ABSTRACT
Besides the protective mechanisms described above, domestic laws and regulations act as further restrictions on the potential for companies to undermine state interests. They establish the parameters for acceptable company behavior and for the actions that states may take to deter or penalize violations. A state can also go outside of its established rules and influence company conduct by applying pressure to prevent or halt behavior it considers belligerent. In wielding its power informally, a state may threaten to withhold future business from a company or to deny it privileges such as subsidies or licenses to engage in regulated activities; 1 it may also threaten to nationalize the company. 2 Sometimes such pressure is exercised in anticipation of the risk of belligerency, as occurred in the run-up to World War II when the United Kingdom sought to ensure the loyalty of Cable and Wireless Ltd., a company upon which it relied for sensitive communications services:
The relationship between government and private business was renegotiated in light of the strategic importance of the company’s assets and activities which allowed the integration of intelligence with decision-making. In 1937 the British government pressured the company to dismiss all foreigners employed in cable stations in the British Empire. Together, the British government and Cable and Wireless devised a “scrutiny scheme” which used the Official Secrets Act of 1920 to sanction telegraphers to read cable slip and retransmit useful information to London. 3
As seen from this example and from the case involving Edward Snowden, hostility that emanates from a company toward a state may be the result of actions by individual employees, regardless of the relationship that the state maintains with the company’s ownership or management; indeed, the closer that relationship is (it can be particularly tight when the state uses the company to carry out an essential aspect of governance), the more damage an employee may be able to inflict on the state, and this may occur without the 148company’s awareness. Besides hostile acts that employees may take at their own initiative, states must face the prospect that the loyalty of individual employees may not be with the state as much as it is with other groups to which they adhere, including the company that employs them, 4 and that if a company engages in conduct hostile to a state its employees may be willing participants. On the other hand, they may be unwilling participants but hesitant to risk losing their jobs by defying their employer and siding with the state. 5 The organizational dynamics of a company may also deter employees with knowledge of hostile acts by other employees from speaking out, especially if the act involves a higher-ranked colleague. 6 The role of the individual in company hostility can be problematic and complex. The state may respond by using its authority over individuals to counter attempts by a company or by its employees to subvert the state’s interests for their own; national laws that pertain to acts against the state by individuals can be relevant in this regard. In a practical sense, however, when company hostility arises from within a diffuse base like its workforce, advance detection and prevention becomes more difficult. As seen from the Snowden case, a state may only be able to consider countering the acts of individual employees once they act, exposing its interests to harm.