Civil Society Calls the Bluff of World Bank Accountability

For Immediate Release

New Delhi: December 17, 2013

Civil Society Calls the Bluff of World Bank Accountability

“Response of World Bank President Jim Kim is evasive and does not even recognize the finding of the report on Tata Mundra,” noted social activist Medha Patkar said. She was speaking at a discussion yesterday on the World Bank and its accountability in the context of the recent reports on Tata Mundra project. “The current stalemate is that of the president versus the Compliance Advisor Ombudsman (CAO), as he has not given any heed to the findings of CAO,” she said.

Member of Parliament Mani Shankar Aiyer said “Development without consideration for environment and people is pointless.” He decried government policies which give big corporations tax concessions, which is glorified in the name of stimulus, while the same done to the farmers and marginalised is called subsidies.

The meeting was held in the context of the recent report by World Bank’s accountability mechanism, which reported Bank’s own policy violations by its private sector arm, International Finance Corporation (IFC) which financing the Coastal Gujarat Power Ltd (CGPL – Tata Mundra) project.

CAO in its report said that Environmental and Social risks and impacts of the project were not considered and addressed; There is no social baseline data; IFC’s policies for land acquisition not applied, despite physical and economic displacement; Inadequate attention paid to the requirement of biodiversity conservation; IFC failed in its review and supervision of the impacts on airshed & marine environment; and IFC failed to examine the cumulative impact of projects around Tata Mundra.

Earlier speaking about the inequity which is promoted by the World Bank, noted economist Prof Arun Kumar said “World Bank does not have one line of operation but have one underlying principle, i.e., marketization of natural resources.” He further said, “the notion that private efficient and hence market needs preference puts the question of equity secondary. The questions of efficiency and equity are opposing. Rationality is dominated by profits and greed is justified.”

Energy expert Soumya Dutta, local community leaders Ayub Haji and Bharat Patel also spoke at the meeting.

MASS Responds to Dr. Kim’s statement

Responding to the statement issued by Dr. Kim MASS said, “By not standing firm behind your accountability mechanisms and their findings, you are undermining their legitimacy and playing into the hands of the ones inside the Bank and outside who find these mechanisms to be a distraction for their smooth running of business.” Drawing parallels between the Morse Committee Report on Narmada dam (Sardar Sarovar) and of CAO on Tata Mundra, the statement from MASS said that the president is “following the same strategy which the then President Lewis Preston, who constituted Morse Committee followed – pretending that you have not seen the findings.”

IFC & World Bank President Evading Responsibility

Not once but twice now, the International Finance Corporation (IFC) has shown leniency in coming to terms with Compliance Advisor Ombudsman’s (CAO) audit report on TATA Mundra. After the CAO pointed that IFC has violated its social and environmental guidelines in its financing the project, the private arm of the World Bank rejected the audit report findings. The rejection was subsequently endorsed by the World Bank Group President, Dr. Jim Yong Kim, who did not prescribe any remedial action for IFC to take.

When the pressure started to mount with International and National Organizations coming together to question this inaction on Dr. Kim’s part, the President instructed his senior staff to have a forward looking statement from the IFC on the issue. This statement turned out to be a damp squib, a non-starter, non-committal, and non-serious. Written in an evasive language, it only breeds confusion, keeping the community’s concerns at bay and undermining CAO’s findings. What is striking in the statement is the noticeable absence of IFC’s roles and responsibilities, with the major chunk of these delegated to Costal Gujarat Power Limited, the TATA subsidiary running the project.

Silence of the President of the WBG goes on to prove that he is either helping IFC absolve itself from responsibilities, or is unable to do anything more than undermine the credibility of internal mechanisms like the CAO. Either ways, the legitimacy of his tall claims of renewable energy could be jeopardized if he continues to remain silent on a thermal project that is not only environmentally fragile, but financially in woes.

