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US Federal Court Rules in Favour of IFC in Tata Mundra Case: Fishworkers and Farmers to Challenge Decision.
IFC hides it shame & guilt behind technicalities of jurisdiction
Kutch, Gujarat / New Delhi: The fishworkers and farmers of Mundra affected by the Tata Mundra Power project will challenge the ruling from a federal judge in the District of Columbia, United States, that the International Finance Corporation (IFC) – part of the World Bank Group – is immune from being sued for damages inflicted as the commercial activity was not carried on in the United States. IFC has been granted immunity for lack of subject matter jurisdiction.
In a long legal battle to hold IFC liable for the social and environmental damages caused by the Coastal Gujarat Power Ltd (Tata Mundra) co-financed by IFC, which started in 2015, the community won a decision from the U.S. Supreme Court last year that the IFC does not have “absolute” immunity to all lawsuits. On Friday evening, United States District Judge John D. Bates again granted the IFC’s motion to dismiss, finding that the IFC is immune under the facts of this case.
The court took a narrow view stating that, “the mere fact that someone in the United States approved a letter that defended IFC’s approach to environmental and social risk management for the Tata Mundra project and announced that IFC will consider certain suggestions raised by the CAO is not sufficient to establish that plaintiffs’ complaint is based upon conduct carried on in the United States”.
It is not only unfortunate but also unethical and legally liable, that in spite of causing irreversible damage to the fragile ecosystem of Mundra coast, destroying the livelihood of thousand of fishworkers, farmers, saltpan workers and cattle grazers IFC gets to hide behind the technicalities of law. When there is growing documentation on IFC’s failure in upholding their own safeguard policies, which was confirmed by its own accountability mechanism – the Compliance Advisor Ombudsman (CAO), the courts have provided immunity on technical grounds.
Budha Ismail Jam, a plaintiff in the case said, “We are disappointed by the decision, but are determined to take this fight ahead. To save our livelihoods and protect our environment for future generations, we do not see any other way. We know we are up against a wealthy and powerful institution, but we are determined to make our voices heard. We will continue to seek justice.”
“The IFC refuses to be held accountable for the damages this plant is inflicting upon farmers and fishers in Gujarat, but no institution is above the law,” added Richard Herz, Senior Litigation Attorney at EarthRights, who pleaded the case. “Even the IFC’s own accountability mechanism criticized the IFC’s role in the project, finding myriad failures. The IFC has not denied causing harm, and it is unconscionable that it would claim immunity when it harms local people.”
Tata Mundra Power project has been a complete failure. Recently, Tata power had announced to the Union Ministry of Power that Tata Power might be forced to stop operating its imported coal-based Mundra ultra-mega power project. From the violation of national laws to the failure to apply the environmental and social safeguards, from environmental and social destruction to financial disaster, to failed policies of energy security, this project is a case study of what should not be done. IFC has been an active participant in this story of financial failure and environmental and social damage by rejecting the findings of its own compliance mechanism. Instead of hiding behind the safety of technical aspects of law, IFC’s focus should be on using its resources to restore the environment and livelihoods of those negatively affected by this power plant.
For background & more information: https://www.cenfa.org/projects-in-focus/tata-mundra-ultra-mega-project/
Dr Bharat Patel
Machimar Adhikar Sangharsh Sangathan
+ 91 94264 69803
Centre for Financial Accountability
+91 98711 53775
By Joe Athialy and Monalisa Barman
For Indian corporations, the grass seems to be getting greener the other side. Investments and acquisitions abroad have been the hallmark of Indian corporations the past decade and a half. While acquisitions of Jaguar Cars and Land Rover & Corus in the UK, Kashagan Oilfields in Kazaksthan, Port Terminals in Australia, Algoma Steel in Canada and Marcellus Shale in the US might have made news, increasing investments of Indian corporations are hardly reported. Even less reported is the role of the Export-Import Bank of India (Exim Bank) and their lendings to these corporations.
