to the Projects. Some villagers chafe at the SPPD requirement that they carry identification cards. Others are reportedly uncomfortable with the highly visible display of weaponry by SPPD forces. Accordingly, the NGO emphasized the importance of expanding communications between the SPPD and local communities to increase understanding and respect between these groups, as well as to ensure effective responses to security issues associated with the Projects.

In addition to stressing the importance of sharing security arrangements with impacted communities, stakeholders also noted the value of establishing a sense of community ownership of the pipeline as a means of ensuring effective pipeline security. These groups stressed that communities will perceive an ownership stake in the Projects once they are able to recognize benefits from them and that, in turn, this will help to minimize security issues. This position is shared by AGT, and was indicated early-on in the BTC Security Concept.

In light of the importance of achieving such community ownership, stakeholders in the diplomatic and NGO communities expressed their perception that there were still many outstanding concerns among communities regarding land issues.16 If not adequately addressed,

16 Notably, this perception does not appear to comport with the facts. As of February 2007, there were only 14 outstanding land grievances out of approximately 2,850 registered land complaints. Of these 14 complaints, 5 had been raised within the past 60 days. In addition to these 14 grievances, there were 48 ongoing land-related litigation cases.

24

they noted, these concerns could undermine any sense of community ownership and negatively impact pipeline security.

Any such pending issues and concerns take place in a tense economic atmosphere. Little of the economic promise associated with the Rose Revolution has materialized for the average citizen, and the soaring price of gas and other living costs frighten many. According to the OSCE and the ICRC, more than 50% of Georgia’s population lives below the poverty line,17 unemployment is as high as 40% in some areas, and annual inflation rests at around 12-13%. The United Nations Development Programme’s “Human Development Index for 2006” ranks Georgia 97th out of 177 countries based on conditions for human development.18 If economic improvements are not forthcoming, attendant discontent could lead to civil unrest -- including security challenges for the AGT Projects.

In recognition of this, AGT has taken significant steps to help ensure that, in addition to providing oil transit revenues to the Government, the Projects directly raise living standards for affected individuals and communities. Accordingly, BP and its partners will spend more than $100 million over the next few years on social and economic investment initiatives for communities along the pipeline route and, more broadly, within Georgia. Activities already underway include initiatives associated with the BTC Grant, the BP Pledge, RDI, the Future Communities Programme, and the Environmental Investment Programme. These initiatives tangibly demonstrate the value-added by the Projects and, accordingly, the attendant value that should be placed on their protection.

Finding: AGT is taking appropriate steps to comply with this principle. The Bilateral Security Protocol represents a new and important standard for the industry with respect to operationalization of the Voluntary Principles.

Recommendation: AGT should support the community meetings held by the SPPD and assist with extending those meetings to include Community Liaison Officers (“CLOs”), local police, executive authorities, and community leaders. AGT might also suggest that the SPPD consider inviting representatives of impacted communities to the SPPD headquarters in Tbilisi for periodic meetings.

Recommendation: Currently, CLOs register community concerns regarding security (and other) issues in a grievance logs. Security related concerns are directed to the AGT Security Manager, and then forwarded to the SPPD for consideration. To speed up the process and be more responsive to community concerns, AGT should encourage the SPPD to ensure that affected communities are aware that concerns can also be raised with the local SPPD Area Commander, the MOIA General Inspection Department, or the public defender ombudsman.

17 According to the U.S. Government, 54% of Georgia’s population living outside of Tbilisi lives in poverty. In 2005, the U.S. approved $295 million in aid to Georgia under the Millennium Challenge Account to address this problem over a five year period.

18 See Human Development Report for 2006, UNDP (2006).

25

Recommendation: Citizens who believe their rights may have been abused by a member of the SPPD can share their concerns with the local police. The SPPD also offers several grievance channels by which such complaints can be lodged -- including via a hotline, with the SPPD headquarters, and directly with the Commander of the SPPD. Although the SPPD has made efforts to publicize these channels, one international organization and one local NGO indicated that they are still unknown to many members of local communities. AGT should encourage the SPPD, in the course of reaching out to impacted communities, to continue its efforts to ensure that community members are made aware of these grievance systems.

Recommendation: According to one NGO, some villagers are concerned about the open display of AK-47s by SPPD forces in villages and at checkpoints. Indeed, armed guards at the SPPD temporary quarters in the village of Tsikhisjvari, in Bakuriani, directly abut an elementary school. In the absence of a significant security threat, AGT might consider encouraging the security forces in such relatively safe areas to dispense with the display of guns as a means of reducing potential tension with local villagers.

Recommendation: Consideration should be given to documenting the dates of and topics discussed at all information-gathering meetings with government officials and stakeholders. Such record keeping could prove useful in mitigating liability in the event of a security incident.

4.2.1.2 Communicating Ethical Conduct and Human Rights Policies to Security Providers

The Voluntary Principles encourage participating companies to communicate their policies regarding ethical conduct and human rights to public security providers and indicate their desire that security be provided in a manner consistent with those policies by personnel with adequate and effective training.

The AGT Projects are continuing to set the standard for the industry with respect to the training of public security providers regarding implementation of Voluntary Principles commitments.

BTC Co. communicated its policies regarding ethical conduct and human rights at the inception of the Project, incorporated those policies as commitments under the Prevailing Legal Regime, and made the documents containing these comments available for public inspection. Notably, the Bilateral Security Protocol stipulates, “[t]he Government agrees that it shall take all necessary action to select and train the Government Security personnel in an appropriate manner with the aim that security is provided in a manner that is compatible with the [Voluntary] Principles….” Chapter II, Article 5.2.

As a central step in operationalizing the Voluntary Principles, AGT encouraged the Special State Protection Service (“SSPS”)/Pipeline Protection Department (“PPD”) to participate in human rights-based security training. This has been provided by Equity International, a non-profit NGO that promotes respect for law enforcement. The training aimed to ensure that all individuals providing security for the AGT Projects received instruction regarding the provision of security in a manner consistent with respect for the human rights of impacted individuals. In addition, AGT has supported BRM training of the SSPS/PPD that has focused on helping the

26

organization to develop its planning skills and standard operational procedures for, among other key tasks, effective incident management, patrolling on foot and in vehicles, managing vehicle checkpoints and observation posts, and the proportionate use of force. In both training initiatives, education was provided through a “train the trainers" regime designed to make the program self-sustaining over the course of the AGT Projects' lives.

In 2006, courses for new recruits and courses in advanced officer training were provided by the SPPD instructors (i.e., previously trained SSPS/PPD instructors) at sector bases, and by BRM. BRM has provided continued training regarding communications, and conflict resolution, the application of the U.N. Code of Conduct for Law Enforcement Officials, rules of engagement, winter survival and rescue, and first aid. BRM also developed and delivered junior and intermediate command and staff courses.

