Activism and BDS Beat 4 June 2015
Faced with a mounting international boycott campaign, the chief executive of French telecom giant Orange says his company wants to end its deal with its Israeli affiliate Partner Communications.
But Stephane Richard claims he can’t due to contractual obligations. This excuse does not pass the smell test.
“Believe me I would cancel the contract tomorrow if I could,” Richard said in Cairo on Wednesday.
His comments have also generated an immediate backlash from Israeli officials.
He was speaking to Daily News Egypt after arriving in the Egyptian capital to give a press conference to try to defuse the growing boycott of the company’s local subsidiary Mobinil.
Last month, BDS Egypt launched a boycott of Mobinil, which is 99 percent owned by Orange.
With at least 33 million Mobinil customers, Egypt is one of the French company’s largest markets.
Profiting from Israeli crimes
Orange operates in Israel through a franchise agreement with independently owned Partner Communications Ltd. Partner pays royalties to Orange and a share of its profits for using its brand name.
Through this arrangement, Orange participates in systematic violations of Palestinian rights, according to an investigation published last month by a coalition of French and Palestinian human rights and labor organizations.
The report notes that Orange profits from Israeli settlements in the occupied West Bank as Partner operates hundreds of communications towers and other infrastructure, much of it on privately owned land confiscated from Palestinians.
What has generated particular outrage is that Orange Israel directly sponsors two Israeli military units, one of which – the Ezuz tank brigade – directly participated in some of the bloodiest incidents in last summer’s assault on Gaza that killed more than 2,200 Palestinians.
Notably, the French government owns a quarter of Orange’s shares, making it a direct beneficiary of economic activities in settlements it deems to be illegal.
Orange, directly and through its subsidiaries, has about 250 million customers in dozens of countries.
Orange operates through various ownership arrangements: in the UK under the name EE, in Belgium as Mobistar, in Morocco as Médi Télécom and in Iraq as Korek Telecom.
It operates under the “Orange” brand in France, Spain, Jordan and Tunisia among others.
Owned by anti-BDS billionaire
Ironically, the controlling shareholder of Partner is the Israeli-American billionaire Haim Saban, who has joined forces with casino magnate Sheldon Adelson to convene a secret summit of “Jewish mega-donors” to combat the boycott, divestment and sanctions (BDS) movement.
In reaction to Richard’s comments, Saban declared that he was proud to own Partner and would not be “deterred by threats.”
“Huge financial risk”
Orange CEO Richard has claimed that the deal with Partner was “inherited” from the time before Orange was taken over and merged with France Telecom. But the deal was renewed in 2011 and amended this year.
“We didn’t renew the contract, we wanted to change the terms of the contract and include a termination date, as there previously wasn’t a termination date, and gave us no possibility of leaving the deal,” Richard said in relation to the recent amendment.
While the whole contract is not public, an April press release states that the agreement is set to last until 2025.
Richard explained that trying to get out of the contract would expose the company to “a huge financial risk.”
“The only other possibility would be to enter a dispute with the partner, and I’m sorry to say but entering a dispute when you have zero legal grounds in Israeli courts is not something I would recommend for my company,” he said. “I am not willing to pay hundreds of millions of euros just because I have to take a risk in terms of penalties.”
In additional statements reported by the Associated Press, Richard acknowledged that Orange’s role in Israel “is a sensitive issue here in Egypt, but not only in Egypt.”
There are several reasons why Richard’s excuses are unconvincing.
He says that Orange would have “zero legal grounds” in Israeli courts and could face huge penalties if it terminated the contract early.
But Orange does not own Partner and likely has very few assets in Israel that could be seized even if it faced an adverse judgment in an Israeli court.
Orange’s most valuable asset is its brand name, which is currently being damaged globally by its Israeli affiliate’s direct participation in criminal activities against Palestinians.
Any properly written business contract will contain a get-out clause for force majeure, or if one of the parties engages in criminal activity.
Even though Israeli courts might not view occupation, colonization and war crimes as criminal, Orange could certainly make the case in French courts or other venues that Partner’s activities in the occupied West Bank and Gaza Strip are illegal under international law.
Orange could say it is simply not obligated to participate in crimes.
It could point to the fact that the French government has warned its companies against doing business with Israeli settlements in occupied territories.
Because the settlements are “illegal under international law,” the French government states that “there exist risks tied to economic and financial activities in the settlements” including “legal and economic risks.”
Orange can also cite the emerging doctrine of corporate liability for gross human rights abuses.
It could therefore cancel the contract on the grounds that Partner is exposing it to unacceptable legal and moral risks.
Orange could not only argue that it does not owe Partner a single penny, but it ought to demand that Partner compensate Orange for any harm done to its reputation by Partner’s ongoing criminal activities.
Finally, in the very worst case, if Orange had to pay penalties to Partner, it would have to calculate which would be cheaper from a business perspective: cutting its losses now or remaining complicit in Israel’s apartheid and war crimes for another decade.
I concede that I am not a lawyer, but even so I can see many routes for Orange to take if it really wanted to end its complicity in Israel’s crimes.
It is impossible to believe that Orange’s well-paid corporate lawyers and consultants have already carefully considered all the options and rejected them.
Despite Richard’s assertions that profits from Israel are small relative to Orange’s size, the only reasonable conclusion from his hasty Cairo press conference is that this is a publicity stunt designed to defuse anger.
It is clear that Orange is feeling the pressure at home and abroad, but Richard is just looking for excuses to continue the status quo.
If Orange were serious, the very least Richard would have done is announce that the company would consult lawyers, the French government and human rights organizations to study how it could speed its exit from Israel as soon as possible.
Of course there’s another possibility: the anger Richard’s statements have already caused in Israel might lead the public there to hasten Orange’s exit by boycotting it in turn.
Tzipi Hotovely – Israel’s new deputy foreign minister who believes the world should submit to biblical justifications for Israeli occupation and colonization – has already reportedly convened a crisis meeting over the matter.
Orange's unconvincing excuses
Permalink Lana replied on
Thank you for this breakdown. While I always suspect corporations' "official statements" I wouldn't have had much understanding of the situation without the explanation and analysis you provided.
While businesses can make a case for costly contractual obligations in most situations, when held up against war crimes and ethnic cleansing such arguments become empty and obscene.
This sentence says it all: "Finally, in the very worst case, if Orange had to pay penalties to Partner, it would have to calculate which would be cheaper from a business perspective: cutting its losses now or remaining complicit in Israel’s apartheid and war crimes for another decade."
Permalink Chris replied on
Yesterday I cancelled my contract with EE. I was asked why and stated I didn't want my money to be used to support the illegal occupation in the West Bank, and the slaughter in gaza. The person I was dealing with told me I was the 12th person who had cancelled his contract citing this reason today alone
This is just another version
Permalink maggie replied on
This is just another version of murder for hire, of complicity in crime for profit. France should be ashamed of itself.
Change over to Bouygues
Permalink Philippa replied on
It also happens to be much cheaper than Orange!