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Wednesday, May 21, 2014

IFC Hide behind Tata’s False Claims: No Actions Taken on CAO Findings yet
President Dr.Kim’s claims about Accountability Goes for a Toss!!

Six months after the Compliance Advisor Ombudsman (CAO) of the International Finance Corporation (IFC) of World Bank Group published its audit report on the Coastal Gujarat Power Ltd (CGPL – Tata Mundra), IFC, or the WBG President Dr. Jim Kim, is yet to take any action.

In August 2013 CAO submitted its findings to Dr.Kim on a complaint filed by the Machimar Adhikaar Sangharsh Sangathan (MASS - Association for the Struggle for Fishworkers’ Rights) in June 2011. Dr. Kim who is mandated to recommend actions on the findings of CAO sat on the report for an unprecedented four weeks before he approved the report without recommending even one action on CAO’s findings and supporting IFC’s rebuttal of the findings and their defense of their client.

Having done nothing on the CAO report so far, IFC is trying to pass the buck to the company and started projecting the supposed CSR work as a response to the CAO findings and proudly display it on IFC’s website. This is not only shameful, but smacks of complete disregard to CAO and contempt for communities who, against odds, dared to bring the issues to the attention of CAO.

IFC passing the buck

Betraying their indifference to the affected communities as well as the findings of WBG’s own CAO, IFC continues to support the company as ever before. They continue to defend their client, and the ‘Factsheet’ posted on IFC’s website reads like a company CSR brochure! The Factsheet parrots what the company is claiming to be doing in the villages without even taking any effort to check facts. It is shameful not just because IFC is risking its own credibility in defending their client and their actions, but is trying to hide behind the purported CSR the company is doing and claiming that everything is hunky dory. It also sends a strong message to communities around the globe and to CAO that whatever the complaint is, whatever the CAO findings are it is business as usual for IFC.

What Dr.Kim said in his public statement of Dec 2013 that “these independent bodies (the Inspection Panel and CAO) ensure that our policies are credibly and effectively applied. They open up a channel for people affected by the World Bank Group financed investments and give them an opportunity to be heard” is farcical. Neither are they heard, nor are the findings of CAO acted upon is proved in the case of Tata Mundra.

Company’s false claims

MASS did a thorough examination of all the activities stated on companies website, which are referred to by IFC and other financiers repeatedly to dodge accountability. What MASS found instead is a shocking bunch of wish-list, twisted facts and imagination put together as great CSR work undertaken in the villages.

The company tries hoodwink the financiers and through a well-oiled Public Relations exercise on how it is improving the lives of communities impacted by the project. The financiers, particularly the IFC, is a victim of this is evident from their echoing what the company says. Strangely enough, IFC fails to ask the company in what way spoken English courses and Bal Pravetsov programme - distribution of educational kits to new entrants in the school, school notebooks distribution, well recharging, drip demonstration, and Promotion of local artisans through exposure visits and sponsoring of the handicraft fair etc can mitigate the loss of livelihood of thousands of fishwokers, or the destruction of mangroves and sand-dunes.

More importantly, even the little the company is claiming to be doing in the villages is not addressing the findings of CAO. That the company is doing a set of such activities with little impact on their livelihood and restoration of environmental damages is understandable, and that they have been doing this for profits all along is beyond doubt. But, what is surprising is how can IFC let their money be used, and then let it go unchecked for these gross violations – both human rights and environmental?

Looking more closely at their claims:

CGPL Claim[1] [2]
Residents of 15 villages in the Mundra and Mandvi blocks of Kutch district of Gujarat state benefit from the project’s community outreach initiatives. These initiatives aim to improve education, promote health, build infrastructure, improve access to natural resources, create livelihood opportunities, and empower women.

The company has only worked in 4 villages, out of the reported 15 villages. They are Tunda, Tunda Vandh, Mota Kanbagara and Bhadiya. In the temporary settlement of fish-workers in badly impacted Kutadi bandar, there is only a tent as school started long before – that too run by a NGO, Yusuf Mehrauli Center.

Sweet ground water sources – a vital natural resource, permanently damaged by CGPL construction.

Breathing related health problems sharply increased due to coal dust & ash – little effort in mitigation.

Even agricultural livelihoods badly affected – Palm-dates & Sapota particularly badly.
Village-level development advisory committees formed to ensure wider village participation in conceiving, developing, and implementing improvement initiatives.

While the claim looks like village level committees are up and running in all 15 villages, in reality, they are formed only in Tunda and Kanbagra villages. Another case of gross discrepancy in numbers.

