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Villagers Celebrate The Historic US Supreme Court’s Verdict Which Ended The Immunity of the IFIs

For Immediate Release

Villagers Celebrate The Historic US Supreme Court’s Verdict Which Ended The Immunity of the IFIs

March 31, 2019, Mundra: The air in Mundra filled with the slogans like Kaun Banata Hai Hindustan, Machuawara, Majdoor, Kisan! (Who makes India? Fishermen, Labourer and Farmers); Ladenge Jeetenge! (We shall fight, we shall win); Aadiwaasi Machhuawara Kisaan Ekta Zindabad! (Long live the unity of tribals, fishermen and farmers), and Poonjipatiyon Ki Dalaai Band karo! Hundreds of people from Navinal and Tagri villages of Kutch and representatives from various social movements and civil society members have gathered to celebrate the historic verdict of the US Supreme Court that ended the absolute immunity enjoyed for long by the International Financial Institutions.
“Is Development only for Tata, Ambani, and Adani? What about the fishermen from Mundra, who live in the open with huts made up of bamboo and gunny bags but feed thousands of people in and outside Gujarat,” asked Medha Patkar, senior activist, Narmada Bachao Andolan and National Alliance for the Peoples’ Movements. “Every citizen has the constitutional right to question anti-people policies,” she asserted. She further said, “We do not have any problem in discharging Sardar Sarovar (Narmada) Dam waters for the benefit of the farmers of Kutch. However, we will fight if it is given to the industries,” referring to the allocation of water for a large number of industries.
She was speaking at the public meeting, organised by the Machimar Adhikar Sangharsh Sangathan (MAAS), Mundra, which witnessed the participation of the hundreds of the villagers affected by the World Bank Group’s International Finance Corporation-funded Tata Mundra Ultra Mega Power Plant. The meeting was organised to celebrate the historic verdict of the US Supreme Court that ended the absolute immunity enjoyed for long by the International Financial Institutions.
During the occasion, representatives from various social movements and civil society members like  Medha Patkar, senior activist of the Narmada Bachao Andolan; Soumya Dutta, Convenor of the Beyond Copenhagen Collective; Nitaben Mahadev, Gujarat Lok Samiti, Sanjeev Danda, Dalit Adivasi Shakti Adhikaar Manch; and Maju Varghese and Anuradha Munshi from the Working Group on International Financial Institutions (WGonIFIs) were also present to extend their solidarity and felicitate the fishermen and villagers who have been at the forefront of this historic struggle.
The petitioners of the case were garlanded and facilitated at the public meeting. Speakers after speakers alluded their courage, encountering hostilities and the broader impact of this victory to the people around the globe, making institutions like World Bank more accountable.
Speaking at the occasion, Soumya Dutta, emphasised that the recent US Supreme Court’s decision to end immunity of the International Financial Institutions is a significant victory of the people fighting to save their dignity, land and livelihood across the world. He stressed that a broader alliance of different sections of the people affected by the project be formed to fight getting justice.
Sanjeev Danda said the US Supreme Court’s verdict is a firm reminder that fishers and poor are not insects that can’t be eliminated easily. He thanked the villagers for their firm resistance against the might of the IFC and Tata.
Nitaben Mahadev expressed solidarity on behalf of organisations in Gujarat and wished the people the best to take the fight to higher heights.
Buddha Ismail Jam, the main petitioner of the case against the ongoing IFC, emphasised the need to stay together. He said, “If we continue to stay strong for the remaining struggle, nobody can snatch justice away from us.”
Gajendra Sinh Jadeja, a co-petitioner of the case and Sarpanch of the Navinal Panchayat in Mundra, listed the problems currently being faced by the fishermen, farmers and pastoralists. He said, “The production of cotton, dates, chikoo has considerably reduced due to the coal-ash, which has also adversely impacted the health of the people. Similarly, the inlet and outlet channel have increased the salinity, thus impacting agriculture. Additionally, the channel has also driven away from the fishes away from the coast, due to which, the fishermen have to travel about 25 kilometres into the sea.”
