World Bank - Projects and Use of Complaints Mechanisms

A whole range of projects in the extractives sector has been reason for civil society criticism towards the World Bank Group. In order to help affected people to get their rights and assess or mitigate environmental problems, affected people and NGOs have used the Inspection Panel and the Compliance Advisor and Ombudsman Office. The experiences were mixed. Some examples:

Marlin Gold and Silver Mine in Guatemala: This is a gold and silver mine in the West of Guatemala, in a region basically inhabited by the indigenous peoples Mam and Sipacapan, who work mainly as small scale farmers. The Canadian company Glamis Gold operates the mine through its subsidiary Montana Exploradora de Guatemala. IFC provided a loan of US$ 45 million in 2004. Marlin became operational in 2005, it is the first major mining investment in Guatemala in 20 years and is an important test case. In January 2005, the break-up of a 40-day protest by the army resulted in one death. Later that year, indigenous Sipacapan communities, affected by the mine, overwhelmingly rejected mineral development in a popular referendum.

In response to a community complaint, the Compliance Advisor Ombudsman (CAO) investigated the project. While the CAO found that some community concerns, particularly those involving impacts to local water supplies, were unwarranted, the CAO identified some serious shortcomings with project assessment and management. For example, the CAO described the lack of a clear policy on human rights as a “significant oversight” on the part of both Glamis and the IFC.

The company and the IFC as well as NGOs involved in the complaint answered to the CAO report, with the IFC claiming that most of the issues had been addressed yet and the NGOs contesting this point of view. The CAO reports and the answers from company, IFC and NGOs of 2006 can be found on the website of CAO. Mining campaigners assess the effectiveness of the complaint as not satisfactory. It left the indigenous leaders in Guatemala unsatisfied as well, the dialogue died.

Yanacocha Gold Mine in Peru: is another mining example with a mixed assessment. Minera Yanacocha is the largest gold mine in South America and an IFC project since 1993. A mercury spill in 2000 signaled the start of CAO’s involvement in Yanacocha and in early 2001, affected communities filed a complaint.

The CAO has published documentation on the history and legacy of the Mesa de Diálogo y Consenso CAO–Cajamarca in Peru—a forum for debating social and environmental concerns, conducting participatory water monitoring, and fostering dialogue between the community of Cajamarca and representatives of the Yanacocha gold mine.

The achievements and challenges of the Mesa are manifold and while the CAO did put a lot of effort into the process, mining campaigners report that affected people are disappointed about the outcomes and do feel the process as a loss of time. The CAO documentation can be found on the website of CAO.  

Karachaganak Oil Field in Kazakhstan: In the case of the Karachaganak oil field in Kazakhstan, the experience with CAO complaints is better. Here, the CAO released a report in April 2008, finding the IFC out of compliance with safety standards for toxic emissions at the giant Karachaganak Oil and Gas Condensate Field in western Kazakhstan. The report found noncompliances in both the stack emissions and in the ambient air quality monitoring programs at Karachaganak. “The CAO finds the monitoring program and the data reported on stack emissions insufficient in order to verify compliance with IFC requirements,” states the CAO report. In addition, the CAO concludes, “neither the ambient air quality monitoring program nor the data reported from the monitoring to date verify compliance with IFC requirements.”

The IFC provided $150 million in loans to the international consortium, Karachaganak Petroleum Operating, BV, which comprises British Gas, ENI/Agip, Chevron, and Russia’s Lukoil.  Karachaganak has been polluting the air around the field since 2002, causing severe environmental health problems in the village of Berezovka, located a mere five kilometers from the field.  In 2004, village residents filed a complaint with the CAO, claiming that the IFC investment was harming their health because of emissions from the field.

Since 2003, the village of Berezovka has been fighting for relocation away from Karachaganak because of respiratory, nervous system and skin ailments among its residents.  Karachaganak’s extremely high levels of hydrogen sulfide have plagued the village, as toxic emissions from the field have been as high as 56,000 tons per year in 2005.  The CAO report states that the IFC failed to report hydrogen sulfide data for the stacks, as required in IFC guidelines from 2003-2006.

• The full audit report is available on the CAO’s website.