Wake Up World Bank

Absolute immunity leads to impunity, and that foments lack of transparency and the reluctance to be held accountable

By Joe Athialy
Published: Tuesday 05 March 2019
Credit: World Bank

Over three decades back, it looked quite impossible to ask the World Bank to review a project approved by them, and to have a complaint mechanism inside the Bank. Yet, the struggle of Narmada Bachao Andolan (NBA) against the Bank-financed Sardar Sarovar (Narmada) Dam did just that.

After years of struggle, in 1991, the movement got the World Bank to review the dam project. Two years later, the Bank withdrew from the project — a first in their history of financing projects around the world.

On February 27, 2019, by challenging the immunity of the World Bank Group’s International Finance Corporation (IFC) at the United States of America (US) Supreme Court in a landmark case, the fishworkers associated with Machimar Adhikaar Sangharsh Sangathan (MASS) rewrote history.

Paradoxically, both these peoples’ movements have roots in Gujarat. Indeed, it would have been impossible for the people to reach the highest court of US if not for the tenacity of the committed team of lawyer-activists at EarthRights International — a US-based NGO specialising in “legal actions against perpetrators of earth rights abuses, training grassroots and community leaders and advocacy campaigns.”

However, the victory, though significant, is only partial in this case. In 2015, a case was filed before the District Court of Washington DC — where IFC is registered — to hold IFC accountable for lending to the Tata Mundra project (Coastal Gujarat Power Ltd). The petitioners claimed irreversible loss to their livelihood.

IFC, instead of challenging the case, sought to hide behind the veil of immunity. Now that the Supreme Court has decided that they do not enjoy absolute immunity, the case about IFC’s liability in Tata Mundra project will commence in the District Court.

With the documentation of non-compliance of IFC’s social and environmental policies, as reported by its own Compliance Advisor Ombudsman (CAO) in an eloquently crafted report, it’s only a matter of time before IFC is held accountable and made to pay.

Besides, the Compliance Review Panel (CRP) — the independent accountability mechanism of Asian Development Bank (ADB) — another co-financier of the project, also reported about the gross violations of ADB policies. ADB’s actions on the findings continue to be inadequate and far from addressing the real violations as reported by the CRP.

Despite confronting a heedless company and careless financiers, the people never gave up on hope. Even in the face of extreme difficulty, with sources of their livelihood dwindling and pressure from different quarters to withdraw the case, they stood their ground. And that paid.

Tata Mundra Timeline
Year Incidence
2007 Power Finance Corporation awarded the project to Coastal Gujarat Power Limited (CGPL – Tata Mundra)
2008 IFC financed $450 million out of an estimated project cost of $4.14 billion
June 2011 Communities filed a complaint with IFC’s independent accountability mechanism, CAO
October 2013 Complaint filed with CRP, independent accountability mechanism of ADB
November 2013 CAO publishes its report, highlighting gross social and environmental policy violations
April 2015 Fishworkers affected by Tata Mundra, file case against IFC in District Court in Washington DC
April 2015 CRP's Final Compliance Review Report published
March 2016 District Court ruled that the IFC could not be sued because it enjoys immunity
February 2017 US Court of Appeals hears case challenging District Court’s decision
June 2017 Court of Appeals upheld decision of the District Court
January 2018 Appeal filed in US Supreme Court
May 2018 US Supreme Court decides to hear the case
October 2018 The case is heard
February 2019 In a historic 7-1 decision, the US Supreme Court decided that international organisations like the IFC do not enjoy absolute immunity

Immunity, even as a principle, is incompatible with present day’s advanced discourse on human rights, good governance and equitable development — terms which the Bank tosses around at their conferences and publications, but seldom practices.

Even an elected government could be taken to court by its citizens. So how can then the World Bank and other international organisations enjoy immunity? Absolute immunity leads to impunity, and that foments lack of transparency and the reluctance to be held accountable.

This historical decision has opened up an opportunity for communities around the globe to take decisive actions against lenders whose investments are causing damage to humans and the environment.

This decision will push financial institutions to be more responsible in their lending and ensure that no or least damages are caused due to their investments. As in the case of Narmada and many other struggles, this judgment proves that local struggles along with the support of other likeminded organisations, developing extensive documentation of violations and building their case on rock-solid facts, will certainly drive the violators to look for hideouts.

It has undeniably thrown open an opportunity for peoples’ movements, fighting against destructive developmental projects, to include ‘finance’ as a part of their existing strategies.

It also upholds that the rights of the people are above the privileges of the rich and powerful. In a world where spaces are shrinking for people to dissent in order to protect their rights and are disempowered before the might of corporations and financiers, this verdict becomes more significant.

Not just for the World Bank Group, this decision is a clarion call to other financial institutions as well — both national and international — that they will be held accountable, and made to pay, for investments where they do not consider people and environment.

Interestingly, a case from Honduras filed by the farmers may not have to go through the same process. The suit, filed through EarthRights International, arises out of the substantial financial support by IFC and the IFC Asset Management Corporation (IFC-AMC) — both World Bank entities — in Honduran palm-oil company Dinant.

The company has been at the centre of bloody, decades-long land-grabbing in the Bajo Aguán region of Honduras.

Furthermore, the outgoing President Jim Yong Kim was at the helm when CAO report about non-compliance of IFC’s policies by the company was published. The CAO reported many shocking findings — that the social and environmental impact assessments were erroneous, people were not consulted before the project was approved, project is causing health hazards to people in the vicinity and the livelihood of the people is gravely impacted.

Kim had every reason to take action on the report. Instead, he chose to ignore the findings and the demands of the people. The consistent indifference of the Bank led the people to knock at the doors of US judiciary. Of course, inadvertently, Kim made the World Bank a step closer to accountability. And he will be remembered for that.

In 2013, a campaign around the CAO findings was named ‘Wake Up Kim’. It demanded that President Kim wake up from his slumber, recognise the violations and take actions. Time has come to rename it to ‘Wake Up World Bank’.

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