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Focus: Lawyers encouraged to pay attention to travel risks

Issue grows in prominence as kidnappings, terror threats on the rise
|Written By Julius Melnitzer

When it comes to travel risk, lawyers from private firms as well as in-house counsel should be paying attention. Not only are lawyers more likely to be on the move these days, but their expertise could help assess the potential liability involved and the nature of preventative and remedial action.

As Riyaz Dattu of Osler Hoskin & Harcourt LLP’s Toronto office sees it, travel risk is often unavoidable because emerging countries are the places where travel can be most important from a business perspective.

“My sense is that there is no substitute for being on the ground when different cultures are at play,” says Dattu.

For this and other reasons, including rising lawlessness in certain countries and terrorists’ thirst for financing, kidnapping and ransom have become a big business.

According to The New York Times, Al Qaida alone has garnered at least US$125 million in ransoms since 2008 with more than half of that sum paid in 2013 alone. The U.S. Treasury Department, which says kidnapping for ransom is Al Qaida’s most significant source of financing, estimates the terrorist’s group take in the past six years at $165 million.

To put things in perspective, letters discovered recently by The Associated Press described how Al Qaida commander Mokhtar Belmokhtar, subsequently killed in a raid by the Chadian army in March 2013, took a scolding from his superiors for accepting a “meagre” ransom of only US$1 million in the 2008 kidnapping of Canadian Robert Fowler, the highest-ranking United Nations official in Niger, and his assistant, Louis Guay. The ransoms for most western officials, it seems, had been for three times as much.

Still, neither Niger nor Chechnya ranked in the top-20 countries for the number of kidnappings for ransom in 2013. In absolute terms, that honour belongs to Mexico with 5,000 to 7,000 such kidnappings annually. From a regional perspective, Asia and the Pacific accounted for the majority of recorded kidnappings with more than one-third of global cases, according to Control Risks, a global organization that specializes in helping companies manage political, integrity, and security risks in complex and hostile environments. Most of the region’s incidents originate from India, Pakistan, Afghanistan, and the Philippines.

Otherwise, Africa is also a high-risk region, particularly Nigeria where the vast majority of kidnappings occur in the oil-rich Niger Delta. Mali, Niger, southern Algeria, and Kenya also harbour significant threats. And while Latin American kidnappings have declined by half since 2005 and now represent less than one-quarter of the global total, Mexico, Venezuela, and Colombia still rank high among individual countries. In the Middle East, kidnappings are common in Syria and Lebanon.

What the Control Risks statistics don’t evaluate, however, are the nature of the targets at risk for kidnapping. So while Mexico may be the riskiest country in the world for kidnapping, it’s predominantly Mexicans who are at risk followed by expatriates and local managers. That stands true for the Western Hemisphere in general.

The highest risks for foreigners, according to the Chubb Group of Insurance Companies, are in the Eastern Hemisphere mainly in Africa, Pakistan, Afghanistan, Iraq, and Chechnya.

Travel risks can also take many forms. “Let’s say you’re looking into investing in resources in Uganda and you send someone from the legal department to do some due diligence,” says Mark LaLonde, director of international operations and company secretary at CKR Global Risk Solutions. “And what if that person happens to be gay?

Uganda is a country that’s advocating the death penalty for gays and lesbians.”

But however the statistics break down, there’s little doubt that companies are worrying more and more about the kidnapping risk. Bombardier Inc., for example, confirms it has various travel-risk management processes in place with their nature varying on the type and level of personnel involved.

For employees generally, Bombardier has put in place several tools to help individuals define where the risks are and deal with a situation if one actually arises. To that end, the company engages various partners including HRG, a worldwide international corporate services provider that specializes in travel and acts as a central travel agency. Bombardier also engages medical, security, and personal protection advisers.

For obvious reasons, companies don’t want to disclose whether they have ransom insurance. But according to The Economist, premiums paid for kidnapping and ransom insurance doubled to $500 million in 2011 from $250 million in 2006. Premiums for a businessperson in Iraq range from $3,000 to $6,000.

“Most major corporations take kidnapping risk pretty seriously,” says Wes Odom, executive vice president for operations at the Ackerman Group LLC, a security and investigative consultancy that worked on executive protection at the 2014 World Cup in Brazil.

“Some do so more than others, some go overboard with policies and protocols, but everyone is taking a look at it.”

In many cases, companies are factoring kidnapping into their overall risk assessments, even for core investment decisions.

“We had a client inquiring about going into Pakistan,” says Odom.

“What we told him was that it was doable if Pakistani nationals were involved but not if the project was going to be staffed by Canadians, Americans or Brits because the Taliban was on a tear against all westerners.”

Increasingly, technology is playing a part.

“Service companies are looking at things like information-based reservation systems that not only track itineraries but allow them to educate employees about the security and health risks in particular locations, important contacts, and insurance requirements,” says William Daly, managing director of Control Risks.

“These systems also allow clients to assess the business case and perhaps mandate approval for travel to high-risk areas.”

Unfortunately, many Canadian companies are behind the curve here, at least partly because the federal government hasn’t stayed on top of the problem.

“The U.S., which has an entire portion of the State Department analyzing, dealing with, and providing education about kidnapping risk and other travel risks, is at the forefront of the issues,” says Dattu.

“There’s nothing like that in Canada. Essentially, you’re on your own when you’re abroad.”

Indeed, Dattu believes the Canadian government hasn’t done enough for Canadians abducted or detained abroad.

“Sending a diplomatic note or making it apparent to foreign governments that Canada would stand behind its citizens is not something that has happened as often or as much as we’d like it to,” he says.

Travel risks are frequently the province of the human resources or securities department rather than the responsibility of a company’s legal branch. Still, whether or not general counsel have a direct role, it’s not likely that legal departments can remain totally at arm’s length from the issue. At the very least, general counsel or their delegates should be part of an internal group appointed to manage a kidnapping or a similar crisis.

“Regardless of the outside help available, every company needs an internal group to manage this type of crisis,” says Odom.


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