Contact: Bharat Patel  - +91-9426469803

Background:

a.       CAO Audit Report: http://www.bicusa.org/wp-content/uploads/2013/10/CAOAuditReportC-I-R6-Y12-F160.pdf

b.      IFC Response to CAO report: http://www.bicusa.org/wp-content/uploads/2013/10/IFCresponsetoCAOAudit-CoastalGujaratPowerLimited.pdf

c.       Key findings and observations: http://www.bicusa.org/wp-content/uploads/2013/10/Key-Observations-and-Findings.pdf

d.      Press note of MASS: http://www.bicusa.org/wp-content/uploads/2013/10/MASS-Press-Release-10-24-131.pdf

e.      Indian organisations’ letter to World Bank President: http://www.bicusa.org/over-100-organizations-demand-world-bank-withdrawal-from-tata-mundra/

f.        International organisations’ letter to World Bank President: http://www.bicusa.org/groups-worldwide-join-indian-people-demanding-kim-pull-ifc-out-of-tata-coal-plant/

g.       Facebook page: https://www.facebook.com/pages/Wake-Up-Kim/677682028922900

h.      MASS letter to World Bank President Dr. Kim: http://www.bicusa.org/local-gujarati-group-sends-letter-to-dr-kim-urging-withdrawal-from-tata-mundra/

i.         World Bank President Dr.Jim Kim’s statement: http://www.worldbank.org/en/news/press-release/2013/12/09/statement-world-bank-group-jim-yong-kim-civil-society-private-sector-investments.print

j.        MASS’ reply to Dr. Jim Kim: http://masskutch.blogspot.in/2013_12_01_archive.html#2984461388647718201

MASS Replies to World Bank President Dr. Jim Kim's Statement

December 14, 2013

Dear Dr. Kim,

It was with great interest that we received your statement issued early this week, in response to the “concerns expressed by the CSOs about several projects supported by World Bank Group”. We hope one of those projects is the Coastal Gujarat Power Ltd (CGPL – Tata Mundra).

We make this assumption because we know that many prominent citizens from different parts of the world wrote to you, expressing concerns at your inaction on the Compliance Advisor Ombudsman (CAO) report on Tata Mundra. Those include people representing 102 organisations from India, another 68 organisations from 28 countries, and host of emails and regular mail.

Since this was the first statement from you on a report made public by CAO six weeks back, we were expecting a much clearer statement, acknowledging the findings of CAO, laying out a road map for mitigation for the damages already caused and some bold measures, sending a clear message to the staff as well as clients, that you are serious about safeguard policies and there is zero tolerance for its violations. You disappointed us, again, Dr. Kim. Disappointment because you missed the point, chose to act weak and made a mockery of all that communities have been saying about impacts.

We will keep the discussion on how private corporations can contribute to “transformative projects” for another day. We have a very different experience and view from what you have on that. It may suffice to state that you can no longer fool anyone with hollow and empty rhetoric – “aligning our operations with our goals of ending extreme poverty by 2030”, “ boosting shared prosperity”, “help the poor lift themselves out of poverty”, “end extreme poverty” and “build shared prosperity”.

In your statement you have elucidated about Bank’s past experiences, claiming it to have benefitted the poor. Our experience in India is different. Particularly two projects, Narmada dam and Singrauli power project which the Bank financed some three decades back are worth mentioning. Bank’s financing undermined the national policies and statutory requirements (Bank approved funding for Narmada dam two years before the Ministry of Environment and Forests gave its clearance); displaced hundreds of thousands of people, a large majority of them are still awaiting rehabilitation; and in both cases, Bank rescued itself from any responsibility some years later, leaving the people high and dry. While the magnitude of damage of both environment and people were too high in these projects, the experience in other projects was not any different.

The first accountability mechanism of the Bank, the Inspection Panel was an outcome of a relentless struggle by the people of Narmada valley, along with their allies from different parts of the globe. You may know that in 1991 the Independent Review Committee (Morse Committee) was the first independent committee constituted by the Bank to review a project it financed. The findings of the committee were revealing. It said:

“The Bank and India both failed to carry out adequate assessments of human impacts of the Sardar Sarovar (Narmada) Project.

“There was virtually no basis, in 1985, on which to determine what the impacts were, that would have to be ameliorated.

“This inadequate understanding was compounded by a failure to consult the people potentially to be affected.

“…the Bank failed to take adequate account of the fact that a large proportion of those at risk from the development of the Sardar Sarovar Projects are tribal people.

“In these and other ways, the Bank failed to follow the principles and policies it set out…

“The Bank failed to consider the effects of the Projects on people living downstream of the dam.

“There has been no comprehensive environmental assessment of the canal and water delivery system in the command area.

“We think the Sardar Sarovar Projects as they stand are flawed, that resettlement and rehabilitation of all those displaced by the Projects is not possible under prevailing circumstances, and that environmental impacts of the Projects have not been properly considered or adequately addressed.