During the past year, human rights instruction was based on the “SPPD Standard Operations Procedures” manual prepared by BRM for the SPPD, the first chapter of which addresses issues related to the nexus of security and human rights, including the use of force, rules of engagement, and international human rights law. By the end of 2006, virtually all of the 720 SPPD security providers had received human rights training. It is anticipated that by the end of 2007 all human rights-based security training will be self-sustaining by the SPPD.

The Government of Georgia embraced the concept of such training on a self-sustaining basis. It began its engagement in August 2004 when human rights-based security training, supported and financed by AGT, was provided by Equity International. The first phase included a four-week “train the trainers” component that encompassed human rights theory, human rights-based policing skills, international standards and practices in the use of force and firearms, international standards and practices in self-defensive techniques, methods of instruction, interfacing with external agencies, physical training, and assessment. In addition to verbal training, trainees were provided with written materials in their local Georgian. By the end of the course, participants are expected to: (1) know and understand the international human rights standards applicable to law enforcement; (2) be able to apply those standards in law enforcement situations in a professional manner; (3) demonstrate the ability to transfer human rights knowledge and skills effectively to others; and (4) recognize that respect for human rights is an important governing principle in professional law enforcement conduct. Ninety-seven students were trained in this phase.

Moreover, AGT and Equity International were able to leverage the training course by inviting representatives of the ICRC and the OSCE to provide lectures for the opening course (the former with respect to the use of force and international humanitarian law, and the latter with respect to policing activity). The participation of these highly respected international institutions reinforced the importance of the instruction to trainees and demonstrated to external stakeholders the seriousness with which AGT takes its commitment to ensure that Projects’ security providers are appropriately trained.

In the second phase, from May-July 2005, Equity International provided similar human rights training for the SSPS/PPD Recruit Training Programme. In this phase, Equity International provided theoretical instruction to the students and BRM provided scenario training and hands-on skill development, including training regarding technical proficiencies with respect

27

to weapons, communications, defensive policing tactics, medical aid, and other basic skills required for protection of the pipeline. BRM continued this phase of the training on it own through the end of 2005. Notably, because the BRM training is generally geared to internationally recognized legal principles and practices, and does not encompass voluntary codes, although the concepts embedded in the Voluntary Principles were taught, the Voluntary Principles themselves were not mentioned. Of the 500 SSPS/PPD officers, 360 were trained by Equity International and BRM in this phase. The remaining 140, and new recruits, were trained by SSPS/PPD instructors at sector bases.

Notably, many of the SPPD recruits have limited experience in the handling of firearms, including the AK-47s they are issued. BRM training regarding the appropriate use of firearms is critical to these recruits, as is tactical police training regarding behavior in a hostile situation. Regrettably, during the past year the SPPD have not had access to training facilities and ranges for firing practice, thus increasing the risk of an accident, injury, and/or human rights violation.

Unlike the SSPS/PPD, which could detain suspects but did not have the power to arrest them, the SPPD is a police force and has the power to both detain and arrest. Notably, however, SPPD forces have no equipment in the manner of intermediary force to employ between issuing verbal commands and using, or threatening to use, the AK-47 weapons they are issued.

It was apparent from the Monitor's meeting with Gia Pantskharva, the Commander of the SPPD, that the Government of Georgia supports operationalization of the Voluntary Principles and the train-the-trainers sustainability concept with respect to the continued human rights instruction of security personnel protecting the pipelines.

In light of the uncoordinated institutional structures and lack of policing capacity in Georgia, however, even if the Voluntary Principles are effectively operationalized through the SPPD, there will still be a number of potential legal and reputational hazards for AGT with respect to human rights and Project security. These include issues with the local police, to whom an individual arrested with respect to an incident along the Right-of-Way might be handed, and the judiciary. If internationally recognized procedures are followed by the SPPD, but the detainee is subsequently mistreated by the police, left uncharged in a jail cell for an indeterminate period, or given a sentence grossly disproportionate to his actions, then that individual's rights will not have been adequately protected.

Although AGT's "sphere of influence" is limited, and the resources at its disposal for reforming weak and ineffectual governmental institutions are also limited, some consideration should be given to the legal system -- ranging from the policing functions of the SPPD, to the policing functions of the local police, to the capacity of the judiciary to fulfill its role. Failure to adopt a sufficiently broad view with respect to the full ramifications of security and human rights could prove problematic for AGT at a later date.

Finding: AGT is taking appropriate steps to comply with this principle and is currently setting the industry benchmark for implementation of the Voluntary Principles with respect to the training of security forces.

28

Recommendation: AGT should encourage the MOIA to standardize the security and human rights syllabus and training, as well as the pooling of training resources and facilities for the police and the SSPD.

Recommendation: AGT, in tandem with the SPPD, should encourage the MOIA to provide the SPPD with access to firing ranges and training facilities so that the security providers can ensure that their weapons are working and are appropriately adjusted. This is a safety concern should be addressed in the near future.

Recommendation: AGT should encourage the MOIA to consider providing funding for nonlethal weaponry -- such as nightsticks, tear gas, and sticky foam sprays -- that can be used in the continuum of the “proportional use of force.” Although the selection of any such non-lethal options will need to include a review of the practical, legal, and political factors that could impact their use, the absence of a non-lethal alternative between verbal warnings and the threat or actual use of potentially lethal force could lead to an undesirably rapid escalation of force and attendant injuries.

Recommendation: Representatives of the ICRC, the OSCE, and GYLA reiterated to the Monitor their interest in playing a supportive role with respect to the human rights and security training course. The leadership of the OSGF office in Tbilisi has also offered to participate in human rights training. AGT should be certain to follow-up with these organizations, and should encourage both the BRM trainers and the SPPD instructors, who will be assuming responsibility for continuing the course in the future, to take advantage of these mutually beneficial offers.

Recommendation: AGT should encourage the BRM training instructors to identify the Voluntary Principles, as well as the international normative standards espoused in the Voluntary Principles, during the course of their instruction.

Recommendation: AGT might consider, through BP, inviting a senior SPPD official, such as Gia Pantskharva, to the next annual plenary meeting of Voluntary Principles participants to showcase the Government of Georgia’s initiatives to operationalize the Voluntary Principles through the security and human rights training program and institutionalize respect for human rights by the security forces.

4.2.1.3 Transparency and Accessibility of Security Arrangements

The Voluntary Principles encourage participating companies to urge Host Governments to make security arrangements transparent and accessible to the public, subject to any overriding safety and security concerns.

AGT is working closely with the Government of Georgia to make security arrangements transparent and accessible to the public.

