The World Bank lending strategy must aim to place people above profit!

Liberian Observer | July 5, 2019


The World Bank Lending Strategy Must Aim To Place People Above Profit!

The attention of the Daily Observer is drawn to a front-page story carried in its July 4, 2019 edition headlined, “SRC’s Investment Faces Hiccups”. According to the story written by Daily Observer contributing writer Alloycious David, the Salala Rubber Corporation(SRC), dogged by persistent claims of human rights and environmental degradation has become the subject of action by the International Finance Corporation (IFC), which has tabled all SRC’s loan application processes pending full scale investigation into a recent complaint filed against it by 22 indigenous Liberian communities.

Of key concern here to the Daily Observer is the revelation that the SRC, a subsidiary of Luxembourg-based transnational corporation SOCFIN is a client of the International Finance Corporation (IFC) which is a member of the World Bank Group. The IFC also has holdings in the Aureus Gold Mines at Kinjor, Grand Cape Mount County and, like the SRC, the Aureus Gold has also been accused of land grabbing, environmental pollution and degradation and violations of human rights.

Available evidence shows that World Bank lending policies have often caused harm to poor underdeveloped countries who find themselves unable to legally challenge such policies, largely due to the absolute immunity from accountability upon which these institutions rely when their policies do go wrong. In some cases, lending is provided to companies whose concession agreements were illegally concluded like the fake and failed Buchanan Renewables that was touted to be a leader in the conversion of biomass to electricity.

Further, in a number of instances, as evidenced in Liberia, World Bank support has gone to multinational corporations involved in vicious land grabs that have succeeded in displacing thousands of poor villagers from their ancestral lands. Moreover, their activities, much of which are unregulated have caused significant damage to the environment. The pollution of creeks and other water sources by poisonous chemical spills in Firestone, LAC, Kinjor, MNG Gold, are well documented.

The problem is that, poor people and communities alike, affected by the activities of these transnational conglomerates have had little or no recourse to justice. Successive governments have remained virtually aloof and allowed such naked exploitation to continue. The Hummingbird gold concession awarded through the influence of shareholder and Senate President Pro Tempore granting mineral and exploitation rights of virtually the entire southeast to a rather shady company was also reportedly a recipient of funding from the World Bank Group.

According to a 2015 International Consortium of Investigative Journalists(ICIJ) report entitled, “Evicted and Abandoned”, between 2004 and 2013, an estimated 3.4 million people were physically or economically displaced by World Bank sponsored projects. The ICIJ also discovered that the World Bank, in most instances, failed to respect its own rules for resettling displaced communities and ensuring that they were protected violent evictions and other human rights abuse as we have seen at Aureus Gold in Kinjor and the Salala Rubber Corporation (SRC).

But the situation is not completely hopeless and the examples of two communities continents apart are currently engaged in a legal battle to determine the level of immunity from lawsuits on which these large international organizations (World Bank, etc.) rely when development causes harm. The examples of a fishing community in India and rural palm oil workers in the South American state of Honduras have raised hopes of change with a US Supreme Court ruling (majority decision) stripping the World Bank of absolute immunity, a status which it has long enjoyed.

On February 27, 2019 the US Supreme Court decided in favor of a minority fishing community which was seeking compensation based on a complaint that an IFC funded coal-fired plant built near the waters of their settlement by the powerful Tata Group was driving polluted water into their fishing grounds, driving away all the fish and destroying their livelihoods.

In the other case, 17 Honduran farmers sued the World Bank, charging that the powerful Dinant Corporation had terrorized, shot or killed their relatives who were involved in a bitter land conflict with locals over control of palm oil plantations. The farmers maintained that the IFC provided loans to the Dinant company at the time it was using paramilitary death squads and hired killers to target its opponents.

According to the ICIJ, although the World Bank Group had refused to comment on the suit, it had previously acknowledged flaws in the handling of the Dinant investment.

Coming back to home, aggrieved communities in the SRC concession area in Bong and Margibi Counties, according to the Daily Observer story, have charged that World Bank money (US$10 million) is being used by the SRC to facilitate illegal land grabs without due and appropriate compensation and to perpetrate sexual and other forms of violence against local people.

But while the US Supreme Court, in the cases mentioned earlier, may have struck down the World Bank’s claim of absolute immunity, according to the ICIJ, it did not “resolve significant issues that will determine the outcome of these cases.”

However, arguments put forth by both communities could serve to establish legal long-lasting precedents. Questions as to which types of development loans are subject to litigation will be decided largely by lower US Courts, according to the ICIJ.

Additionally, the US Supreme Court decision portends to have far reaching implications, even for Liberia, especially in view of the complaint filed by 22 communities before the Compliance Advisor Ombudsman (CAO) at the IFC on 27 May 2019, alleging that the expansion has undermined their livelihoods and has been accompanied by violence against women and community leaders.

The Daily Observer awaits the outcome of this investigation and welcomes and supports the peaceful disposition of the affected people who have sought redress through legal action, which may possibly land in US Courts. It now remains to be seen whether and how the World Bank will draw lessons from this.

Above all, the World Bank should be reminded every step of the way to put people above profit, else it must brace itself to deal with what could be an avalanche of law suits ending up not in corruption prone local courts but in US, European and other courts.
  • Women living near the #Socapalm oil palm plantation in Edéa, Cameroon, are struggling for their land, autonomy and livelihoods. Please read their account and sign in support before 15 December: https://forms.gle/gBKbFCv2Bizzpfbt7
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