Bharat Patel, thanked the villagers, civil society and social movements across the country for their solidarity, and the Earth Rights International, for their unflinching support. He asserted that the policies of the IFIs need to be amended and said that they can’t function at the cost of the lives of people. Talking about the further course of action, he said, “We will fight till the ecology is restored; the people who lost their livelihoods are adequately compensated; and the officials of IFC and Tata Power, who conspired to destroy our lives for their greed are criminally charged.”
Background
On February 27, 2019, the Supreme Court of United States, in a historic 7-1 decision, the U.S. Supreme Court decided in Jam v. IFC that international organisations like the International Finance Corporation of the World Bank Group do not enjoy absolute immunity.
The Court’s decision marks a defining moment for the IFC – the arm of the World Bank Group that lends to the private sector. For years, the IFC has operated as if it were “above the law,” at times pursuing reckless lending projects that inflicted serious human rights abuses on local communities, and then leaving the communities to fend for themselves.
In the case of the Tata Mundra, since the beginning, the IFC recognised that the Tata Mundra coal-fired power plant is a high-risk project that could have significant adverse impacts on local communities and their environment. Despite knowing the risks, the IFC provided a critical Rs 1,800 crore (USD 450 million) loan in 2008, thus enabling the project’s construction. Despite this, the IFC failed to take reasonable steps to prevent the harms it predicted and failed to ensure that the project abided by the environmental and social safeguards.
As predicted, the plant caused significant harm to the communities living in its shadow. Construction of the plant destroyed vital sources of water used for drinking and irrigation. Coal ash has contaminated crops and fish laid out to dry, air pollutants are at levels dangerous to human health, and there has already been a rise in respiratory problems. The enormous quantity of thermal pollution – hot water released from the plant – has destroyed the local marine environment and the fish populations that fishermen rely on to support their families. Although a 2015 law required all plants to install cooling towers to minimise thermal pollution by the end of 2017, the Tata plant has failed to do so.
A nine-mile-long coal conveyor belt, which transports coal from the port to the Plant, runs next to local villages and near fishing grounds. Coal dust from the conveyor and fly ash from the plant frequently contaminate drying fish, reducing their value, damage agricultural production, and cover homes and property.
The IFC’s own internal compliance mechanism, the Compliance Advisor Ombudsman (CAO), issued a scathing report in 2013 confirming that the IFC had failed to ensure the Tata Mundra project complied with the environmental and social conditions of the IFC’s loan at virtually every stage of the project. The report recommended the IFC to take remedial action. However, the IFC’s management responded to the CAO by rejecting most of its findings and ignoring others. In a follow-up report in early 2017, the CAO observed that the IFC remained out of compliance and had failed to take any meaningful steps to remedy the situation.
The harms suffered by the people are all the more regrettable because the project made no economic sense from the beginning. In 2017, in fact, Tata Power began trying to unload a majority of its shares in the project for one rupee because of the losses it has suffered and will suffer in future. At the moment, the plant is operating much-below capacity in part because India has an oversupply of electricity.
Please visit here for more background and accessing documents related to the case.
About us:
Machimar Adhikar Sangharsh Sangathan (MAAS) is a trade union of the fish workers in Mundra and a co-petitioner in the historic Budha Jam vs IFC case.
 