The Bilateral Security Protocol, as well as the major Project Agreements referencing security and human rights, have been made public and are accessible via the Internet. The executive leadership of AGT and representatives of the Government have also referenced the importance of security providers respecting human rights in their public speeches and in comments to the media. In an effort to inform the widest range of stakeholders possible

29

regarding these issues, a Security and Human Rights section was added to the AGT website to provide regularized reporting of non-confidential, noncommercial information with respect to security and human rights issues impacting the Projects.19 In addition, Gia Pantskharva has been highly responsive to civil society organizations, such as GYLA and the OSGF, that have sought information regarding security operations and the use of funds and equipment provided to the SPPD. British Embassy officials deemed the degree of transparency demonstrated by the AGT Projects “a model for the industry.”

In addition, the AGT Communications and External Affairs Manager and the AGT communications team in Georgia have sought to make security arrangements transparent through the course of public roundtables, discussions with the press, and meetings with NGOs. CLOs and FSOs have sought to do likewise in the course of meetings with members of affected communities.

The remarkable degree of transparency associated with the Projects is all the more striking in light of the fact that, on a broader level, the Government of Georgia is not known for its transparency. Transparency International ranked Georgia 99th in transparency out of 158 countries in its 2006 report. Although this was a significant improvement over 2005, in which Georgia was ranked 130th, its score was well below even the “threshold for the perception of a serious corruption problem.”20

The Government’s decision in 2005 to seek to participate in the EITI,21 however, appears to represent a significant commitment toward greater transparency. Countries participating in this initiative agree to abide by criteria that guarantee a high degree of transparency regarding revenue information. The existing EITI template focuses on revenue payments to governments by members of the extractive industries for natural resources extracted, so implementation of the initiative in Georgia will require extending the template’s coverage to include transit activities in the country. The Government has worked with a range of interested parties, including the OSGF, to draft proposed participation criteria that would allow it to participate in this initiative.

Since independence, the Government has also taken important internal steps to promote transparency. A citizen’s right to access public information is acknowledged by the Constitution of Georgia, which was adopted in 1995. Additional guarantees of transparency are embedded in the Law on Oil and Gas and the Regulations of Oil and Gas Operations in Georgia. Specifically, the Regulations mandate that all records in the possession of the State Agency for Regulating Gas and Oil shall be open to inspection. Regulations on Oil and Gas Operations, Title XII, Chapter LXVIII, Article 246, Access to Records.

19 This can be found on-line at www.bp.com/caspian.

20 Annual Report 2005, Transparency International (2006); Annual Report 2004, Transparency International (2005).

21 The EITI was launched by U.K. Prime Minister Tony Blair at the September 2002 World Summit on Sustainable Development, in Johannesburg.

30

Finding: AGT is taking appropriate steps to comply with this principle, and continues to set the industry benchmark for making security arrangements transparent and accessible to the public.

Recommendation: AGT should continue to encourage the Government to follow-through with its commitments to promote greater fiscal transparency pursuant to the EITI.

4.2.2 Deployment and Conduct

4.2.2.1 Competency and Appropriateness of Public Security Forces

The Voluntary Principles note that the type and number of public security forces should be competent, appropriate, and proportional to the threat.

AGT has worked closely with the Government of Georgia to seek to help ensure that the public security forces protecting the pipeline are competent, appropriate, and proportional to the challenges presented by pipeline security threats.

AGT and the Government of Georgia agree that the primary role of public security is maintaining the rule of law -- which includes deterring acts that threaten AGT personnel and facilities and safeguarding human rights. This is implicit in the Joint Statement and throughout the Prevailing Legal Regime. Moreover, it is explicit in the human rights training initiated by Equity International and continued by BRM that is being provided to personnel providing security for the AGT Projects. The training emphasizes that actions by security personnel must be assessed in terms of their legality, necessity, and proportionality.

Competence -- Individuals recruited to serve in the SPPD often lack the common skill sets and knowledge necessary for effective policing activities and therefore require training. Moreover, not all recruits have previously used the standard issue Soviet-style AK-47 weaponry. This combination of policing inexperience and unfamiliarity with assigned weaponry presents safety and human rights risks, and underscores the importance of providing adequate training to SPPD recruits.

As outlined above in “Communicating Ethical Conduct and Human Rights Policies to Security Providers,” (Section 4.2.1.2), AGT has helped to ensure that new recruits to the SPPD are provided access to a world-class human rights and security training regime. The regime is designed to ensure that all individuals providing security for the AGT Projects receive instruction regarding the provision of security in a manner consistent with respect for the human rights of impacted individuals -- including instruction regarding the proper handling and use of weapons in a manner consistent with international standards.

Appropriateness & Proportionality -- Although the Government of Georgia has the authority and the responsibility to determine the number of personnel needed for the provision of security for the AGT Projects, AGT has encouraged the Government to ensure that that number is rational and reasonable in light of perceived threats. This effort has not been entirely successful.

31

According to Gia Pantskharva, forces in the new SPPD unit provided for the protection of the AGT Projects and the Supsa Terminal total about 720 personnel.22 In the event of a terrorist attack or major hostilities with respect to the pipelines, the SPPD would call upon the MOIA for back-up support.

Pursuant to the Security Agreement, which was entered in to by the Government of Georgia and BTC Co. on October 19, 2004, about 185 of the SPPD forces will be committed to a 17-kilometer stretch in the Kodiana Valley sector. In contrast, the remaining three sectors along the pipeline have on average 120 patrol personnel for 85 kilometers. The assignment of so many security providers to the small Borjomi area is premised upon the Government’s questionable conclusion that a large number of forces are needed to provide security for this environmentally and political sensitive region.

BTC Co. commits under the Security Agreement to providing “operations funding to the Government for the provision of security to the Project in the Borjomi zone, and to help offset associated security costs.” Security Agreement, Preliminary Statement. To make clear that such funding is not intended to pay the salaries of security forces, the Security Agreement expressly stipulates that the funds used with respect to security personnel “are all to be used solely for (1) operational expenses for security personnel providing security to the BTC Project in the Borjomi zone, including heating, fuel, food, office materials and similar suppliers… (3) conduct of a training program for Project security personnel on the Security Principles, and (4) management, procurement and logistical assistance.” Id., at Article 3. In addition, the agreement states, “[u]nder no circumstances shall the Operational Expense Funds be used…(y) for any Government military functions or personnel other than dedicated Export Route pipeline security forces, or (z) for any use inconsistent with the Security Principles.” Ibid.23

To demonstrate adherence to these commitments, the Government agreed to provide a report to BTC Co. every three months after the first delivery of Operational Expense Funds specifying the manner in which such funds were employed. Id., at Article 6. In addition, BTC Co. is entitled to engage independent auditors to verify that the Operational Expense Funds are being used in compliance with the terms of the agreement. Ibid.