Fodder provided to dairy cattle through the Gaushala initiative.

Again, it sounds like for the entire 15 villages. But this is done only in Tunda and Kanbagra. Even there it is not sufficient to all the cattle since there are about 2500 cattle and CGPL providing fodder for 1000 to 1300 cattle. Clearly then, reality and claims have a numerical disconnect.

Priority to local community members for project-related jobs or contracts.

Only menial jobs are offered to locals. And only few in numbers. Contract jobs were given to locals earlier during construction phase, and now even they have dried up.

Community infrastructure through construction of modern roads, stadium, community halls, drainage lines, clean drinking water and sanitation, boat lights, and street lights.

Only in Tunda Vandh roads are made. The reason of constructing the new road was because the old road was acquired for for the project. Kanbagra has a cricket ground, but no stadium. Tunda and Kanbagra have a community hall. Drainage lines are made by the government. Bhadreshwar, Kanbagara and Tunda villages have one RO plant each for drinking water. This is kept at the Panchayat house and Panchayat charges Rs. 5 / 20 liters. Tragdi Bandar has boat lights. Not any other. Tragdi Bandar has solar street lights. No other village is provided claimed amenities and facilities by the company.
Improved health facilities through periodic medical camps.

Medical camps were held a few times. There has been no further information on sending for diagnosis or treatment since.

E-learning stations (computer kiosks) in schools.

Computers given in 2-3 schools. Govt also has schemes to do the same.
Microfinance opportunities and training for self-help groups.

No Micro finance groups formed yet.
Drip irrigation, pond renovation, well recharge, and check-dam programs.

2-3 check dams made – in villages Bhadiya and Tragadi. The interesting fact is that the company destroyed an existing check dam to construct their power plant and CAG estimated a loss to the Govt exchequer to the tune of Rs. 1.92 crore (Rs. 19.2 million).[3] No well recharging done yet and nothing done for drip irrigation.
Better fishing nets to fisherfolk, solar lights for fishing boats, and fishing equipment.

“The truth of this claim could be gauged by the fact of dwindling of traditional livelihood, depleting fish catch, and increasingly inaccessible fishing grounds. These issues cannot be fixed with what company purports to be doing. Money has indeed been distributed to 20-25 people in Modvani and Trugudi (or Tragadi) Bandar, but there has been no distribution of fishing gear whatsoever.

Sagarbandhu project for development of fisherfolk in association with the Aga Khan Society for Rural Development Program (India).

There is no AKRSP work in these villages and nobody has paid a visit from AKRSP yet.

Addressing indebtedness and livelihood enhancement for seasonal migrant fishing communities living near the plant in association with Fisheries Management Resource Center, a non-governmental organization.

Nothing has been done on this front.

Looking at the more detailed versions of the activities[4], one can only wonder how has it escaped a critical referential analysis of the IFC? How has the IFC missed out on company’s purpoted claims of improving the lives of the fishing community? Isn’t this callous?

It claims “striking the right balance between development and climate change concerns is crucial and Mundra UMPP is a step in that direction”, while the reality is that this single massive coal fired power plant is adding about 31 million tons of carbon dioxide (if only high calorific value imported coal is burned) to the atmosphere every year, as estimated by Ernst & Young, making it India's 3rd largest point-source CO2 emitter. To put in perspective, entire CO2 emission from a country like Bangladesh, with 155 million+ people, is around 55 million tons (IEA figure).

The company’s ‘development’ USP of cheap /affordable power to millions – also publicized by IFC, fell flat on its face, when CGPL forced a massive financial burden on its approximately 16 million (as per its own claim) domestic consumers, by hiking tariffs by a huge 27%, coercing CERC – the govt regulator – into permitting it to do that, and opening the flood gates for other power plants to follow suit. The cascading effect of this will be on small consumers in India.

It claims that “CGPL will take up a massive tree plantation programme on 430.4 acres of project land and a total of 1076000 trees of indigenous species will be planted” conceding that the company acquired more land than it required. This was confirmed by the CAG as well.

The company says, “Every year ‘Environment Day’ is celebrated with great fervour and wide participation” as part of the Environment Awareness Campaign. It holds a series of consultative dialogues with village elected representatives, opinion leaders and the community at large.” Formation of Self Help Groups (SHG) for those engaged in handicrafts- Linkages with markets for sale and many such actions neither have any bearing on any mitigation or action plans, nor can compensate the loss they have caused to people and the environment.