Contact:
Dr Bharat Patel (Mundra, Gujarat, India)
General Secretary, Machimar Adhikar Sangharsh Sangathan
+ 91 94264 69803
bharatp1977@gmail.com

MASS welcomes the US Supreme Court’s Decision to Hear the Case Challenging World Bank Group Immunity

For immediate release

MAAS welcomes the US Supreme Court’s Decision to Hear the Case Challenging World Bank Group Immunity
This will be the first time the US Supreme Court will address the scope of international organisations’ immunity.
May 21, 2018, Mundra, Gujarat: Machimar Adhikar Sangharsh Sangathan (MASS) and the affected communities by the Tata Mundra Ultra Mega Project welcomes the historic decision of the US supreme court to hear the landmark lawsuit which challenged the immunity of powerful institutions like the International Finance Corporation (IFC), the private lending arm of the World Bank Group.
“This is a victory of our relentless struggle to bring to justice the crimes committed by the Tata against the fishing community. The IFC aided the process by turning a blind eye to it,” said Dr Bharat Patel General Secretary, Machimar Adhikar Sangharsh Sangathan, one of the petitioners in the case.
The case, Jam v. IFC, brought by fishermen and farmers affected by IFC-funded Tata’s Mundra Ultra Mega Project challenged the absolute immunity enjoyed so far by international organisations like IFC.
“International organizations like the IFC are not above the law and must be held accountable when their projects harm communities. The notion of ‘absolute immunity’ is inconsistent with Supreme Court precedent, and it is contrary to the IFC’s own mission as an anti-poverty institution. We are glad the Supreme Court has agreed to hear this case and hope it will correct this error,” said Richard Herz, Senior Litigation Attorney at EarthRights International (ERI).
The Supreme Court’s decision to hear their case means that it will consider international organisation immunity for the first time, and decide whether international organisations can be held accountable for their harmful conduct, or whether they enjoy the special status above the law that they claim.
Budha Jam, the main petitioner, said that “This decision on this case will be keenly awaited by not only by us but by the communities from across the world which are fighting the crimes of the international financial institutions in the name of promoting development. I am hopeful that the US Supreme Court will not let us down.”
International organisations like the IFC have long claimed they are entitled to “absolute” immunity from suit – an immunity far greater than any person, government, or entity enjoys – no matter how illegal their actions are or how much harm they cause.
“It is the time to start holding international financial institutions accountable. In this time and age when the human rights and accountability discourse has travelled far and wide, hiding behind the immunity clause is contrary to the “right to seeking justice” and “rights to remedy” of the communities,” added Patel.
Last year, the U.S. Court of Appeals for the D.C. Circuit ruled that IFC had “absolute immunity” and could not be sued for its role in the controversial Tata Mundra coal-fired power plant that has devastated communities in Gujarat. The D.C. Circuit recognised the “dismal” situation the plant has created for the complainants, including the destruction of their livelihoods and property and the serious threats to their health, and noted that the IFC had not denied those harms. The court found the IFC could not be sued based on prior D.C. Circuit decisions. One of the judges, however, expressed strong disagreement with IFC immunity and noted that another federal court had rejected the prior D.C. Circuit immunity cases, which she thought were “wrongly decided.”
“When at a time we thought that all doors for justice seemed closed, with this decision our faith in the judicial system is restored,” said Gajendrasinh Jadeja, head of a local village that is also a petitioner in the case.
Dr Bharat Patel (Mundra, Gujarat)
General Secretary, Machimar Adhikar Sangharsh Sangathan
+ 91 94264 69803

Communities affected by Tata Mundra approach US court to review “absolute immunity” doctrine

After a Judge declared World Bank immunity cases “wrongly decided,” the communities affected by the Tata Mundra project approach US court to review “absolute immunity” doctrine

Communities harmed by Tata Mundra coal power plant in India continue to seek justice from World Bank Group’s International Finance Corporation

July 26, 2017, Washington, D.C., and Mundra: After a federal judge in US declared that the cases giving the World Bank Group an “absolute immunity” from lawsuits were “wrongly decided,” the communities affected by private-lending arm of the World Bank Group have filed a petition asking the full D.C. Circuit Court of Appeals to revisit its immunity doctrine.

In June, a three-judge panel of the D.C. Circuit, in the case Budha Ismail Jam v. IFC, had ruled that the International Finance Corporation (IFC), the private-lending arm of the World Bank Group, could not be sued for its role in the controversial Tata Mundra coal-fired power plant, which has devastated fishing and farming communities in Gujarat.

In its June ruling, the panel, citing the legal precedents, concluded that the IFC is immune from suit in this case. Justice Nina Pillard, however, wrote a dissenting opinion criticising those decisions as “wrongly decided” and suggested that the full D.C. Circuit, which has the authority to change the law of the Circuit, should revisit those cases.

“The panel’s ruling gives international organisations like the IFC an unparalleled immunity, insulating them from legal accountability regardless of how much harm they cause,” said Richard Herz, senior litigation attorney at ERI, who argued the case for the plaintiffs. “Such sweeping immunity, which is far greater than the privileges enjoyed by sovereign foreign governments, is inconsistent with multiple Supreme Court precedents, and is contrary to the IFC’s development mission,” added Herz.

“We will not give up our struggle for justice,” said Budha Jam, a plaintiff in the case, after the verdict.

“This decision tells the world that the doors of justice are not open to the poor and marginalised when it comes to powerful institutions like IFC,” added Gajendrasinh Jadeja, the head of Navinal Panchayat, a local village involved in the case. “But no one should be above the law.”

It is noteworthy that the plaintiffs filed suit against the IFC in April 2015 over the destruction of their livelihoods and property and threats to their health caused by the IFC-funded plant. The IFC recognised from the start that the Tata Mundra plant was a high-risk project that could have “significant” and “irreversible” adverse impacts on local communities and their environment. Despite knowing the risks, the IFC provided a critical $450 million (Rs 1800 crore) loan in 2008, enabling the project’s construction and giving the IFC immense influence over project design and operation. It failed to take reasonable steps to prevent harm to the local communities and to ensure that the project abides by the required environmental and social conditions for IFC involvement.