The first tranche of $1 million in Operational Expense Funds was provided by BTC Co. to the Ministry of Finance in 2005, and the second tranche was provided in 2006. Pursuant to the Security Agreement, the Government submitted quarterly reports identifying the manner in which the funds were used, and BTC Co. engaged the independent auditing company Deloitte & Touche LLC to review the documents and verify that the funds were being used in compliance with the terms of the agreement. According to Deloitte, “the program expenditures funded by the Grant appeared to be supported by relevant documentation as required by the Grant 22 The SPPD work from seven bases, the last of which is still under construction and is expected to be completed in 2007. The SPPD work in mobile units, in 12-hour, 7-day shifts. In addition to the SPPD security forces, the AGT Projects employ unarmed horse patrols to walk the pipeline to and spot potential security issues and verify the operational condition of the Right-of-Way. Individual employed for the horse patrols are hired from local villages.

23 The Security Agreement was subsequently amended to permit Operational Expense Funds that exceeded the needs of the public security forces in the Borjomi Zone to be used to by the public security forces for provision of security in other Project Zones.

32

agreement.” “Agreed Upon Procedures Report,” Deloitte & Touche (letter of October 4, 2006).24

Notably, GYLA also has a strong interest in how the Operational Expense Funds are used during the course of the Projects’ lifespans, and has interacted with Gia Pantskharva to conduct its own investigation. GYLA believes that there should be an established oversight role for representatives of civil society with respect to the use of these funds.


Recommendation: The inexperience of SPPD recruits highlights the importance of AGT and the Government working together to ensure that security providers are appropriately trained with respect to human rights, security, and the use of firearms. The ongoing training to this end by BRM and the SPPD trainers is essential and should be continued.

Recommendation: In reviewing documents received from the SPPD/MOIA regarding the use of operational funds, Deloitte Touche found a lack of capacity with respect to accepted budgeting and accounting practices -- including that the security forces lacked a budgeting process, formalized reporting procedures, and specific internal monitoring and reporting requirements. AGT should strongly urge the Government to commit appropriate resources to implementing internationally-recognized budgeting and reporting procedures.

4.2.2.2 Mitigation of Foreseeable Negative Consequences Regarding Human Rights

The Voluntary Principles encourage participating companies that provide equipment to public security to take appropriate measures to mitigate any foreseeable negative consequences with respect to human rights.

AGT is aware of the challenges associated with the provision of equipment to public security forces, the mistakes made by some members of the extractive industry (including some AGT investors) with respect to the provision of equipment, and the lessons learned from those mistakes. AGT has assessed the legal and reputational risks associated with the provision of any kind equipment to public security forces and created strict guidelines governing such logistic assistance.

As noted above in “Risk Assessment: Equipment Transfers,” (Section 4.1.6), these guidelines include a ban on the provision of lethal aid. The guidelines also stipulate that: (1) all assistance be transparent and fully documented; (2) the reasons justifying such assistance be made public; and (3) wherever possible, the use of such equipment be monitored and publicly documented. Consistently implemented, these guidelines should significantly minimize human rights concerns associated with the misuse of equipment given to security providers.

24 The Deloitte & Touche reports are published on-line at http://www.bp.com/liveassets/bp_internet/bp_caspian/bp_caspian_en/STAGING/local_assets/downloads_pdfs/b/legal_agreements/ssps_grant_june_06_eng.pdf

33

Under the Security Agreement, BTC Co. agreed to loan to the SSPS (now the SPPD) “non-lethal and non-dual-use Project security equipment and facilities.” Security Agreement, Preliminary Statement. Such equipment includes cameras, binoculars, first aid packs, tents, compasses, PCs, office furniture, a generator, personal clothing and equipment, Land Rover station wagons, trailers, ATVs, trucks, and operations buildings. Security Agreement, Annex A.

The Government agreed “that the Equipment and Facilities will be used only by the security forces the Government has dedicated from time to time to provision of security for the [BTC] Project and the … SCP project … in the Borjomi zone” and that “[a]t no time shall the Equipment or Facilities be transferred , conveyed, loaned, sold, or made available … to personnel or forces other than the forces dedicated solely to the provision of security for the BTC Project Borjomi zone.”25 Id., Article 1, paragraph 2. Should the Government violate these commitments or otherwise materially breach its obligations under the Host Government Agreement or the Bilateral Security Protocol, BTC Co. would be entitled to terminate the loans in whole or in part. Id., Article 2, paragraphs 2 and 3.

To demonstrate adherence to these commitments, the Government agreed to provide a report to BTC Co. every three months after the first delivery of equipment and facilities specifying the manner in which they were employed. Id., at Article 6. In addition, BTC Co. is entitled to “inspect the Equipment and Facilities to monitor compliance with the terms of th[e] Agreement or to investigate any situations in which Equipment or Facilities are believed or alleged to have been used in an inappropriate manner.” Ibid.

The first tranche of equipment was provided by BTC Co. to the SSPS in 2005, and a subsequent tranche was provided in 2006. Pursuant to the Security Agreement, the Government has provided quarterly reports regarding the use of this equipment, and the AGT Projects have asked BRM to conduct an internal review to ensure that the equipment has been used for its intended purpose. As of September 2006, BRM had submitted six quarterly reviews confirming this to be the case, and there had been no evidence of the misuse or reallocation of any equipment. In addition, Deloitte Touche’s quarterly independent report audits delivery of the equipment against the provisions of the Security Agreement.


Recommendation: AGT should strongly encourage the SPPD to develop an effective internal auditing system by which to monitor the use of equipment provided by BTC Co. To the greatest extent possible without undermining security considerations, such a system, as well as the results attained from both internal monitoring and BRM’s review process, should be transparent and made accessible to the public. This could be done via the Internet, through the public release of the monitoring documents and findings, and/or in the course of stakeholder discussions.

25 The Security Agreement was subsequently amended to permit equipment that exceeded the needs of the public security forces in the Borjomi Zone to be used to by the public security forces for provision of security in other Project Zones.

34

4.2.2.3 Use of Force and Refraining from Violating Human Rights

The Voluntary Principles encourage participating companies to use their influence to urge public security to: (1) prohibit individuals credibly linked to human rights abuses from providing security services for the company; (2) use force only when strictly necessary and to an extent proportional to the threat; and (3) refrain from violating the rights of individuals exercising their rights under the Universal Declaration of Human Rights and the International Labor Organization Declaration on Fundamental Principles and Rights at Work.

The AGT Projects have worked directly with the leadership of the SPPD, and indirectly through instructors from Equity International and BRM, to educate security providers regarding the importance of acting in accordance with these principles, as well as how to act in accordance with the principles. Moreover, they are embedded in the Prevailing Legal Regime, and have been reinforced in detail in the Bilateral Security Protocol. Operationalization of these commitments is fundamental to compliance with the Voluntary Principles and, in light of the road-based criticisms of Georgia’s human rights record,26 imperative to managing AGT’s legal and reputational risks.

