JONES DAY TALKS®: The War in Ukraine’s Human Trafficking Risks

Dave Dalton:

The war in the Ukraine is clearly the dominant news story of 2022. Like any conflict of this magnitude, civilian families are adversely and profoundly affected. As women and children flee and evacuate they're at particular risk of both human trafficking and sexual exploitation. This is a true humanitarian disaster, which impacts the region and the entire global community. To help sort this out, explain some of the human trafficking issues and risks arising out of the Ukraine crisis, Valiant Richey, Special Representative and Coordinator for Combating Trafficking in Human Beings at the Organization for Security and Cooperation in Europe, or OSCE, joins Jones Day partner Harriet Territt, for a very timely and important discussion. I'm Dave Dalton. You're listening to JONES DAY TALKS®.

Val Richey represents the OSCE at the political level on anti-trafficking issues and assists the 57 OSCE participating states in the development and implementation of anti-trafficking strategies and initiatives. Before joining the OSCE Val worked for 13 years as a prosecutor in Seattle, Washington handling sexual assault, child exploitation, and human trafficking cases.

And based in London, Jones Day partner, Harriet Territt has more than 20 years experience advising the world's largest banks, financial institutions, and multinational companies on complex disputes, compliance, and regulatory issues. She represents clients in connection with investigations and proceedings brought by regulatory and enforcement agencies such as the Serious Fraud Office, the Financial Conduct Authority, and others, and she works with colleagues on cross border investigations involving OFAC, the DOJ, and SEC, as well EU Anti Trust Agencies. Harriet deals with related regulation and law such as compliance with bribery and corruption legislation, money laundering, and criminal finance laws. In that context, she has undertaken highly confidential internal investigations and compliance reviews for clients. She has specific experience in helping clients with the increasingly complex obligations that apply to international organizations under worldwide sanctions and money laundering rules. Much of her recent work has involved assisting clients with risk assessment and structural governance issues. Increasingly, she works with clients on liability, risk, and governance issues arising out of the cutting edge of financial technology, or FINTECH, such as distributed ledger technology, that's block chain, AI implementations, alternative finance arrangements, and consumer facing products.

Val, Harriet, thanks for being here. You have a lot to cover, so I'll toss right to Harriet to get you underway.

Harriet Territt:

Val, it's great to be connected to you again. Maybe we could just start with a bit of level setting. For anyone who isn't as familiar with the OSCE, can you talk a little bit about what it is, what it's purpose is, and particularly what does your role as a special representative entail?

Valiant Richey:

First of all Harriet, thanks so much for having me on the podcast. It's a real pleasure to be here and I really appreciate the interest of Jones Day in this topic. The OSCE is the world's largest security organization and we're made up of 57 countries from North America through Europe and into Central Asia, all the way to Mongolia. The focus of the OSCE is on promoting peace, security, and human rights. We focus on a whole bunch of topics from conflict prevention and resolution to election monitoring, and even including human trafficking. The reason for that is that human trafficking has a number of really important security and human rights implications.

Valiant Richey:

My job as the special representative is to support the 57 countries in their efforts to combat trafficking. My team and I do that in a number of ways including policy development and research and analysis, technical assistance and training, and political advocacy. What that means is that I travel to a lot of countries and really try to emphasize the need to comply with international legal obligations and to invest politically, financially, and with human resources to combat this really massive challenge across the whole OSCE region.

Harriet Territt:

I'm conscious we have a whole range of people listening, some from the business community, some more interested in the social and the policy side, but also quite a lot of young people who are maybe just starting out in their careers. You obviously just didn't end up as a policy special representative. How did you get to that? Do you have almost like a career advice perspective? Where did you start out and what's gotten you to where you are now?

Valiant Richey:

From a career advice perspective I can say that the one thing I've learned is there's no one single pathway anywhere. Most of the people who've occupied my position in the past have been ambassadors and it's an ambassadorial level position. I work in the diplomatic environment, which means I'm surrounded by ambassadors or ministers of foreign affairs. I operate in that kind of sphere, but my background is very different.

I worked in state government for a few years after college and then went on to law school and I became a prosecutor. I was a prosecutor for 13 years before coming to the OSCE and I worked most of that time in sexual assault, child rape and child molestation, sexual violence, and trafficking, and commercial sexual exploitation.

the interesting thing about that is that although it meant I had to learn a lot about the diplomatic sphere when I came here, it also meant that I had practical knowledge that very few people in this arena have. It gave me a really strong foundation for advising countries on what they should be doing because I had been in that position myself. That's been really valuable to me, but I hope it's also been valuable to the organization, to have that experience informing our advice to countries.