“Moreover we believe that the Bank shares responsibility with the borrower for the situation that has developed... it seems clear that engineering and economic imperatives have driven the Projects to the exclusion of human and environmental concerns... India and the states involved... have spent a great deal of money. No one wants to see this money wasted.

“But we caution that it may be more wasteful to proceed without full knowledge of the human and environmental costs. We have decided that it would be irresponsible for us to patch together a series of recommendations on implementation when the flaws in the Projects are as obvious as they seem to us.

“As a result, we think that the wisest course would be for the Bank to step back from the Projects and consider them afresh. The failure of the bank's incremental strategy should be acknowledged."

Dr. Kim, doesn’t it ring a bell when you read this? Didn’t CAO say something very similar, sans, recommendations, which it is not mandated to make? CAO after its audit on Tata Mundra said:

“The Complainants, who are from a religious minority and occupy a socially marginal position given their migrant traditions, were not adequately considered as the (Environmental and Social) E&S risks and impacts of the project were considered and addressed.

“There is no social baseline data in relation to the fisher people who reside seasonally in the fishing villages. In the absence of a baseline data IFC was not in a position to ensure the proper application of IFC’s policies related to land acquisition, despite indications that households living on the bunders have been displaced by the project (both physically and economically).

“IFC failed to ensure that its client’s E&S assessments adequately considered the risks and impacts of the project on these fisher people.

“IFC paid inadequate attention to the requirement of biodiversity conservation.

“Serious lapses in IFC’s review and supervision of the impacts of the project on the airshed and marine environment.

“ IFC has not ensured that its client correctly applied the World Bank’s Thermal Power: Guidelines (1998) in that the project airshed has not been defined as a degraded airshed—a classification that brings with it a requirement that there will be no net increase in the total emissions of particulates or sulphur dioxide within the airshed.

“IFC’s process of E&S review was not appropriate to the nature and scale of the project or commensurate to risk as required by the Sustainability Policy.

“IFC has not assured itself that the plant’s seawater cooling system will comply with applicable IFC Environmental, Health and Safety (EHS) Guidelines.

“IFC’s E&S review paid inadequate attention to ensuring that the project’s risks and impacts were “analyzed in the context of [its] area of influence,” as required by Performance Standard 1 (of IFC), including “areas potentially impacted by cumulative impacts…from project-related developments that are realistically defined at the time the E&S assessment is undertaken.”

“IFC should have advised its client that third-party E&S risk emerging from the project’s proximity and relationship with Mundra Port and Special Economic Zone needed to be better assessed, with mitigation measures developed.”

Dr.Kim do you need more reasons from anybody on why you should take bold steps on Tata Mundra? If findings of your own mechanism are not convincing enough, what else on earth can convince you?

The statement and the so called action plan issued by IFC CEO Jin-Yong Cai shows only how non-serious IFC is about the findings of CAO. After rebutting all that CAO has reported, they issued this, which is nothing but to confuse the public, making a mockery of communities’ concerns and yet again, undermine CAO and its findings.

As we mentioned in a statement earlier, “While some of the action plan stated are listing of actions taken pre-CAO time, some other are just suggestions, resulting in nothing particular. There are no timeline, no specific targets or indicators. Significantly, the statement says that it will bank on the expertise of the company, whose violations are in question. The statement is silent on IFC’s violations of its own policies, listed by the CAO”.

By you not taking any action on the findings of CAO, you are sending out a message to your clients and staff that you are non-serious about safeguard policies. That any violation of the policies will not alter the course of IFC’s current financing, or future investments. If the purpose of it is only ornamental, why are you investing time and resources in reviewing the safeguard policies? If not to be acted upon, if there is no political will to implement them steadfastly, the policies and its review, both are a sham.

By not standing firm behind your accountability mechanisms and their findings, you are undermining their legitimacy and playing into the hands of the ones inside the Bank and outside who find these mechanisms to be a distraction for their smooth running of business. By ignoring the findings of CAO, Dr.Kim, how can “the CAO and the Inspection Panel enhance our impact and help us further improve our effectiveness?”

You seem to be following the same strategy which the then President Lewis Preston, who constituted Morse Committee followed – pretending that you have not seen the findings. However we are hopeful, since Preston withdrew financing after a year of the report, having faced the wrath of people around the globe.

In hope,

Bharat Patel,
General Secretary,
Machimar Adhikar Sangharsh Sangathan