Prohibition on human rights abusers -- The selection process for individuals serving in the SPPD includes a background check of each applicant's work history and criminal record to ensure, among other criteria, that the individual has not been credibly implicated in human rights abuses. The Government is specifically committed to such a background check pursuant to Chapter II, Article 4.1 of the Bilateral Security Protocol. In addition, the importance of such vetting is reinforced in the human rights training courses. Since the advent of the AGT projects, there have been no allegations or reports of human rights abusers being permitted to serve in the SSPS/PPD or the SPPD.

Proportional use of force -- Under the Bilateral Security Protocol, the Government specifically commits to “ensure that Government Security personnel use force only where strictly necessary in a manner proportionate to the threat responded to….” Chapter II, Article 3.1. In addition, the Equity International and BRM human rights training programs stress the importance of abiding by internationally recognized standards with respect to the use and proportionality of force, including those pursuant to the United Nations Code of Conduct for Law Enforcement Officers and the United Nations Basic Principles on the Use of Force and Firearms by Law Enforcement Personnel.

The training courses also provide participants with practical guidance regarding how to respond to an array of security challenges in a manner that demonstrates appropriate respect for human rights. In addition to classroom lectures and analyses of hypothetical situations, SPPD personnel are provided hands-on training with respect to technical proficiency in the handling and use of firearms. Particular focus is placed on safety procedures and the precepts of defensive and proportional use of force. To date, the SPPD have detained a number of suspects, but have not had the occasion to employ their power to arrest.

26 See e.g., “The Challenge of Operation,” (Section 3.1).

35

Respect for human/worker rights -- The Government of Georgia is committed under both its international agreements and the Prevailing Legal Regime to respecting the rights of individuals as articulated in the Universal Declaration of Human Rights and International Labor Organization (“ILO”) Conventions. The "Maintenance of Public Order" segment of the human rights training course identifies these rights and focuses on how security providers can protect the AGT Projects in a manner that demonstrates respect for such rights. In addition, the BRM training regarding technical proficiency in handling firearms and defensive policing tactics serves to professionalize public security forces that will be protecting the Projects and helps to decrease the possibility of an accident, injury, or human rights violation. Notably, as part of its own internal effort to promote respect for fundamental worker rights, AGT maintains an “Open Talk” program through which employees (including the employees of contractors) can ask questions and lodge complaints (anonymously, if preferred) regarding worker rights, ethics, and related issues.


Recommendation: In light of the Government’s overall human rights record, human rights and security training regarding the proportional use of force and technical proficiency in the handling and use of firearms is essential to ensuring that the SPPD demonstrate respect for the principles articulated in the Universal Declaration of Human Rights and the ILO Conventions. AGT should work with the SPPD to ensure that this training is continued in an effective manner as the SPPD assumes responsibility for making the training course self-sustaining.

4.2.2.4 Reporting Use of Force

The Voluntary Principles note that when force is used by public security, the incident should be reported to appropriate authorities and the company, and medical aid should be provided to injured persons.

During the course of 2006, AGT worked closely with the SPPD to ensure that security providers were appropriately trained with respect to reporting the use of force and providing medical assistance to any injured persons, including suspects.

The BRM training course emphasizes to all trainees that the use of force is to be proportional to the threat posed, and that any use of force is to be reported. Moreover, under SPPD security guidelines, if security providers employ the use of force a report regarding the events preceding the use of force and the manner in which force was employed is to be provided to governmental authorities through the SPPD chain of command. In addition, AGT is to be notified. To date, adherence to this requirement has not yet been tested, as there are no known instances in which SPPD personnel have employed the use of force.

Pursuant to the Bilateral Security Protocol, the Government recognizes its responsibility “to provide medical aid to injured persons, including offenders, where force is used in connection with Government Security.” Chapter II, Article 3.2. In addition, the human rights training course emphasizes that public security forces have a duty to provide medical aid to persons, including offenders, injured by the use of force by public security providers.

36

Notably, in 2004 when five police officers strictly obeyed guidelines regarding the proportionate use of force and were themselves injured by an unruly crowd in the town of Tabatskari, the AGT General Manager for Georgia, visited the injured officers and their families and paid the medical bills incurred with respect to the officers’ injuries.

Finding: AGT is taking appropriate steps to comply with this principle and has demonstrated a leadership position with respect to injured security providers.


4.2.3 Consultation and Advice

4.2.3.1 Meetings Regarding Security and Human Rights

The Voluntary Principles encourage participating companies to meet with public security, companies, Host and Home governments, and civil society to discuss security and human rights.

During the course of 2006, the AGT security risk management team held regularized meetings with representatives of each of these stakeholder groups.

Public security -- The AGT security team held both structured and informal meetings on a regular basis with representatives of the public security forces responsible for protection of the Projects, ranging from representatives of the MOIA and Gia Pantskharva to SPPD recruits to discuss security issues. During 2006, coordinated meetings were held between the SPPD, the National Police, and the Army, including monthly meetings between the SPPD and the police in each region. AGT security also interacted directly with regional police chiefs and local police, particularly in areas where tensions exist, such as Tsalka. These discussions included human rights and related workplace safety issues. The precise issues addressed were typically documented in the monthly security reporting in the “Az SPU Regional Risk Review.”

During the course of the year, BRM instructors interacted on an ongoing basis with SPPD security forces taking the human rights training course. These forces ranged from new trainees to SPPD officers and instructors who will be responsible for continuing the training course in the future.

In 2003, the three Host Governments, with support from AGT, signed a joint protocol that committed them to observing the highest human rights standards. During 2006, the Joint Pipeline Security Commission established under the protocol met, bringing together security officials from the three countries to work and share their security experiences.

Companies -- AGT communicated with company investors in the AGT Projects regarding specific human rights and security issues and best practices during the course of meetings, conference calls, and through monthly reporting in the “Az SPU Regional Risk Review.” In addition, members of the security risk management team met with other company participants in the Voluntary Principles process to discuss effective implementation of the Voluntary Principles and associated successes and failures with respect to their

37

operationalization. The security team also discussed human rights and security issues with members of the extractive industry not engaged in the Voluntary Principles process.

Host and home governments -- During 2006, security and human rights issues impacting the AGT Projects were discussed with representatives of the Government of Georgia through the MOIA. Many of these meetings, and the specific issues discussed, were documented by AGT. In the past, AGT has also participated in formal meetings regarding the Projects and the impact of associated security arrangements with representatives of Georgia’s National Security Council.

Human rights and security issues were also raised on an ongoing basis with representatives of the United States (in Tbilisi, with the U.S. Embassy, and in Washington, with the State Department and the National Security Council) and the United Kingdom (in Tbilisi, with the British Embassy and, in London, with the Foreign and Commonwealth Office). In light of the founding role the United States and the United Kingdom played with respect to the Voluntary Principles, AGT engaged with these governments frequently with respect to the Voluntary Principles process, including regarding the newly emerging guidelines regarding participation criteria. AGT also engaged to a lesser extent with representatives of the Netherlands and Norway, other government participants, regarding security and human rights issues.