Harriet Territt:

Yeah, it's incredibly inspiring hearing you kind of talk about your background and how you've transformed a very practical and I'm sure quite a challenging kind of background experience into something that's really focused on forward facing and how can we kind of make this better.

You and I, we've been talking about doing this recording podcast for a little while now. Certainly from my perspective, when I talked to Jones Day's clients and to other people who are interested in this area, the interest has never been higher. The focus of the business community on the risks around human trafficking and exploitation, there's obviously a huge amount going on in the policy space, the legislation space, a lot of good public private partnerships and I suspect we may talk about some of that, but as ever, things do come up that are unexpected and which really change the conversation.

I guess I'm going to start with almost an assumption by me, but I'd be interested to know what you think. Am I right in thinking that the impact of the war in Ukraine is pretty much at the top of your to do list at the moment? How does it kind of fit into everything else that's going on in your world?

Valiant Richey:

You're exactly right. When we developed our work plan for this year, spending a lot of time on dealing with the war in Ukraine was not on the list. As you said, there are a number of massive initiatives globally on combating trafficking and exploitation that were underway that we were preparing to work on for this year. Then on February 24th everything changed. The war has dominated our activities, our thoughts, our initiatives, our responses for the last several months now.

The reason for that, you may be wondering because as I said I work on combating human trafficking and it's a war, so what's the connection there? Well, the connection is that the war resulted in the displacement of millions of people. Some six million people have left Ukraine.

The 6 million people have left Ukraine mostly to the west, heading into Europe. And a vast majority of those people are women and children who left with very little planning, very little resources, and are now in countries where they may not speak the language. They may not have places to stay. They're incredibly vulnerable. And that has heightened risks for literally millions of refugees. And so what we're doing right now is putting a ton of attention on trying to prevent this humanitarian crisis from becoming a human trafficking crisis. And that's been our focus for basically every waking hour since February 24.

Harriet Territt:

Absolutely. You and I have sort of talked about this. It's quite difficult to discuss these issues in a remote, dispassionate way. Particularly for anyone who's based in Europe, this is not a remote war. It is on our doorsteps. On any level, it is an absolute human tragedy. And obviously our thoughts are very much with anyone who is affected by what's going on there. But you do really have kind of a unique insight for certainly the people who may be listening to this, who may see news reports. The focus on the war, that focus on the people at bus stations and shelters around the world, in terms of kind of what is actually happening on the ground and how those risks that you just identified and manifesting themselves. Can you really try and ground for us what is actually happening? What is the situation that people are facing and how does the criminality side of it really come in?

Valiant Richey:

The position that we sit in here and I'm based out of Vienna, Austria, which is not far at all from Ukraine. And the position that we sit in here is a front row seat to a lot of really difficult and traumatic incidents right now. And these are people that we've worked with. Ukraine is one of the participating states in the OSC. I've been there as part of my missions to support their actions on combating trafficking. I have two Ukrainians on my team who obviously are really concerned about the situation in their country, their personal effects and so forth. And I've been now to several other countries on the border of Ukraine, including Poland, Hungary, Moldova. I just got back from my second trip to Moldova last night. So I've seen the border and I've seen what it's like, watching people, literally, a mother and three children carrying a couple backpacks across the border, walking with nothing else.

What I saw on the ground, on an individual level, is magnified by hundreds of thousands or millions. And what we're talking about as I said is some 6 million people, mostly women and children coming in states of extreme vulnerability, but that's not the only risk, is the current vulnerability. What we also know is that traffickers and organized criminals and individuals have traditionally exploited people in migration flows. They have preyed upon those flows to find vulnerable people, to exploit for profit. And we've seen that back in 2015, 2016 in the migration crisis involving Europe and the countries around it. And time and time again, this happens. We've also seen it in other conflicts. And so what we know is that those risks are now magnified even more. And then what we also know is that historically, Ukrainians are among the most exploited nationalities in Europe, even before this war.

And the reason I highlight that is because we know that organized crime has the pathways already established for exploiting Ukrainians. That they've done it many times before, that they know where to go. They know how to run their operations. And now what they've been provided with is this gift, if you will, in a very cynical sense, of millions of vulnerable people, who they can now try to prey upon to take into this situation. And when you put all those things together, it's a toxic cocktail of vulnerability and risk. And we know that traffickers know this because we've had numerous reports of traffickers or suspected traffickers approaching women, girls, teenagers in train stations on the border in the early days. But now in places removed from the border, offering them rides, offering them accommodation, offering them money. We've seen screenshots of persons approaching young Ukrainian women online of offering them money for a job undescribed.

