T. Markus Funk, Ph.D, the firm-wide chair of Perkins Coie LLP’s White Collar and Investigations practice, Markus was a decorated federal prosecutor in Chicago and served as a section chief with the US State Department-Balkans. He co-authored the groundbreaking book, Child Exploitation and Trafficking: Examining Global Enforcement and Supply Chain – Challenges and US Responses (second edition).
Robert Mensiger, Senior Counsel at KBR Inc. Robert has extensive experience directing compliance, regulatory enforcement, and investigative programs in the public and private sectors. He spent 26 years as a special agent and manager with the US Departments of Treasury, Homeland Security, Defense, and the Small Business Administration’s Office of Inspector General.
Kevin B. Metcalf, who has more than 30 years of experience as an investigator and prosecutor. He is founder of the National Child Protection Task Force (NCPTF) which brings together experts in legal strategy, open source intelligence investigations, cellular mapping and analysis, dark web, cryptocurrency, and more to aid law enforcement agencies around the world on cases involving missing, exploited, and trafficked children.
John Fanning, Vice President Business Development, Integrity Risk International.
According to the International Labor Organization, nearly 21 million people across the globe are victims of forced labor, a form of enslavement that encompasses labor and sexual exploitation. As one of the fastest growing criminal enterprises in the world, human trafficking can pose serious ESG risks in the supply chains of global companies.
Three leading experts recently took part in an IntegrityRisk-hosted webinar to discuss today’s global human trafficking and forced labor scene. They reviewed the legal, regulatory, moral dimensions of these global problems in an effort to raise awareness and educate viewers about strategies to combat them.
Highlights from the discussion are below.
What informed your interest and work in these issues?
“There are between 20 to 40 million people in modern slavery today,” said John Fanning, who noted that a precise statistic is elusive because so many cases go undetected. Organized crime profits tremendously from human trafficking, he added. Fanning also noted that IntegrityRisk’s attention to and interest in human trafficking and forced labor in the supply chain has been magnified by its work in the ESG (environmental, social, governance) diligence space. Those efforts have spotlighted the growing demand for human rights due diligence, broadly, and the need for specialized intelligence gathering tradecraft for detecting human slavery in supply chains, more specifically.
T. Markus Funk said he traces his interest in the subject of child trafficking to his days as a federal prosecutor in Chicago, where a number of cases included touch points in the area of child exploitation. In particular, while serving at the UN Mission in Kosovo as the USDoJ Section Chief, Funk had a front row seat to witness the global dimensions of human trafficking. Once back in the US, he and then-prosecutor (now federal Judge) Virginia M. Kendall felt what was needed was a practitioner’s guide to prosecuting, adjudicating, and defending these complex cases, and to also address the related company supply chain compliance issues, the two published their book in 2012. It examined the issues from all sides, including recidivism rates, prosecution approaches, and forensic issues. That book’s updated second edition, which has become the leading treatise on the subject, was published in 2017 (with a particular focus on supply chain-related issues).
Robert Mensinger arrived in the private sector with experience in federal law enforcement that included work on cases involving child exploitation, human trafficking, and money laundering tied to debt servitude after 9/11. Working for defense contractors, compliance programs involving combatting trafficking in persons and forced labor are required. But every company should be a good corporate citizen and develop programs that address human trafficking and forced labor. Every organization will have unique risks inherent to their own supply chains and should mitigate those risks.. Mensinger noted that, for example, for any company operating globally, it’s essential to be in full compliance with international laws such as, for example, the UK’s Modern Slavery Act.
Kevin Metcalf noted that since 1988 he’s held positions in the military as well as state, local, and federal law enforcement. After law school, he was struck by differences in approaches and perceptions between investigators and prosecutors. “There are different ways of looking at things, even though you’re working on the same problem,” he said. “As a prosecutor, I’ve got to tell the jury a story. I’ve got to make it understandable. I’ve got to connect the dots,” he said. He came to see the value of connecting those dots early on — at the front end in the investigative process. Metcalf saw that by making use of the full range of investigative tools and techniques, more cases of child exploitation and trafficking could be solved. His answer was to found the nonprofit National Child Protection Task Force (NCPTF), which operates today as a “fully volunteer-run team of seasoned professionals, parents, and advocates” donating their time and skills to help law enforcement find missing people faster.
How is the legal and regulatory ecosystem changing and what are key challenges your experience has surfaced?
On the legislative side, there are a multitude of laws and regulations across countries and in US states that are “all about disclosure,” noted Funk. What’s shifted some, he says, are that some things that used to be merely ‘red flags’ are now codified in some law as standalone violations. “The big problem,” observes Funk, “is not a lack of laws or business initiatives.” He expressed his personal view that, “we don’t need new laws, but the real thing we need is enforcement.” He compared the lag between legislation and enforcement on this front to what’s unfolded in slow motion with the Foreign Corrupt Practices Act (FCPA), which was enacted in 1977 but only began to be seriously enforced decades later. Funk said that there is often little awareness or appreciation of the extent to which the laws and regulations on the book remain unenforced.