Civil society -- AGT representatives met with numerous representatives of civil society -- in Georgia, the United States, and the United Kingdom -- to discuss human rights and security issues. In Georgia, these included local organizations such as GYLA and Green Alternative, as well as local offices of international NGOs such as the OSGF and the International Crisis Group. In the United States and the United Kingdom, the groups consulted included think tanks, such as the Brookings Institution; and NGOs such as Amnesty International, Human Rights Watch, International Alert, and other civil society participants in the Voluntary Principles. In addition, members of the AGT security have worked in Baku and London with the ICRC and the OSCE. These discussions occurred on an ongoing basis, but were not regularized.


Recommendation: In the past, some of AGT’s governmental consultations were formalized and documented, and others were not. AGT should consider documenting the dates of and topics discussed at all information-gathering meetings regarding security and human rights, inasmuch as such strict record keeping could prove valuable in the event of a security incident.

4.2.3.2 Training and Observance of International Law Enforcement Principles

The Voluntary Principles encourage participating companies to promote, with Host Governments, the observance of international law enforcement principles. The Voluntary Principles also encourage participating companies to support efforts by governments, civil society, and multilateral institutions to provide human rights training for public security, as well as to strengthen state institutions to ensure accountability and respect for human rights.

AGT has consistently promoted the observance of international law enforcement principles with the Government of Georgia. This ongoing effort began on a legal level with the

38

embedding of the Voluntary Principles and other international human rights standards in the Prevailing Legal Regime and the Bilateral Security Protocol, was reinforced on a practical level through the Equity International train-the-trainers human rights course for security personnel, and continues to be reinforced through the BRM training.

The U.K. and U.S. governments have been directly and indirectly supportive of the Voluntary Principles and the underlying objectives that the principles seek to achieve. In 2004, the U.K. Ambassador, with support from the U.S. Embassy, publicly introduced the Voluntary Principles in Georgia.

As noted above in “Risk Assessment: Rule of Law,” (Section 4.1.4), however, virtually all the stakeholders consulted agree that Georgia’s judicial system lacks basic capacity and is in serious need of reform. This is a significant hurdle to securing accountability and respect for human rights, and is an ongoing challenge for both the Government of Georgia and AGT.

The Government recognizes these problems, and is seeking to address them. Other governments and international organizations are also working closely with the Government of Georgia to promote accountability and respect for human rights. Key governmental initiatives include the following:

• The U.K. is providing advice to the Government of Georgia regarding prison reform.

• The U.K. and the U.S. are sponsoring training, including human rights training, for the Georgian military.

• The U.S. State Department’s Bureau on International Narcotics and Law Enforcement provides training at police academies that includes a human rights component. The Government of Norway is also providing training to Georgia’s police and judiciary.

• The U.S. Department of Justice is helping Georgia to revise its criminal codes, and the EU is providing assistance to Georgia with respect to rule of law issues.

• The Government of Sweden is considering helping Georgia to set up an independent arbitral system as a form of Alternative Dispute Resolution.

AGT invited representatives of the OSCE and the ICRC to present lectures before Georgia’s public security forces at the opening of the Equity International human rights training course, and has supported efforts by these institutions to promote accountability and transparency. Members of the AGT security risk management team also participated in two USEUCOM strategy fora regarding regional security and human rights.

More recently, international institutions have engaged in the following additional initiatives to support accountability and respect for human rights:

• In April 2006, with support from the Council of Europe and ABA-CEELI, Georgia passed legislation establishing a High School of Justice to promote

39

professionalism and capacity within the judiciary. The High School of Justice will offer training for sitting judges, and will begin the training of judicial candidates in 2008. The school’s curriculum is being developed by ABA-CEELI, and the OSCE, and in 2007 the OSCE will help to organize the training of judges.

• During 2006, the OSCE and OSGF provided a police reform programs at the Police Academy. The OSCE is also interested in providing training to the border police.

• Each year since 2003, the OSCE has trained secondary school teachers regarding the methodology of teaching human rights. This program will be continued in 2007.

• In 2007, the OSCE will begin an initiative by which lawyers monitor and report on judicial proceedings related to human rights -- particularly torture.


Recommendation: AGT should consider using funding from the RDI, or an analogous capacity-building initiative, to promote good governance to reinforce and strengthen the aforementioned rule of law programs by governments and international organizations. Inasmuch as these programs dovetail with the Voluntary Principles’ mandate of increasing the observance of international law enforcement principles and ensuring accountability and respect for human rights, any steps that AGT could take to support or leverage the programs would further fulfill its commitments as a Voluntary Principles participant.

Recommendation: As co-authors of the Voluntary Principles, the U.S. and U.K. governments have a particular interest in and responsibility with respect to the success of the initiative. AGT could ask these governments, through their respective embassies in Tbilisi, to play a convening role, such as by hosting a conference regarding challenges associated with operationalizing the Voluntary Principles in Georgia.

Recommendation: As noted above in “Communicating Ethical Conduct and Human Rights Policies to Security Providers,” (Section 4.2.1.2), AGT should encourage BRM and SPPD instructors to take advantage of the offers made by the ICRC, the OSCE, GYLA, and OSGF to play a supportive role with respect to the human rights and security training course.

4.2.4 Responses to Human Rights Abuses

4.2.4.1 Recording and Reporting Human Rights Abuses

The Voluntary Principles encourage participating companies to record and report credible allegations of human rights abuses by public security to Host Government authorities and, where appropriate, urge investigation and that action be taken to prevent reoccurrence.

AGT has established internal processes and procedures by which to record and report allegations of human rights abuses by public security forces. It has also established a grievance procedure by which local villagers can report any concerns regarding the AGT Projects. Chapter

40

III, Article 9.1 of the Bilateral Security Protocol outlines additional processes and procedures for the sharing of information with respect to allegations of human rights abuses and the investigation of such allegations. In addition, Chapter III, Article 8.1 of the Bilateral Security Protocol sets out procedures for the parties to consult on an ongoing basis regarding human rights issues arising from the provision of public security.

During the course of 2006, AGT representatives encouraged the SPPD to abide by the rule of law, follow regularized legal processes, and work with the judiciary to ensure appropriate accountability. AGT has also encouraged the SPPD to agree to independent monitoring of its efforts to operationalize Georgia’s commitments under the Voluntary Principles and take appropriate remedial steps to address any shortcomings noted in such monitoring. Thus far, AGT has not encountered any credible allegations of human rights abuses by the SSPS/PPD, or the more recently constituted SPPD security forces, involved in pipeline security protection.


Recommendation: AGT should encourage the Government of Georgia to agree to its own independent monitoring of SPPD efforts to operationalize Georgia's commitments under the Voluntary Principles.

