World Bank Faces Probe on Enviro, Human Rights Violations

Having failed to reach a decision on July 22 in the case of the Brazilian farm and fishing communities, the directors are now scheduled to take it up on Aug. 29, after their summer recess. On that date, they are also to rule on a complaint from poor farmers in central India.

In both cases, initial reviews by the Bank's independent inspection panel are understood to have concluded that the peasants' complaints have merit and warrant full investigation. And in each case, the plaintiffs' hopes could be crushed by political force or stricken down by bureaucratic fiat.

If board members vote yes, the inspection panel will conduct a full-scale probe of each project, sifting through the evidence to determine whether agency and project staff disregarded any of a wide range of Bank rules, notably those governing involuntary resettlement, environmental assessments and mitigation, community participation, and project supervision.

The Indian complaint was filed on behalf of communities in Singrauli, a cluster of villages about 1,000 kilometers southeast of New Delhi. It involves Bank funding for a government effort to expand coal-fired power plants, a process that includes removing a number of villages so that ash-dikes, or receptacles for sludge made from coal ash and water, can be dug from the soil on which the villages stood.

That effort pits local farmers, who coax a subsistence living from the earth, against the might of the National Thermal Power Corporation (NTPC), which was created at the Bank's behest and has received some $4 billion in Bank funding since 1975.

The villagers' main complaints are that the Bank failed to heed its environmental and social rules and turned a blind eye to human rights abuses by NTPC, the Central Industrial Security Force, and local police. The Bank disputed those charges in its response to the panel, which nevertheless is said to have recommended a full inspection.

Bank officials say they have been aware of problems surrounding NTPC, and Singrauli in particular, for some years, but that local peasants' allegations, even when backed up by visiting human rights and environmental workers, have been hotly contested by Indian authorities.

NGO sources say that the Bank has been too trusting of its client.

Since the villagers filed their claim in late April, they have "suffered a renewed assault by the (NTPC)," argues Dana Clark, an attorney with the Washington-based Center for International Environmental Law.

"This is the first time that claimants to the inspection panel have been targeted for reprisals," says Clark, whose organization has closely followed the panel since its creation in 1993. "NTPC is essentially aiming for a fait accompli: to evict the complaining villagers, destroy their homes and crops, and dump ash on their lands before the Bank can respond to the claim."

The Bank itself, faced with this crisis, opted not to take steps to defuse the situation, claims Clark, who visited the area earlier this year.

Bank officials decline comment on the latest allegations, saying they are subject to an ongoing investigation. In a recent letter to Clark, Mieko Nishimizu, the Bank's vice president for South Asia, said the agency continues to "urge the highest NTPC authorities to act in a responsible manner."

"I know you will not be satisfied with this response," Nishimizu wrote. "But we ask you to also understand that the Inspection Panel process relates to actions taken by Bank management, and it is not intended to substitute for local dispute resolution, nor is it intended as an international remedy once local legal procedures are exhausted."

The Brazilian case involves the Itaparica Resettlement and Irrigation Project, an effort to compensate the Brazilians for the homes and farms they lost during construction of the Itaparica dam, completed in 1988. In March, communities displaced from the banks of the Sao Francisco river complained that after 10 years they have yet to see any of the project's benefits.

The inspection request was filed by 121 community leaders and the Polo Sindical, a union of squatter, tenant, and small independent farmers formed especially to push for the irrigation schemes and other benefits they had been promised.

In May, the panel recommended a full-scale probe following a preliminary review of the allegations and the Bank's response, which included new proposals to compensate the peasants.

The Brazilian government has opposed an inspection, and on July 21, one day before the directors were set to vote, challenged the eligibility of the inspection claim. If more than 95 percent of the project's loan funds had already been disbursed before the claim was filed, the project would be off-limits to the panel.

In the run up to the Aug. 29 vote, both sides are lobbying the directors. Even as Bank staffers insist their latest plan will fix the problems, the Brazilian government is seeking to persuade board members, and especially those from developing countries, that an inspection would represent external interference in what it deems a domestic affair.

Brasilia's argument reveals "a lack of understanding of the meaning of this instrument of global citizenship," the Polo Sindical says in a letter issued jointly with the Rede Brasil, a network of 40 NGOs focusing on the country's dealings with international financial institutions.

"The Inspection Panel is not an instrument for assessing governments but for assessing the World Bank, a step which we regard as legitimate in dealing with a multilateral institution of which Brazil is both a shareholder and borrower."

A full investigation, the groups add, "will be a reaffirmation of the World Bank's new policy of ensuring freedom of information, transparency in its activity, and the participation of civil society in the projects financed by the Bank."