But all they have to do is be able to talk to some men who like to speak with them and it's helpful if they're pretty. These are very, very risky exchanges that are happening. And so we know already that they are aware of what this situation, the opportunity it provides to traffickers to exploit. And they're going to take advantage of that. Unfortunately, it's not just the vulnerability, but it's also on the other side of that. And what I mean is that we've seen indications of a strong demand for Ukrainian women and access to them. So this is a very dangerous situation and will become more dangerous as these Ukrainian refugees start to run out of their limited financial resources and become more desperate. And that's a real problematic situation.

Harriet Territt:

I sort of started off by saying, it's difficult to be remote about these things. And you can probably just hear I'm listening to you talk, what you're describing is a humanitarian travesty, but also on an individual personal level. It's just incredibly upsetting to think that anyone in this day and age would be going through that experience. I do just want to say thank you to you and your team for everything that you're doing, because I appreciate that the OSC is focused on this. You're well resourced for what you're doing, but something like this is not something you can plan for. I guess my question that kind of comes out from all of that is where do you even start, from a policy and a practical response to something like this? You wake up on the 24th or 25th of February, you're faced with this situation. How is the OSC reacting both in terms of programs, but also in kind of practical support?

Valiant Richey:

It's a fantastic question because the circumstances are largely unprecedented. We haven't seen this level of movement in several decades in Europe since the second world war. And it may sound a bit strange, but one of the things that helped us be prepared for this was actually COVID. And what I mean by that is that when COVID hit, it was a crisis that hit very quickly without a lot of warning and upended the status quo. And what we did in COVID was assessed the situation, start to analyze it from a strategic perspective. That's exactly why we have the experts we do in my team. And try to think about what's going to happen and what will countries need to do to prepare for this. And we developed quickly a set of recommendations for countries to respond, including outlining online risks, which we predicted would be a serious challenge and in fact were.

And that prepared us for this situation with Ukraine, even though the underlying causes are completely different. We realized that what countries were going to need, as quickly as possible, was guidance on how to respond to the risks of trafficking. They were largely focused on the war, on the security considerations, but what we needed to do was give them advice about how to deal with the trafficking risks. And we knew this to be true because they started calling us and saying, "What do we do?" And so that's great that they reached out for help. So what we did is we developed a comprehensive set of recommendations and guidance for them, focused primarily on prevention. We didn't believe that the early days would see a lot of cases right away. What we wanted to do was keep people who were vulnerable, safe from entering....

Wanted to do was keep people who were vulnerable safe from entering exploitative situations. We focused on a couple buckets. First of all, on meeting the immediate needs of refugees. These are things like housing, transportation, access to medical care, access to childcare and labor markets. They need money. They need the opportunity to work. But if you're a mom with three kids and you don't have access to childcare, how are you going to work? So you can see it's a cascade of problems.

What we need to do is think about that from their perspective and then line up the solutions. So we focused on immediate needs, access to official information in languages that they understand. It doesn't help to put, for example, guidance to Ukrainians in French or German if they don't speak that language. Then we focused on what countries needed to do in terms of integration. As this conflict is going to persist, that was our assessment in the early days, they need to think about how do you integrate? What kinds of longer term or mid to long term solutions do they need?

Then we wanted to emphasize the need to start anti-trafficking actions. For example, monitoring those online venues that I referenced earlier, making sure that there weren't fake job offers or Ukrainians being sold into prostitution through those websites. They really need to monitor that to make sure that people are safe. So we worked on putting those together and now we're working on supporting countries and implementing them. I just came back from Moldova, where we had a round table working together to try to go through them. What's been done, what hasn't been done, what gaps remain. It's a tedious process, but it's a crucial process because there's so many technical layers to it that we really need to work closely with the countries to make sure that they implement it.

Harriet Territt:

One of the things I'm kind of always struck by when you and I talk, and this kind of has a resonance for my own area, which is very much around other types of corporate criminal liabilities. So things like money laundering, sanctions also now supply chain is just how sophisticated the verticals of people who are focused on the trafficking issue is. Sometimes the perception that it's all guys in ill fitting leather jackets in car parks with 50 pound notes. Only that is a part of it, but this is kind of a highly integrated end to end. It's almost like a global business. It's just a global business that relies and prays on human capital and vulnerability.

Valiant Richey:

It's absolutely a business. In fact, it's an incredibly lucrative business. The global estimates of the profits, profits I emphasize, off of human trafficking and forced labor are $150 billion a year, which is more than the Apple corporation. So I emphasize that because it's a huge problem involving millions of victims per year. Yet you're right, that we're tempted to think about the problem of one actor here or the movie Taken with Liam Neeson rescuing his daughter from a small gang somewhere, but it's actually much broader than that.