Recommendation: AGT's security risk management team should follow through with the SPPD with respect to the guidelines established under the Bilateral Security Protocol to promote the establishment of a credible system by which allegations of human rights abuses are appropriately investigated and addressed. To the greatest extent possible, such a system should be open and transparent to external stakeholders. To facilitate this effort, AGT might share with the SPPD the “BP-Az SPU Human Rights Response Plan,” and recommend that it be used as a starting point for investigating and addressing allegations of human rights abuse.

4.2.4.2 Monitoring Status of Investigations and Resolutions

The Voluntary Principles encourage participating companies to monitor the status of investigations and press for their proper resolution. Efforts should be made to ascertain whether the basis of allegations is credible; additional information should be made available, as appropriate, to concerned parties.

AGT has developed internal procedures by which to monitor and independently investigate allegations of human rights abuses by public security forces and press for their proper resolution, under rule of law, by Government authorities. As of the end of 2006, AGT had encountered no allegations -- credible or otherwise -- of human rights abuses by the SPPD security forces involved in pipeline security protection; accordingly, it had not yet had occasion to implement these procedures.

Specifically, AGT’s human rights and security risk management team has created the “BP-Az SPU Human Rights Response Plan,” which establishes a process to be followed by the Business Unit in the event that there is an allegation of human rights abuse. The objective of this document is to denote a process by which to mitigate human rights-related legal and reputational liabilities, ensure internal consistency in responding to human rights challenges, develop clear documentation, and demonstrate AGT's commitment to promoting respect for human rights. To

41

this end, the Response Plan establishes detailed guidelines to assist AGT in responding to an allegation of human rights abuse.

The guidelines include internal due diligence in all cases of alleged abuse and, when appropriate, an independent investigation of the allegations; the maintenance of records and documentation of all human rights related incidents; the establishment of a chain of command for managing an incident internally and a process for responding externally; the confidential engagement of the Host Government prior to any external engagement; and the efficient distribution of information. Notably, the security and safety of sources are to be protected.



4.2.4.3 Equipment Monitoring

The Voluntary Principles encourage participating companies to monitor the use of equipment provided to security forces.

AGT has established specific guidelines governing the provision and monitoring of equipment provided to public security forces. These guidelines, and associated monitoring, have been fully operationalized with respect to the provision of equipment to public security forces protecting the Projects in Georgia.

Notably, AGT assessed the legal and reputational risks associated with providing equipment to public security forces and created internal guidelines governing the provision of logistic assistance prior to commencing the Projects. The guidelines, which are outlined in detail under “Risk Assessment: Equipment Transfers,” (Section 4.1.6), include a ban on the provision of lethal equipment to public and private security forces and stipulate that the use of any equipment provided to security forces be monitored and publicly documented.

As noted above in “Mitigation of Foreseeable Negative Consequences Regarding Human Rights,” (Section 4.2.2.2), pursuant to Article 6 of the Security Agreement, BTC Co. has entered into a detailed commitment with the Government regarding monitoring, auditing, and reporting with respect to the use of equipment provided by BTC Co. to the SPPD security providers. Pursuant to this agreement, the Government is required to report to BTC Co. on a quarterly basis regarding the use of such equipment. In addition, BTC Co. is entitled to perform an independent audit regarding the use of the equipment, which it has done during the past two years through BRM. If it were determined that equipment had been used for inappropriate purposes, or in a manner inconsistent with the Voluntary Principles, then the loan of the equipment could be terminated.



42

4.3 Interactions Between AGT and Private Security

In some scenarios companies employ private security to protect personnel and assets. In the case of the AGT Projects, public security forces, under the auspices of the SPPD, provide protection for AGT’s external assets, such as the pipelines, and private security guards protect internal “behind the fence” assets, such as the pump stations.

The private security firm that provides these services for AGT is InterSecurity. InterSecurity was established in 1997, and was one of the first private security companies in Georgia. It has approximately 1,000 employees, 387 of whom work for the AGT Projects.

InterSecurity guards necessarily need to coordinate their activities with state forces, including as the National Police and the SPPD, with respect to security threats and the defensive use of force. Given the risks associated with such activities, the Voluntary Principles outline a series of principles to guide private security conduct. Although the role of private security actors differs from that of public security actors, inasmuch as private security provides only preventative and defensive services and does not engage in activities that fall exclusively within the mandate of state military or law enforcement authorities, the suggested principles overlap with many of the guidelines articulated for public security forces. AGT has sought to address these principles in the following manner:

4.3.1 Observance of Best Practices

The Voluntary Principles encourage participating companies to use their influence to urge private security forces to: (1) observe international humanitarian law and emerging best industry practices; (2) maintain high levels of technical and professional proficiency with regard to the use of force and firearms; (3) abide by the United Nations Principles on the Use of Force and Firearms by Law Enforcement Officials and the United Nations Code of Conduct for Law Enforcement Officials; and (4) respect the rights of individuals under the Universal Declaration on Human Rights and ILO Conventions.

AGT recognizes that it bears greater responsibility regarding the activity of private security guards. At the time of the Monitor’s visit, AGT personnel in Tbilisi were in the process of establishing guidelines with respect to the provision of a human rights and security training regime for private security guards.

It is anticipated that during the course of 2007 InterSecurity guards will be provided with training regarding the Voluntary Principles -- particularly with respect to international humanitarian law, standards regarding the proportionate use of force, and the rights of individuals under the Universal Declaration of Human Rights and ILO Conventions. Notably, at the time of the Monitor’s visit, AGT was seeking to insert a variation order into the AGT private security contracts covering BTC, SCP, and WREP. One section of this order, titled “Assurance Program for Private Security Contractor,” stipulates that private security guards must abide by and be trained with respect to the Voluntary Principles. Training has already been given to the security guards with respect to the provision of first aid, and AGT is in the process of drafting a brochure for the guards regarding worker rights. Training will not be provided regarding the use of firearms, as private security guards are not authorized to bear firearms.

43

Finding: AGT is taking steps to provide training for its private security guards in a manner consistent with the requirements of these principles.

Recommendation: Private security personnel need to be provided with formal training regarding human rights and security. Since their responsibilities are not as broad as those of the public security providers, what they need to learn could be offered in a condensed version of the human rights training course taken by members of the SPPD -- either by BRM, SPPD trainers who have already been trained regarding security and human rights, or AGT personnel.

4.3.2 Prohibition on Human Rights Abusers

The Voluntary Principles encourage participating companies to use their influence to prohibit private security forces from employing individuals credibly linked to human rights abuses.

AGT has taken aggressive steps to ensure that none of the private security guards employed to protect the Projects are credibly linked to human rights abuses.

Pursuant to the Bilateral Security Protocol, AGT has committed itself to requiring its private security contractors to “institute appropriate screening of security personnel” and not employ persons who have been credibly implicated in human rights abuses or serious criminal activities. Chapter II, Article 4.2. Likewise, the draft variation order for use with AGT private security contractors requires the vetting of individuals seeking employment as security guards.

