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March 24, 2005
Caterpillar Bulldozes Shareowner Concern Over Aiding Alleged Israeli War Crimes
    by William Baue

Caterpillar faces a shareowner resolution as well as a lawsuit filed by the family of peace activist Rachel Corrie that cites the Nuremberg Tribunal as precedent in alleging war crime complicity.


Last week, two years after peace activist Rachel Corrie was allegedly killed by a Caterpillar (ticker: CAT) bulldozer used by the Israeli Defense Forces (IDF) demolishing Palestinian homes in the Occupied Palestinian Territories, her family filed a lawsuit against the company. The development shines a spotlight on a shareowner resolution filed by Jewish Voice for Peace (JVP) and the Interfaith Center for Corporate Responsibility (ICCR) members asking Caterpillar to report on whether bulldozer sales to IDF comply with its Code of Worldwide Business Conduct.

"When shareholders initially brought this issue to Caterpillar years ago, before we even filed the resolution, we told the company, 'you're putting yourself at risk for a lawsuit.,'" said Liat Weingart, JVP's director of campaigns and programs. "The lawsuit adds fuel to the fire of the argument that Caterpillar is working against its own best interests by not responding in any kind of substantive way when shareholders have requested that they investigate the matter."

"CAT is being charged with war crimes in a federal court--that can't be positive for the company," Ms. Weingart told SocialFunds.com.

The resolution and the lawsuit both document that Caterpillar has been made aware of the fact that its machines are used in human rights violations. For example, both cite a May 2004 letter from the office of the United Nations High Commissioner on Human Rights to Caterpillar CEO Jim Owen.

"...I am deeply concerned about the actions of the Israeli occupying forces...using armored bulldozers supplied by your company to destroy agricultural fields planted with crops, as well as numerous Palestinian homes and sometimes human lives, including that of the American peace activist, Rachel Corrie," wrote Jean Ziegler, UN Special Rapporteur on the Right to Food. "...there is also a concern that allowing the delivery of your D-9 and D-10 Caterpillar bulldozers to the Israeli army through the Government of the United States in the certain knowledge that they are being used for such actions, might involve complicity or acceptance on the part of your company to actual and potential violations of human rights..."

Despite the fact that Caterpillar commits to "respond to public inquiries...with prompt, courteous, honest answers" in its Code of Worldwide Business Conduct, the company has yet to respond to the letter.

"We did not respond directly to Mr. Ziegler," Caterpillar spokesperson Ben Cordani told SocialFunds.com. "Our position on the topic is well known and well stated."

Caterpillar articulates its position in a brief statement on its website that also serves as its proxy statement opposing the resolution.

"[M]ore than two million Caterpillar machines and engines are at work in virtually every country and region of the world each day," the statement reads. "We have neither the legal right nor the means to police individual use of that equipment."

Caterpillar's rhetoric, which disperses attention globally, sidesteps the very specific and localized point of the lawsuit, according to Jennie Green, senior attorney at the Center for Constitutional Rights (CCR), which is representing the Corries.

"The point is that Caterpiller knew how these bulldozers were being used by the Israeli Defense Forces in the occupied territories, and the company continued to supply them, and failed to take any precautions," Ms. Green told SocialFunds.com.

Mr. Cordani could neither confirm nor deny whether the company performed a risk analysis after being informed of its potential implication in human rights abuses.

CCR contends that a company can be held liable for knowingly providing substantial assistance in human rights violations, according to precedents in US courts. CCR is also citing a precedent that goes back to the Nuremberg trials.

"One case involved the shipping of Zyklon B, a delousing agent," Ms. Green explained. "In and of itself, Zyklon B was not fatal to people, but the Nazis were using it in the gas chambers."

"There were three corporate officers brought before the Nuremberg tribunal, and two were found not to have sufficient knowledge of what was happening with the gas, but one was found to have very clear knowledge that the product was being used in this way, which violated international law," she continued.

The resolution filers express concern that the controversy surrounding the use of Caterpillar bulldozers in potential human rights abuses will damage its reputation in ways that will adversely impact long-term shareowner value. JVP has documented a "skyrocketing" in negative media coverage of Caterpillar and its human rights record in the past five years, including more than 160 articles in major media outlets about the lawsuit in the two days immediately after it was filed.

"The lawsuit and this negative media coverage are affecting the company in very concrete ways," said Ms. Weingart of JVP. "CAT knows that reputation and branding are among its most valuable assets, and have a long-term impact on shareholder value."

"The CAT logo means that they are reliable, they build the infrastructure of the world, but if the company continues this head-in-the-sand approach, the CAT logo is going to become synonymous around the world with human rights abuses," Ms. Weingart said. "And ultimately, that would negatively impact shareholder value."

 

 
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