Bretton Woods Project
April 16, 2010
A spate of human rights violations and environmental abuses by mining ventures backed by the International Finance Corporation (IFC), the private sector arm of the World Bank, is raising alarm over the inadequacy of its social and environmental standards.
US corporation Newmont has agreed to pay $5 million in compensation for negligently spilling cyanide at its Ahafo gold mine in Ghana, which received a $125 million loan and social and environmental guidance from the IFC. The spill occurred at a processing plant in October 2009, causing water contamination and damaging fisheries on which local livelihoods depend. The company failed to prevent or properly investigate the spill, and delayed notifying downstream communities and regulatory authorities, according to a ministerial panel report.
Daniel Owusu-Koranteng, director of Wacam, a Ghanaian civil society association of communities affected by mining, says this incident is the latest of a long series of human rights and environmental abuses relating to the mine: "A petition signed by over 1,200 community people from Ahafo that raised social, economic and environmental concerns about the mine was presented to the board of directors of the IFC at the time when the loan application was being considered. However, the IFC board completely ignored the issues raised by the petitioners and now we are suffering the consequences."
In India, a subsidiary of French company Lafarge has admitted mortgaging ecologically sensitive tribal land to secure a loan from international banks, including the IFC. Though approval had previously been given for the mortgage, in February the Supreme Court halted mining operations in the area after the Shella Action Committee, a community group, protested against the land transfer and lack of mandatory environmental clearance. In an early March letter, the IFC reiterated its commitment to funding the project. The company was ordered to produce a new environmental impact assessment, seek approval from relevant agencies and fund welfare projects for tribal peoples before resuming mining.
Indigenous peoples in the Peruvian Amazon have also been adversely affected by the IFC's activities in extractive industries. In early April, Shipibo-Konibo communities filed a complaint with the IFC's ombudsman against Irish corporation Maple Energy for polluting their ancestral land and rivers with repeated oil spills.
In Yemen, community interests look to be excluded from a mining law developed with IFC assistance that is now passing through the parliament. "Nobody representing potentially affected communities was invited to participate in the drafting of Yemen's mining policy," says Nadia Daar of US NGO Bank Information Center. Though Yemen is a candidate for the Bank-supported Extractive Industries Transparency Initiative, "there was no mention of EITI in the draft code." Conflicts of interest
The IFC's dual role as investor and advisor to governments on taxes, regulations and laws continues to fuel charges of conflicts of interest, despite the existence of the institution's policy for such cases. Concerns have been heightened by an upward trend in disputes between multinational companies and governments over revenues generated.
In February, the IFC said it would make no further investments in the Democratic Republic of Congo (DRC) until a dispute over the Kolwezi copper and cobalt project - in which the IFC has a 7.5 per cent share - is resolved. The DRC cancelled the project because of delays and the refusal by lead investor First Quantum Minerals to revise the contract, made under the post-war transitional government, to give better terms to the state. The IFC's advisors have played a leading part in encouraging pro-business reforms in the DRC. The case is currently before an international tribunal.
Cases relating to extractive resources have also proliferated at the International Centre for the Settlement of Investment Disputes, an arbitration forum which is part of the World Bank Group. According to Rebecca Dreyfus of the Washington-based Institute for Policy Studies, this "reflect[s] the growing practice among global corporations of bypassing countries' domestic legal systems and bringing cases over sensitive resource rights issues before unaccountable international tribunals."