With 215 lines of credit in place covering over 63 countries in Africa, Asia, Latin America, Europe, which are worth over USD 15.87 billion Indian Exim Bank is a key player in promoting Indian business abroad. Africa seems to have its heart with 34 out of 63 countries for its investments in recent years.
Established in 1982, the growth of Exim Bank has been a phenomenon. From a lending portfolio of Rs. 64,353 crores in 2012-13 it has nearly doubled at Rs. 1,02,641 crores in 2016-17. Major Indian corporations – both public and private – benefited handsomely from Exim bank’s support. They include RITES Ltd, Goa Shipyard Limited, Cosmos International Ltd, Tata Power, Shapoorji and Pallonji Co. Ltd, Ashok Leyland Ltd., Tata Motors Ltd., Suzlon Group, Godrej Group, Bharti Enterprises, Kirloskar Group, Mahindra & Mahindra, Escorts, Apollo, Essar and Jindal.
Impacts of Indian investments abroad, particularly in African countries is well captured in the report India’s Role in the New Global Farmland Grab. Among the many African countries, Ethiopia has been a favourite destination for Indian corporations, particularly the agro-business. According to Oakland Institute, “Indian firms have acquired over 600,000 ha of land. Most investors plan to grow edible oils and crops while a few have plans to grow cotton.” Many of them are financed by Indian Exim bank.
According to an RIS Discussion Paper, “Indian companies have offered investment of over USD 4 billion to Ethiopia. Of this, an estimated USD 2 billion is already on the ground or in the pipeline. There are 608 Indian projects approved by the Ethiopian Investment Commission in Ethiopia. About 48 per cent of the Indian companies are in manufacturing and 21 per cent in agriculture.” Amongst these, Indian Exim bank alone has invested USD 98 million, through 65 companies.
There have been local protests against these land grabs. “Many (in Ethiopia) are describing India as a “neo-coloniser”. The phenomenon has in fact received wide local coverage, with damning headlines like ‘Indian agribusiness devastates W. Ethiopia’” a report in Outlook says. It further mentions, “…a million hectares are being handed over to Indian firms at bargain prices, suppressing local dissent and causing displacement of people.”
The Tendaho Sugar project in Ethiopia is one of the significant investments of India in Ethiopia. Situated in the Afar State in north-eastern Ethiopia, Exim bank invests through the Indian firm Overseas Infrastructure Alliance (OIA). In operation, it will crush more than 619,000 tonnes annually and is expected to cover 50,000 hectares of sugarcane cultivation, according to the RIS Discussion Paper.
Some of the impacts of the project on the local community are documented. There has been a major impact on the pastoral indigenous people of Afar community residing near the Tendaho sugar project. As most of their grazing land is taken for the project there has been a rapid increase of child labour in the locale. Since sugarcane plantation is water intensive cropping, it consumes a lot of water which has created scarcity for the domestic consumption, including for household and livestock. The community says that they were not consulted before taking their lands in the name of development. The Afar community also states that after the Tendaho Project prostitution and thievery has increased which was unknown few years ago in the area. (Socioeconomic Effect of Tendaho Sugar Plantation on the Pastoral Livelihood of the National Regional State, Nov 2016).
In regions where people are critically dependent on natural resources with low and uncertain incomes, customary tenure rules had been the main ways of providing security of land tenure and food security. Both State control of land tenure and private investment, however, have tended to be detrimental to the interests of local people living in marginal lands. (Getachew, 2001)
India cannot shrug off the responsibility just because these violations are happening elsewhere, As noted aptly by Anuradha Mittal of Oakland Institute, “The Indian government and corporations cannot hide behind the Ethiopian government, which is clearly in violation of human rights laws”.
This brings us to the fundamental point of accountability and ethics of Indian Exim bank and Indian corporations while rolling out investments off shore. Most of the corporations investing elsewhere have a bad track-record at home when it comes to upholding human rights and protecting the environment. To assume that they will do those elsewhere is a far distant dream.
Indian Exim bank, which is owned by the government and uses public money, has a lot to answer.