International Finance Corporation’s (IFC) grievance redressal body Compliance Advisor Ombudsman (CAO) in its compliance investigation report has indicted IFC for not following its Performance Standards in Vizhinjam International Seaport Limited (VISL), a special purpose company wholly owned by the State Government of Kerala.
Flagging inconsistencies with the Performance Standards, CAO scathingly observed that IFC took on the role of lead transaction advisor without a reasonable assurance of the VISL’s commitment to the Performance Standards; and that the Environmental and Social Impact Assessment (ESIA) was inconsistent with the Performance Standards, particularly in relation to land acquisition and project impacts on livelihoods.
The Report further made many startling findings regarding IFC Advisory Services. Some of these include deliberately not advising the VISL to suspend its land acquisition till the completion of ESIA; narrowing its environmental and social mandate to facilitate the project thus ignoring a few essential components during ESIA which would have a detrimental impact of the project on tourism and fishing communities situated along the coast of the area. Another important finding was that the ESIA did not go through a process of consultation and participation.
The Corporation’s ombudsman’s report came in the context of the development of a multi-purpose seaport at Vizhinjam, 16 kilometres south of the state capital, Trivandrum (Thiruvananthapuram), for which IFC was hired as the Transaction Advisor to strategically assist VISL in structuring and implementing the project, and seeking private sector partners to implement the plan in collaboration with the State Government Ports Department.
As a lead transaction advisor, the IFC’ role was to supervise the work of technical and environmental consultants, and to market the project to potential investors. As part of its mandate, IFC had also agreed to coordinate and supervise the preparation of environmental studies needed for submission to the relevant government agency.
The investigative report came in response to the complaint filed in August 2012 by local tourism workers/businesses and other residents with the support of the Kerala Swathantra Malsya Thozhilali Federation (Kerala Independent Fish Workers Federation), Kerala branch of Exnora International, the Kerala Hotels and Restaurants Association, and the People’s Resistance Committee in Vizhinjam.
In their complaint, the complainants raised concerns about the potential environmental and social impacts of the port and its associated infrastructure. They raised concerns about how the project would impact the livelihoods of people who depend on tourism and fisheries. They also raised concerns regarding the impact on farmland related to the construction of infrastructure associated with the port development.
IFC’s in its response to the CAO’s report brushed aside its responsibility by pointing that this case is of investment and advisory services regarding assessment and monitoring with the Performance Standards.