U.S. NCP Initial Assessment: Edouard Teumagnie and AES Corporation

Bureau of Economic and Business Affairs
September 13, 2012


Background

The OECD Guidelines for Multinational Enterprises (MNEs) are voluntary, non-binding recommendations for responsible business conduct in a global context. The Guidelines are addressed to MNEs operating in or from the territories of governments adhering to the OECD’s Declaration on International Investment and Multinational Enterprises, of which the Guidelines form one part. Adhering governments have committed to encourage their MNEs to follow the Guidelines in their global operations and to appoint a national contact point (NCP) to assist parties in seeking a consensual resolution to issues that may arise under the Guidelines.

As a part of its function, the U.S. NCP receives concerns raised, in the form of a specific instance, about the business conduct of a MNE operating in or from the United States. It handles such issues in accordance with procedures it has adopted for this purpose. In such circumstances, the NCP's primary function is to assist affected parties, when appropriate, in their efforts to reach a satisfactory and consensual resolution to matters raised under the Guidelines. The NCP’s role is to take up issues that are amenable to a consensual resolution under the Guidelines and, where appropriate, make recommendations as to how the enterprise might make its business practices more consistent with the Guidelines. Consistent with the voluntary nature of the Guidelines, the NCP does not make a determination whether a “violation” of the Guidelines has occurred, nor does the NCP have legal authority to adjudicate disputes submitted under this process.

The Specific Instance

On August 27, 2011, Mr. Edouard Teumagnie, a Cameroonian citizen, submitted a specific instance filing to the UK NCP regarding concerns over alleged labor-related actions by AES Sonel involving Mr. Teumagnie, an AES Sonel employee. Teumagnie contended that AES Sonel’s actions were inconsistent with the principles in Chapter V (employment and industrial relations) of the Guidelines, specifically paragraph 1(e). Teumagnie alleged he suffered salary discrimination based on his race, during the period of July 2001-August 2002. AES Sonel is Cameroon’s main electrical utility supplier.

The UK and U.S. NCPs consulted and agreed that the U.S. NCP would take the lead on the specific instance because The AES Corporation, the parent company for AES Sonel, is a U.S.-based MNE. The UK NCP informed Mr. Teumagnie of this decision on September 25. At the U.S. NCP’s request, Teumagnie submitted on December 7, English language translations of several French language supporting documents. On January 5, 2012, the NCP notified AES of Teumagnie’s specific instance filing, forwarding the specific instance and supporting documents.

In his specific instance submission, Teumagnie stated he was Director for Information Services for Sonel, Cameroon’s national utility company, at the time AES Sonel assumed ownership of the utility in July 2001, and he continued in that position until August 2002. Teumagnie stated that after AES assumed control of Sonel operations, it replaced a number of other Cameroonian management staff with expatriate staff. He alleged that at least three of the new managers had less professional experience than he, but received salaries that were in a ratio of one to more than 25 in the favor of the new managers. He alleged the difference in wages was based on racial discrimination. He requested the NCP’s assistance in a mediation process that he hoped would result in AES adjusting his salary for the July 2001-August 2002 period to be “in compliance with the OECD Guidelines in relation to the prohibition on salary discrimination and the principle of equality.”

On January 10, Teumagnie submitted additional information to the NCP, elaborating that the actions cited in the August 27 specific instance were also inconsistent with Chapter II (General Policies) paragraph 6 and Chapter III (Disclosure) paragraph 4(d) of the Guidelines.

On January 17, the AES General Counsel contacted the NCP to acknowledge receipt of the specific instance. On February 16, an AES official telephoned the NCP to provide further information. He told the NCP that Teumagnie continued to be employed at AES Sonel, but in a different position. AES also reported that Teumagnie had pursued related complaints against AES Sonel through two separate and ongoing parallel proceedings in Cameroon: (1) a complaint initiated in 2005 with the Office of the Cameroon Labor Inspector, and subsequently litigated through Cameroon’s court system, seeking reinstatement to his prior position and related compensation;[1] and (2) two additional complaints filed in 2011 with the Office of the Cameroon Labor Inspector, regarding compensation.[2] AES stated that Teumagnie raised no allegations of salary discrimination in either set of proceedings (later confirmed by Teumagnie).

Teumagnie stated that he has pursued these concerns through the Cameroonian legal and administrative system, as well as through AES’ human resources department and the AES Hotline (for AES employees). Teumagnie reported no satisfactory reaction from AES through the company’s internal procedures. AES stated it has limited its engagement with Teumagnie on compensation-related matters while these legal and administrative processes in Cameroon are pending.

During the February 16 telephone call, AES agreed to the NCP’s request for a written response to Teumagnie’s specific instance filing. AES submitted its formal response on June 15, after a number of follow-up contacts by the NCP. The submission by AES reiterated and elaborated on points raised in the telephone call. On the allegation of salary discrimination, AES stated that the salary differences reflected standard AES wage scales applied to expatriate and local employees. AES said that its expatriate employees are compensated based on the position salary grade in their home country plus applicable foreign service premiums. Local employees are compensated based on the local position salary grade on a pay scale that reflects local competitive market conditions. Regarding the concerns Teumagnie raised in his January 10 submission, AES stated that it maintained a robust set of corporate governance practices and that it reported information on board members, key executives and their remuneration in a manner consistent with the requirements of the U.S. Securities and Exchange Commission.

The NCP forwarded AES’ June 15 submission to Teumagnie, who provided comments to the NCP on July 3. Teumagnie objected to a number of points in the AES letter and raised questions about the salary histories for the expatriate management staff. He confirmed the status of the separate legal and administrative proceedings in Cameroon, and that he was raising his salary discrimination concerns only through the specific instance process. The U.S. Embassy in Cameroon contacted Teumagnie and AES Sonel management to confirm certain factual circumstances.

Recommendation

The NCP declines to offer good offices to seek a mediated resolution between Mr. Teumagnie and AES. Teumagnie provided insufficient substantiation for a possible race-related basis for the salary differences he cited. Differentiated wage scale policies for expatriate and local employees are common practice among multinational enterprises and are not in themselves inconsistent with the Employment and Industrial Relations principles of the Guidelines. In the absence of clearer substantiation of concerns that AES policies or practices may be inconsistent with paragraph 1(e) of Chapter V of the Guidelines, the NCP sees no evidence that its involvement would further the effectiveness of the Guidelines. The existence of parallel proceedings was not a factor in the NCP’s decision not to offer its good offices.

Alan Yu
U.S. National Contact Point for the OECD Guidelines for Multinational Enterprises
September 13, 2012



[1] The Labor Inspector undertook but failed to achieve a mediated agreement and granted authority to Teumagnie to pursue litigation. At trial, the High Court of Douala dismissed some of Teumagnie’s claims, but awarded him certain benefits associated with his prior position as Director for Information Services. The trial court’s decision was upheld by the Court of Appeals. AES Sonel initiated an appeal review by the country’s Supreme Court of the lower courts’ conclusions. The disputing parties are currently awaiting the Supreme Court’s decision.

[2] The Labor Inspector undertook but failed to achieve a mediated agreement and granted authority to Teumagnie to pursue litigation.