A visit to the area could clearly spell out the hollowness of these claims. What is more fundamental is that these are only claims, at best wishful thoughts, but at cross purposes with reality. The purpose of putting this up on the website is to veil the reality for the financiers to take note of and mislead the general public.

Violations recognised by CAO neither acknowledged nor addressed by IFC.

What is very interesting is that IFC is completely silent on the violations of its own policies identified by CAO in its report. CAO had mentioned in their report of no social baseline data, that IFC failed to ensure that its client’s E&S assessments adequately considered the risks and impacts of the project on these fisher people, and that IFC paid inadequate attention to the requirements of biodiversity conservation and many others.

President Dr. Kim wants these to be swept under the carpet and move on, as if pretending that nothing happened? Or does he intend to use this a learning opportunity to implement in future projects. Where does the buck stop on this? Who takes responsibility to these heap of violations? Or, are the ones responsible rewarded for doing ‘good business’, thereby sending across a message to all staff that nothing in the Performance Standards, or no findings of any CAO can check their actions and they will be insulated from any possible harm?


CAO Findings

CAO found IFC made serious lapses in funding Tata Mundra project. Some of the key findings are:

· 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 (Tata) 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 (of IFC).

· 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.

Public Response

The rebuttal of IFC and Dr.Kim’s inaction on the serious findings resulted in a series of public responses.

68 groups from 28 countries across six continents sent a letter to World Bank President Dr. Jim Yong Kim condemning the World Bank Group’s continued support for a deadly coal project in Gujarat. The letter said, “Mr. President, you must show that you are serious about your statements at previous WB/IMF annual meetings on climate, accountability and learning from past mistakes. The CAO found massive shortfalls at the IFC, showing that the mechanisms to uncover such issues are working. However, while the Tata Mundra project provided an opportunity to prove your commitment to learning from these failures, your clearance of the IFC response continues the lack of public accountability within the IFC.”

Over a hundred prominent Indian organisations expressed shock over World Bank President Dr. Jim Kim’s inaction on the audit report on Tata Mundra Power Project in Gujarat, condemned it and demanded International Finance Corporation’s (IFC) withdrawal from the project.

“People’s movements and their allies in India are shocked that you have cleared the IFC Management’s response to the CAO Audit Report on Tata Mundra Project,” the letter to the President said. “The CAO findings warrant nothing less than IFC’s withdrawal from the project” they added.

They added, “Your endorsement of IFC’s response to CAO findings and thus letting IFC and the company continue the violations merits nothing less than condemnation.” [5]
An online petition with more than 28,000 signatures continues to gather support from people from different parts of the globe. The letter urges Dr. Kim to Recognize IFC policy violations and the serious impacts of its financing after CAO audit reconfirmed community’s complaint; develop remedial action plan that has clear timeline, specific targets and monitorable indicators that address restoration and reparation needs; and withdraw IFC funding immediately from the Tata coal plant and do not consider funding for project expansion. The petition, with 24,000 signatures were delivered by MASS General Secretary Bharat Patel to the Executive Directors of World Bank in April 2014 [6]

IFC action plan and statement

A month after CAO report release and a public outlash, IFC released a statement and a supposed action plan. The local organisation MASS rejected it. They said, “The 1.5 page statement and action plan on Tata Mundra issued by IFC CEO Jin-Yong Cai is a non-serious, non-committal one, and issued under duress from the growing criticism of IFC’s / World Bank President Kim’s inaction on CAO’s findings of serious social and environmental violations. It’s empty and a non-starter. By issuing this, IFC is trying to confuse the public, making a mockery of communities’ concerns and yet again, undermine CAO and its findings. While some of the action plan stated are listing of actions taken pre-CAO time, some other are just suggestions, resulting in nothing particular. Eg: household level socio-economic survey, health survey and testing of ash residue for radioactivity and heavy metals. The action plan fails to say what happens after these surveys and testing. There are no timelines, no specific targets or indicators. Significantly, the statement says that it will bank on the expertise of the company, whose violations are in question.”

Kim’s response

A few weeks later, Dr. Kim himself issued a statement in response to the “concerns expressed by the CSOs about several projects supported by World Bank Group” without naming Tata Mundra. MASS responded to it saying, “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.”

Machimar Adhikaar Sangharsh Sangathan
May 2014

[1] IFC has summarised nicely all CSR activities and proudly displayed it on their website, under a question ‘Has the project supported local communities, including fishing communities, near the project site?’ :

[2] For details about CSR activities: