Sharing is caring!

Economic, legal, diplomatic and civil society experts – including Joseph Stiglitz, a Nobel Prize-winning economist, and former Vice President and Chief Economist of the World Bank – have urged the United States Supreme Court to go back to the case Budha Ismail Jam, et al v. IFC , (Tata Mundra case) concerning immunity from the suit for the World Bank Group and foreign nations.
They said, the immunity decision in the US Supreme Court has broad and dangerous consequences in an amicus brief supporting the Earth Rights International. EarthRights represented fishing and farming communities, organised under the Machimar Adhikar Sangharsh Sangathan (MASS) in Kutch, Gujarat, in the case against the World Bank’s private lending arm, the International Finance Corporation (IFC), over its role in funding a coal-fired power plant that allegedly destroyed local people’s livelihoods.

They urged the court: “The collective experience of amici in many countries teaches that the IFC must be held accountable for the social and environmental impacts of the projects its loans make possible. Internal IFC accountability procedures are ineffective. Judicial review is essential.”
In 2019, the US Supreme Court ruled that the IFC is not entitled to “absolute” immunity in the case but instead is subject to the same immunity as foreign governments. Applying those rules, the DC Circuit Court of Appeals last year ruled that IFC was still immune.

EarthRights qualified the decision as having far-reaching consequences for foreign states’ accountability for everything from price-fixing to financing terrorism. It asked the Supreme Court to again take up the case and clarify the law – not just in this case, but whenever a foreign government is involved in financing or otherwise assisting wrongful conduct.
In a media communqiue, Marco Simons, General Counsel of EarthRights, is quoted as saying:“These distinguished experts show, as EarthRights argued, that the DC Circuit’s decision is wrong, and will immunize a wide variety of harmful conduct Since the World Bank Group committed negligence at IFC’s headquarters in Washington, DC, it should not be immune in this case and must be held accountable for the impacts of this project that it funded.
“But the DC Circuit decision would allow international organizations and foreign governments to abet wrongful conduct from US soil – such as state-owned banks financing terrorism, or state-owned companies joining with other businesses to commit fraud, breach contracts, steal technology, or fix prices – without any accountability at all.
“In this case, the IFC’s responsibility is clear. From the start, the IFC recognized that the Tata Mundra coal-fired power plant was a high-risk project that would significantly harm local communities and their environment.
“Despite knowing the risks, the IFC provided a critical $450 million loan, enabling the project’s construction. As predicted, the plant undermined water quality, contributed to air pollution, and harmed crops and fish populations that support local economies.”

Dr Bharat Patel, general secretary, MASS, one of the petitioners in the case, said, “Fishworkers and farmers in Mundra for over a decade now continue to suffer disastrous impacts of the project which has been financed by the IFC. If immunity is granted to these institutions it would be travesty of justice. We hope the US Supreme Court recognizes the seriousness and far reaching implications of this case on accountability of financial organisations and takes up the case.”
Notably, the IFC’s own internal compliance office at one point had issued a scathing report 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 and calling for the IFC to take remedial action.
“The briefs filed demonstrate the widespread condemnation among legal academics, diplomats, and civil society experts for the DC Circuit’s decision, which immunizes not only the IFC but also a wide swath of harmful foreign sovereign activity,” Marco added.

Speaking on this, Joe Athialy, Executive Director of the Centre for Financial Accountability, New Delhi, said, “It is high time institutions like the IFC and the World Bank Group stop using the technicalities of law to evade their accountability to people. It would only be fair that the US Supreme Court takes up the case especially when the lives and human rights of thousands of fishworkers are at stake.”

It is high time institutions like the IFC and the World Bank Group stop using the technicalities of law to evade their accountability to people. According to EarthRights, from the very start, the IFC recognized that the Tata Mundra coal-fired power plant was 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 $450 million loan in 2008, enabling the project’s construction and giving the IFC immense influence over project design and operation. Yet 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 conditions of IFC involvement”, it alleged.

Claimed EarthRights, “The plant has 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.”
It added, “The enormous quantity of thermal pollution – hot water released from the plant – has destroyed the local marine environment and the fish populations that fishermen like Budha Ismail Jam rely on to support their families. Although a 2015 law required all plants to install cooling towers to minimize thermal pollution by the end of 2017, the Tata plant has failed to do so.” It further said, “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.”

According to EarthRights, “Some air pollutants, including particulate matter, are already present at levels dangerous to human health, in violation of Indian air quality standards and the conditions of IFC funding, and respiratory problems, especially among children and the elderly, are on the rise.” The IFC’s internal compliance mechanism, the Compliance Advisor Ombudsman (CAO), in a scathing report in 2013 said 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 and calling for the IFC to take remedial action.

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.

 

 

Picture courtesy: Joe Athialy

The original article published in Counterview can be accessed here.

Centre for Financial Accountability is now on Telegram. Click here to join our Telegram channel and stay tuned to the latest updates and insights on the economy and finance.

Help us in
* Demystifying finance to common people
* Making financial institutions transparent and accountable
* Spreading financial literacy programmes

Related Stories

guest
0 Comments
Inline Feedbacks
View all comments