InterSecurity conducts background checks on all applicants in conjunction with the MOIA, police, and local communities to ensure that none have criminal records and/or have been credibly linked to human rights abuse. In addition, applicants are required by InterSecurity to provide references and undergo a psychological evaluation.

There have been no allegations that any of the personnel hired to work for InterSecurity have been associated with human rights abuses.



4.3.3 Inclusion of the Voluntary Principles in Contractual Provisions

The Voluntary Principles urge participating companies using private security providers to include these principles in contractual provisions.

AGT embedded respect for the Voluntary Principles in its contractual relationships with InterSecurity.

The AGT-InterSecurity contract stipulates that the services provided by private security personnel must be consistent with the security and human rights provisions outlined in the Voluntary Principles. “Contract Number C-05-BTC-80701 Between the BTC Pipeline Company

44

and InterSecurity-Georgia Ltd. for Provision of Security Services for the BTC Pipeline in Georgia,” Section 3, Article 1 (May 10, 2005).


Recommendation: At the time of the Monitor’s visit, AGT was seeking to insert a variation order into the AGT private security contracts that includes the full text of the Voluntary Principles, as AGT has done in its contract with the private security company used in Azerbaijan. The variation order would also make clear that the Voluntary Principles are to govern the behavior of the private security provider. This is a constructive step, and the Monitor encourages AGT to follow through with this initiative to directly tie the Voluntary Principles into the contract.

4.3.4 Monitoring of Compliance

The Voluntary Principles urge participating companies to monitor private security providers to ensure that they fulfill their obligations under the principles.

Once AGT has ensured that InterSecurity guards have been provided appropriate training regarding Voluntary Principles commitments, as discussed above in “Observance of Best Practices” (Section 4.3.1), it will want to monitor implementation of these principles.

Finding: AGT will need to establish a monitoring program with respect to the fulfillment of InterSecurity's obligations under the Voluntary Principles.

Recommendation: In Azerbaijan, AGT and the private security provider formed a joint Operational Committee to ensure that the security provider’s performance is in compliance with its commitments and address any attendant shortcomings. Human rights issues are monitored and discussed under the Committee’s jurisdiction, and the security provider’s performance with respect to the Voluntary Principles is assessed against designated expectations and criteria on a quarterly basis. AGT should consider adopting a similar process with InterSecurity in Georgia. Similar criteria governing the behavior of the private security provider are included in the variation order.

4.3.5 Investigation of Alleged Abuses

The Voluntary Principles urge participating companies to investigate any allegations that private security have failed to demonstrate appropriate respect for human rights and to forward such complaints to proper law enforcement authorities for resolution.

AGT has an internal policy and attendant procedures to investigate any allegations of human rights abuses by private security providers, the BP-Az SPU Human Rights Response Plan, and is committed to ensuring that any credible allegations are shared with appropriate law enforcement authorities.

Pursuant to the Bilateral Security Protocol, AGT is committed to investigating and reporting “any credible allegations of human rights or ethical abuse” by private security personnel to the appropriate governmental authorities. Chapter III, Article 9.1. Moreover, in the

45

spirit of transparency encouraged by the Voluntary Principles, AGT has committed to making such information publicly available, unless such disclosure were to violate the law, Project Agreements, or result in material risk to persons or property.

InterSecurity has agreed to facilitate AGT’s independent investigation of any allegation that a private security guard failed to demonstrate proper respect for human rights. The variation order under consideration at the time of the Monitor’s visit would also require private security provider(s) to do so.

As of the end of 2006, there had been no allegations that any of the private security guards working for InterSecurity had failed to demonstrate proper respect for human rights.


Recommendation: AGT should encourage the private security provider to agree to its own independent monitoring of its efforts to operationalize the Voluntary Principles. In addition, AGT's security risk management team should work with the private security provider to establish a credible system by which allegations of human rights abuses are appropriately investigated and addressed. To the greatest extent possible, such a system should be open and transparent to external stakeholders and consistent with the “BP-Az SPU Human Rights Response Plan.”

4.3.6 Consultation with Companies, the Host Government, and Civil Society

The Voluntary Principles urge participating companies to consult with other companies, government officials, and civil society regarding experience with private security and unlawful activities committed by private security providers.

AGT consults on an ongoing basis with a variety of companies, government officials, and representatives of civil society regarding their experience with, and the activities of, private security providers.

AGT engages in extensive and ongoing consultations regarding security and human rights issues with companies (predominantly AGT investors and other company participants in the Voluntary Principles), government officials (including the governments of Georgia, the United States, and the United Kingdom), and representatives of civil society (ranging from local NGOs such as GYLA, to international institutions, such as the OSGF and the International Crisis Group). See above, “Consultations with Host Governments and Local Communities,” (Section 4.2.1.1); “Transparency and Accessibility of Security Arrangements,” (Section 4.2.1.3); and “Meetings regarding Security and Human Rights,” (Section 4.2.3.1). These consultations include discussions regarding experience with private security providers and the activities of those security providers. Discussions reference both private security providers in general, as well as any specific interactions the individuals consulted with may have had with InterSecurity. AGT keeps the SPPD and the National Police specifically advised regarding the activities of InterSecurity’s security providers.

InterSecurity hires its private security providers from local communities and, accordingly, has direct ties to those communities through its employees. InterSecurity uses its

46

guards to convey information regarding the nature and purpose of their work for the Projects to other members of these communities, and relays feedback from community members to InterSecurity management. The hiring of local guards provides revenues to the impacted communities, facilitates communication both to and from those communities and, accordingly, helps to ensure that the communities benefit from and contribute to Project security -- in effect, giving them a stake in the success of the Projects.

InterSecurity is a security provider for the British, French, Israeli, and Swedish Embassies in Baku, as well as the ICRC, the United Nations, and other private sector companies, and draws upon its work for these entities to stay abreast of best practices with regard to security and human rights issues.



47

About the Monitor

Gare A. Smith chairs the corporate social responsibility and risk management practice at the law firm Foley Hoag, in Washington, D.C. Prior to joining Foley Hoag he was Vice President of Levi Strauss & Co., where he supervised global implementation of the company’s code of conduct. Mr. Smith previously served as Principal Deputy Assistant Secretary in the U.S. Department of State’s Bureau of Democracy, Human Rights & Labor, and was a U.S. representative to the U.N. Human Rights Commission, the International Labor Organization, and the U.N. Working Group on the Rights of Indigenous Peoples. He has authored three books on codes of conduct and international human rights standards, which were published by the World Bank and the International Finance Corporation. Mr. Smith sits on the boards of a number of human rights organizations.

Human Rights and Security External Monitoring Assessment ... · PDF fileBRM Bowman Risk...

Documents

Transcript of Human Rights and Security External Monitoring Assessment ... · PDF fileBRM Bowman Risk...