The plant has destroyed the local marine environment and the fish populations that fishermen like Jam rely on to support their families, and vital sources of water used for drinking and irrigation. Coal ash contaminates crops and fish laid out to dry and has led to an increase in respiratory problems.

The IFC’s compliance mechanism, the Compliance Advisor Ombudsman, issued a scathing report in 2013 confirming that the IFC had failed to ensure the Tata Mundra project complied with the conditions of the IFC’s loan. Rather than follow CAO’s recommendation for remedial action, rejected most of its findings, and ignored others. Plaintiffs had no other recourse but to sue IFC. In its ruling last month, the panel recognised the “dismal” situation of the affected communities, noting IFC did not deny that the plant had caused substantial damage and yet found IFC could not be sued.

The harms suffered by the communities are all the more regrettable because the project made no economic sense from the beginning. In fact, in the past month, Tata Power, which owns the plant, has begun trying to unload a majority of its shares in the project for 1 Rupee because of the losses it has suffered and will suffer going forward.

On appeal, the plaintiffs argued that IFC has waived immunity because this suit promoted the IFC’s mission, which includes the goals of reducing poverty without harming its projects’ neighbours. The IFC interestingly argued that it is not bound by its own mission.

“The court’s judgment supports the arrogance of lenders like IFC, who disregard the law, their own safeguard policies, and even the findings of their accountability mechanisms,” said Dr. Bharat Patel of Machimar Adhikar Sangharsh Sangathan (Association for the Struggle for Fisherworkers’ Rights), which is a plaintiff in the case. “This sends the wrong message to institutions like IFC – that you can continue to lend money to bad projects, causing irreversible damage to people and environment and no law will hold you accountable.”

The plaintiffs are optimistic that the full D.C. Circuit will reconsider the case.

Investing in Losses

By Joe Athialy

Like India once had a Ministry of Disinvestment, it’s time she has a Ministry of Loss Making. How else can one understand government’s eagerness to buy out all loss-making projects, whether in coal, hydro or steel sectors, collectively a few lakhs of crores of rupees worth?

Thermal power projects of about 25,000 MW are on sale, a report says, while there are not many buyers in the market. The government jumps in and offer to buy some of them. Last month after a meeting with leading bankers Power Minister Piyush Goel said that the Centre is designing a new plan where public sector banks will buy off stressed assets or projects which are running on losses, and the state-owned National Thermal Power Corporation (NTPC) will operate it.

What magic could turn these loss-making projects profitable by buying them off from private corporations who, despite subsidies and other incentives given by the centre and state governments, failed to make their projects economically viable? If one looks at the fate of Air India today, one wonders if the government could convert loss-making sectors to profit-making ones, why did they fail in saving Air India!

This buy off undermines the effort Reserve Bank of India (RBI) is doing to recover nearly 25% of non-performing assets (NPAs), listing down 12 stressed accounts through the Insolvency and Bankruptcy Code and cast a shadow on the tall claims of curbing the menace of NPAs.

The other day, nine thermal power projects (TPP), run by private corporations were shortlisted for bank takeover. Three of the major ones are said to be Jindal’s Derang project in Odisha; RattanIndia Power (erstwhile Indiabulls Power) plant in Nashik, Maharashtra; and Lanco Infratech’s Babandh power project in Odisha, with a combined capacity of 6660 MW.

A study, which looked into TPPs which are 1000 MW and up, and which secured environmental clearance between 2005 and 2015, said that over Rs. 6 lakh crore was lent out by national and international financial institutions, banking and non-banking, for 125 projects, with a capacity of 2.4 lakh MW. Of which, 89%, or Rs 4 lakh crore was lent by national institutions. The above three projects are part of the 125 projects considered for the study, and they borrowed from national banks as well as non-banking institutions like Rural Electrification Corporation and Power Finance Corporation, for a combined cost of Rs. 27,255 crores.