It implicates numerous sectors of our economy. It implicates the technology sphere. It implicates the health sphere and construction sphere and so on. So it takes a really holistic approach. One of the things that we're doing to try to meet the scope of the problem is to really also focus on awareness raising. So we've been doing a lot of efforts to conduct interviews, write op-eds, put out information on social media to really raise awareness around not only the risks in this particular situation, but the risks more broadly and the result has been quite positive. You've probably seen more information about human trafficking related to the war in Ukraine than in any prior conflict ever. That's great because that raises awareness for people who are at risk. It raises awareness of people who might be able to help people at risk and it overall gives a better opportunity for people to avoid those situations of exploitation.

Harriet Territt:

Tell me, one point I do want to come onto when you and I were talking about doing this podcast, you said one thing that really did strike me and that's you were focusing on the direct impact of Ukraine, and that's what we've been talking about in terms of the number of people involved. But also there's a bigger, indirect impact that may be triggered by or may be exacerbated by Ukraine, but actually is going to be felt in different parts of the world. What did you mean by that and where do you see those impact points being?

Valiant Richey:

It's a bit messy out there right now, Harriett, as you probably have picked up on. It's a turbulent time globally and that has real relevance to the work that I do because it makes me worried about how people are going to be incentivized to exploit others and how people in vulnerable situations might be exploited. What I meant by that was that we have a series of global challenges. Everything from inflation, which is pumping up prices and reducing people's financial stability. That has been amplified of course, by the war in Ukraine and pressure on food and energy prices.

But second, we have ongoing supply chain disruptions that began in COVID and were quite acute already, and now of course are being amplified by the war in Ukraine. What do I mean by that? Well, that food, for example, is already a shortage and likely to get worse and the opportunities to source that food are limited. We see it in cargo or in construction field. We see it in the medical field. What that means is that then prices compound, vulnerability increases and it starts to extend. One area where we have seen an impact on this is in labor migration and so one example is that in central Asia a lot of the workers migrate to different countries, including Russia for work.

As the sanctions have come into play, or as the war has come into play, or as COVID has come into play, the labor migration has begun to decline abruptly. We're talking about a large number of workers, hundreds of thousands who are now either going to have to find a different location to migrate or won't get income. Why does that matter? Well, it's not only income for them, but it's also the taxes they pay to their governments and all of this starts to have a ripple effect on the economy. That then translates into a whole bunch of other risks. Procurement buyers and companies are now going to have pressure to try to source the materials or labor from other places and then they start to maybe take risks that they wouldn't have before. That creates more possibility of not only creating vulnerability among populations, but also potentially fueling exploitation by paying for goods and services that were produced by trafficking victims.

One of the great examples of this was during COVID when it turned out that governments in particular were buying millions and millions of medical gloves from companies that were using forced labor. So in the response to a public health crisis, governments were unintentionally actually fueling exploitation and labor. The United States, for example, took the unprecedented step of banning the import of those medical gloves based on the fact that it was forced labor, but that takes a lot of courage in the middle of a pandemic to say we're going to cut off the importation of these medical gloves, which we desperately need, because we don't want to fuel forced labor. The result of that was to actually work with the companies to give payments to those workers and to try to improve the situation. But this is all a very long way of saying that compounding crises across the world are creating a number of situations and ripple effects that are really worrisome to me and a lot of other actors in the anti-trafficking arena.

Harriet Territt:

No, I can actually see that.

Valiant Richey:

... Actors in the anti-trafficking arena.

Harriet Territt:

No, I can absolutely see that, and I think your point about the importance of businesses standing by their systems and processes as we go into this slightly more uncertain environment is a really well made one. And having set out the complexity and the challenges, we probably ought to try and bring it back to possibly some of the more positive things that are happening, or at least the kind of support that is out there. And that's really the backdrop to where I at least started this discussion.

There is this significant global policy and legislation effort. It's not just one or two countries anymore. It's a broad base of countries recognizing that this is an issue which needs to be dealt with on both a local, national, and a global basis. And certainly the most eminent example for me is the European Commission draft regulation on human rights and environmental due diligence.

Frankly, that's the subject of a podcast in its own right. I suspect we won't get into the detail there. But it does carry with it both almost like a carrot and a stick for companies. In the sense that it sets out a process by which companies can benchmark their own systems and their systems of their suppliers, making it hopefully a lot easier to compare and contrast and drive good behavior in the market. But they also have the stick. There is this risk of civil, administrative, and potentially ultimately criminal penalties as laws like that are starting to come in.