Mensinger noted that there are few companies that are not understaffed on the compliance front. In many cases it takes litigation or bad publicity threatening a company’s reputation to drive meaningful action when it comes to uncovering and mitigating the infection of human trafficking in private sector supply chains.
Metcalf says the legal challenges he faces now in the US revolve around how much predators are “networked, something law enforcement fails to do very much. He added that predators are telling children, “when you leave, make it look like you are running away,” because it changes the law enforcement response. He said that his strong preference would be to simplify the designation to reflect simply whether someone is missing or not — as opposed to designating whether a missing child is a runaway. Metcalf also bemoaned the fact that the urgency of a response to a missing child diminishes once 48 hours have passed.
What are strategies companies can take to safeguard their supply chain?
Funk noted that, for companies with the requisite leverage, unannounced visits to manufacturing facilities (whether owned or vendor-run) during which interviews can be conducted can be very helpful. He also emphasized the importance of reviewing, verifying, and following up on documentation and certifications such as local language contracts. As he put it, a “paper-only” compliance program that is not meaningfully enforced can be very dangerous from a compliance perspective. In response to a webinar viewer question about whether there were any US or international instruments that mandate companies to develop compliance programs, he replied, “In the US, certainly, there is nothing out there. In other words, you can comply fully with the California Transparency in Supply Chains act by simply saying, ‘we do nothing to monitor our supply chains.’” In other words, that particular law is descriptive, rather than proscriptive. In the absence of substantive enforcement, he added, the primary concern for many companies is reputational; put another way, today the concern tends to be with brand damage, not government action. But that could change if and when the state and federal enforcers and regulators begin to more actively pursue the laws in their respective tool belts.
Funk also recommended viewers listen to a September 2020 Perkins Coie LLP podcast with Jeremy Gottschalk, the general counsel for Sittercity.com, an online marketplace for childcare providers. The podcast also features Virginia M. Kendall of the U.S. District Court for the District of Northern Illinois, one of the nation’s leading experts in the area of child exploitation. In their discussion, they discuss potential threats companies may face when operating in the childcare space, concrete steps companies can take to identify and root out potential abusers from their online platforms, and cooperation with law enforcement agencies.
Mensinger emphasized the importance of due diligence with subcontractors. He noted that much of the risk companies face is detected with their lower tier subcontractors. He noted that a best practices approach would be to conduct unannounced audits, interview subcontract employees away from the employers, inspect housing conditions, and make sure that employment agreements are understandable and in the language of the employees.
Where does awareness need to be raised, and about what?
Metcalf noted that his organization is being contacted continuously by media in reaction to a plethora of misinformation and “crazy theories” that circulate today. “We need to focus on the reality,” said Metcalf. One of his advisors at NCPTF, for example, was trafficked by her own mother, here, in the United States from age eight to 13. “We live in this bubble here in the US, especially people that have a good life,” he said. “We need to educate people that these kids are out there not because they want to be out there. They’re out there because they’ve been groomed by a parent, or a brother or sister, or a close family friend. This stuff is happening right under our nose.”
Funk said that Hollywood actors opining on the ills of human trafficking is one thing, but deeper awareness-raising has to happen on the consumer level. He says that he doubts that consumers are likely to probe the companies they buy goods from for details about their supply chain, and as a result awareness tends to be raised when big cases capture headlines. This is a dynamic observed in the context of the Foreign Corrupt Practices Act, which from the late 1970s until the early 2000s was generally unknown in US boardroom. “It has to be more than billboards,” said Funk. He said that until he visited some factories himself, it was hard for him to grasp the full dimension of the problem. “The value of a human life” when it comes to human trafficking in the supply chain needs to matter at least as much as the other sustainability issues that consumers today tend to care about.
What is the mission of the National Child Protection Task Force?
Metcalf closed the webinar with a summary presentation of the work of the NCPTF which exists because, “We imagine a world where children wake up and experience childhood, feel safe wherever they are, and end each day looking forward to tomorrow.” He noted that the organization’s case tools span a broad spectrum and include: location and image tracking; cryptocurrency, social engineering, legal proceedings and prosecutions, dark web, and open source intelligence.
Fanning noted that IntegrityRisk made a financial donation to support the important work of NCPTF and that the company was committed to assisting the organization’s work. Through the end of 2020, IntegrityRisk pledges to donate five percent of the revenue from any ESG report ordered by webinar participants to the NCPTF.
SELECTED RESOURCES AND BACKGROUND
Laws and Regulations
Trafficking Victims Protection Act (22 US Code Chapter 78)
US Federal Acquisition Regulation (FAR) (48 CFR 52.222-50)
Supply Chain & Trafficking Chat With a Federal Judge, June 2020 ‘White Collar Briefly’ Perkins Coie LLP podcast
Policing Online Child Care Platforms: A Conversation with Sittercity’s General Counsel Jeremy Gottschalk and the Hon. Virginia M.Kendall, September 2020, ‘White Collar Briefly’ Perkins Coie LLP podcast