But where did all this start? The coal sector is reeling under heavy financial stress with more and more companies trying to shed their liabilities off. Expansion of coal-based power sector a decade back was devoid of any sense or reasoning. How else would one justify approvals of over 700 GW of power projects by 2011, with nearly 85% of the coal-based projects, when the Integrated Energy Policy of the Planning Commission was projecting a power requirement of only 230 GW by the year 2032? One could trace back today’s financial stress of the sector to that mindless expansion, into which companies which hitherto was only making/dealing with compact disks, electronic items and running newspapers jumped into to make quick bucks.

Coastal Gujarat Power Ltd (Tata Mundra) and Adani Mundra plants are other two projects, which sought government bailout in the recent past due to mounting losses.

One of the first Ultra Mega Power Projects, Tata Mundra has been the poster-boy of TPP in India. A 4000 MW, $4 bn project, financed by every major financier one can things of – World Bank private sector arm, International Finance Corporation, Asian Development Bank, Korean Exim Bank, BNP Paribas, India Infrastructure Finance Corporation Ltd, HUDCO, State Banks of India, Bikaner and Jaipur, Hyderabad, Travancore, Indore, Vijaya Bank and Oriental Bank of Commerce.

Claiming to be using supercritical technology, and hence less pollutant, they procured coal from Indonesia, prices of which trebled within a few years making the project more non-viable.

The colossal environmental damages, loss of livelihood and a host of social and environmental issues recognised as serious impacts by accountability mechanisms of IFC and ADB – the Compliance Advisor Ombudsman and Compliance Review Panel – were never counted in the costs, nor tried to compensate or mitigate.

Since the time of its commissioning, the Mundra project has been a drag on the financials of Tata Power.

Adani’s 4260 MW coal based power project in Mundra, a neighbour to the Tata project, has been reeling under growing stress the past many months. Adani Power recently reported a consolidated net loss of ₹4,960 crore in Q4 of FY17 compared to a net profit of ₹1,085 crore in Q4 of FY16. Last month, Adani Power had discontinued 1,250 MW power supply to Gujarat Urja Vikas Nigam Ltd. (GUVNL), a Govt of Gujarat entity, mainly due to the inviability of imported coal to run its power plant at Mundra.

In April, Supreme Court had disallowed any relief to Adani Mundra plant (and Tata’s Mundra plant, both located at Mundra) in a five-year-old contentious issue of compensation due to the unforeseen increase in imported coal prices for their power plant.

Economic and Political Weekly, in a recent investigation, found out how the NDA government amended rules related to Special Economic Zones to favour one company – Adani’s Mundra Power, benefiting the company with Rs. 500 crores by giving it an opportunity to claim refunds on customs duty, which it never paid. It says:

In August 2016, the Special Economic Zones Rules, 2016, were amended by the department of commerce, to insert a provision on claims for refund under the Special Economic Zones Act, 2005. The SEZ Act under which the SEZ Rules are framed did not initially provide any provision for refunds of any kind before this amendment was introduced. According to reliable information received by the authors of this article, the amendment was made to specifically provide Adani Power Limited (APL) an opportunity to claim refunds on customs duty to the tune of 500 crore. The APL has claimed that it has paid customs duty on raw materials and consumables—that is, coal imported for the generation of electricity. However, documents leaked to the EPW indicate that the APL had not, in fact, paid the duty on raw materials and consumables amounting to approximately 1,000 crore that had fallen due at the end of March 2015. It appears at face value that by amending the SEZ Rules to insert a provision for companies to claim refunds on customs duty, the department of commerce is allowing the APL to claim refunds on the duty that has never been paid by it in the first place!

How will a project plagued with controversies, with possible legal and certainly financial liabilities, be of any good for a public sector undertaking?

NPAs stand at a staggering Rs. 7.6 lakh crore at the end of March, or 9.3% of the gross advances by the banks – a rise of 135% in last two years. Public sector banks account for almost 88% of these loans, which have now exceeded these banks’ combined market value.

It’s a double blow to the public – first their deposits in the banks have been turned to NPAs, and then their tax paying money is used to bail out the ones who turned their assets to NPAs.

The bailout of corporations by the government sends a wrong message to the banks and regulators and takes away the confidence in the public that the government is serious about tackling this issue. It’s a simple case of privatisation of profits and nationalisation of losses.

Without putting bold and long-term measures to tackle the issue of NPAs, piece-meal measures of bailing out selective corporations will only lead to the ripping off of the banking system. The long-term measures could include a moratorium on corporate debt restructuring and non-transparent debt write-offs, blacklisting willful defaulters and preventing them from further borrowings, and stringent measures to recover from defaulters.