You spend a lot of time talking to businesses, as well as governments all around the world. Are you seeing businesses start to engage with those new laws? Is there any key takeaway that you have? If we've got a client listening who is aware this is in the background, but doesn't really know where to start, what would you tell them to start thinking about right now?

Well, the simplest way that I can explain the current movement in policy around the world is this. If we want to stop human exploitation, we have to stop paying for it. And what I mean by that is that when we buy goods and services that are produced by exploited persons, we fuel that industry and we incentivize the continued exploitation of people. And if we want to stop that problem, if we want to foster human rights, then we need to stop paying for those things. And so due diligence is really the process of figuring out how to ensure that you're not doing that.

How do you make sure that when you buy something from a supplier or your supplier buys something from another supplier that they aren't fueling or buying it from traffickers or labor exploiters? And it's about putting those protection mechanisms into place. It's about checking that they're actually working. And in some cases, it's a process for government to hold those who aren't doing those things accountable for that. It's a pretty straightforward concept.

Now, that's not to minimize the complexity of actually implementing that. We know that global supply chains are huge and complex and it's tricky. But the simple idea behind it is to stop paying for exploitation.

So, the way that governments are approaching that right now is they're starting to pass laws that are requiring companies to take those steps, to exercise due diligence in their supply chains. And ideally governments are applying those same principles to their own procurement, which is something I really push for. It's a bit hypocritical and it's really not a fair playing field if government applies it to businesses, but not to themselves, and so we've been arguing for that.

The interesting thing about these laws is that they don't stop at the border of the country that adopt it. So if, as you said, the EU proceeds and adopts its draft directive on human rights due diligence, the fascinating thing about that is it'll impact companies and governments outside the EU too.

Why? Because part of it will be that countries and companies outside the EU will have a lot more challenge importing their goods into the EU, or exporting, depending on whose perspective you're talking about, because the EU won't allow those goods to come in if they can't certify that they are clean of forced labor.

Likewise, a company in the EU might have its supply chains that extend outside the EU. Perhaps they source from Serbia or from Kazakhstan or Uzbekistan, and they need to be sure that the labor they're using or the goods that they're buying are not tainted with forced labor.

And so what we've been doing is trying to talk with those countries, even outside the EU, about the legislation that is surely coming and how to get ready for it. And companies definitely need to take this into account because they want a clear understanding of what's happening to their business practices. They want a bit of predictability. And the best way to do that is to look at these laws, to look at the policy action that's happening and start preparing for it.

Now, what's the business case for this? Why should they bother? Well, first of all, because they want to keep their economic market. They want to be able to sell their goods. But the other reason that policy like this is a good thing is because it fosters a level playing field.

Think about how, as a business, you are going to compete against another business that isn't paying its workers. It's difficult. There's no way you can compete if you are going to follow the rules with a company that is not following the rules. And so one of the values of these policies is they create a harmonized approach. They create a level playing field, so all companies are competing fairly.

The other thing they do is they create a level playing field on human rights more generally. So that certain regions of the world, and there are several right now, certain regions of the world don't have some advantage because they are exploiting their workers or forcing people to harvest or to produce certain goods. And I think this is, again, something that as a globe, we should be really excited about.

Valiant Richey:

We want human rights to be advanced and we want them to be done in a fair and equal way across the whole region. And this is why we are big fans of this legislation. We also want to support businesses in making sure that they can respond to it and comply with it in a fair and stable way.

Harriet Territt:

Yeah, absolutely. And I would just sort of echo. The clients that we speak to, the focus on this issue has never been greater. But also the demand for more consistency, as you sort of say. The ability to compare like for like, and the ability to understand what's going on in supply chains. The more that this is happening around the globe, the easier that is, the better it drives standards. So it really is a virtuous circle once we get into that position of constantly driving standards.

Val, this has been absolutely incredible. Again, I do just want to extend my thanks, not only for joining us today, but also for sharing and all the work that you and your team are doing.

Valiant Richey:

Thanks so much for your great questions, but also for taking the time. You're busy, I know this. You have a lot of people relying on you right now, and I really appreciate Jones Day and you making the effort to be engaged on this topic. It means a lot to us.

Dave Dalton:

Val, Harriet, thanks. Great information that you covered very well, and I think we'll talk more as this situation evolves.

For more information on the OSCE or Val Richey, go to OSCW.org, and you can find complete bio and contact information for Harriet Territt at Jonesday.com.

We thank you for listening. I'm Dave Dalton. We'll talk to you next time.

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