Active Citizens, Africa, Civil Society, Economy & Trade, Energy, Environment, Food & Agriculture, Headlines, Labour, Natural Resources, North America, Poverty & MDGs

U.S. Agency Accused of Safeguards Failure in Liberia Investment

WASHINGTON, Jan 23 2014 (IPS) - Hundreds of Liberians have filed a complaint accusing a U.S. government agency of failure to carry out due diligence or ensure that safeguards were followed for investments made to a failed biomass project in Liberia.

From 2009 to 2011, the U.S. Overseas Private Investment Corporation (OPIC) made three loans to a Dutch-registered company, Buchanan Renewables, that aimed to replant a mature rubber plantation in Liberia and use the old trees to run a new biomass-fired power plant, which the company also wanted to build. The OPIC loans, totalling around 217 million dollars, constituted 70 percent of the project’s total costs.

“This so-called development project destroyed livelihoods and drove communities deeper into extreme poverty.” -- Francis Colee

The scheme, which has since failed, was initially described as a climate-friendly, pro-poor attempt to resuscitate Liberia’s rubber industry while powering its economy. Yet according to the new complaint, filed Wednesday, the project was rife with abuses.

Further, the complainants say the company’s sudden withdrawal has resulted in hundreds of local community members being unable to support themselves or their families. OPIC investigations, they say, should have flagged these and other potential problems, and they are now calling on the agency to offer reparations.

“Because of OPIC’s role in this project, people in Liberia are actively suffering from hunger and environmental damage that has been catastrophic to their livelihoods,” Natalie Bridgeman Fields, the executive director of Accountability Counsel, a watchdog group representing some of the Liberians party to the complaint, told IPS.

According to the complaint, OPIC oversight should have realised that the Buchanan Renewables plan would prevent local farmers and charcoal producers from making an independent living once the project got underway. While locals did sign contracts to tend to the new rubber trees and do related work, this set-up also made them entirely dependent on the company.

“OPIC, in violation of its social and environmental rules, failed to require an appropriate level of due diligence regarding [Buchanan Renewables’] operations in Liberia,” the complaint, addressed to OPIC President Elizabeth Littlefield, states, “and did not take adequate action to stop or remedy the harm experienced” as a result of the company’s activities.

OPIC has adopted a series of social and environmental safeguards, created by the International Finance Corporation (IFC), the World Bank’s private-sector arm, that should protect against such situations. Yet rights groups say the system appears to have broken down.

“This so-called development project destroyed livelihoods and drove communities deeper into extreme poverty,” Francis Colee, of Green Advocates International, a Liberian group representing those party to the new complaint, said Wednesday. Another Green Advocates representative, Alfred Brownell, noted the project “left behind a legacy of abuse”.

No contingency

The Buchanan Renewables biomass project in Liberia revolved around an old rubber plantation previously owned by Firestone, the global tire manufacturer. While the plantation’s trees were considered past their prime, locals continued to tap the trees or convert them into charcoal, a critical energy source for the country.

The Buchanan plan, which also had some backing from the Swedish government and investors, entailed cutting down and replanting these trees, with the old wood made into chips to be burned and converted to electricity. However, the company moved to cut down the trees before the Liberian government decided whether to permit the construction of the new power plant.

Eventually the government decided not to allow the permit and, faced with a collapsed business plan, by the beginning of 2013 Buchanan Renewables suddenly pulled out completely (a full report was released in March 2013 by the Dutch watchdog group SOMO). The company, previously owned by the Geneva-based McCall MacBain Foundation, was subsequently dissolved.

In retrospect, there appears to have been no contingency planning by the company in case the power plant construction wasn’t allowed. And evidently, OPIC didn’t enforce such a requirement, either.

“We see it as OPIC’s job now to fix this situation,” Accountability Counsel’s Fields says. “But we’ve been talking to the agency for a year and they’ve only delayed, showing very little interest in what they’ve done wrong.”

In an accompanying report released Wednesday, Accountability Counsel says that OPIC did express some interest in exploring some form of reparations in November. But the groups said it decided to go forward with the complaint after “numerous attempts to engage” since November “did not result in a commitment from OPIC to engage in a process for discussing remedy”.

The complaint outlines two types of problems, those that took place during the Buchanan project and the ongoing impacts of the company’s sudden withdrawal. The complainants outline flagrant labour violations, including allegations of systemic sexual abuse against female workers.

“We were forced to work under terrible conditions without safe drinking water or proper safety equipment, leading to illness and serious injuries,” Sam Yeadieh, a representative for the former workers, said in a statement. “We were not paid what we had earned, and women were abused on the job.”

Since the company’s departure, rights groups say the young rubber trees have died, the woodchips have poisoned local water supplies, and livelihoods have been ruined. The charcoal producers, meanwhile, have been forced to start cutting into the surrounding forests for fresh product – a process that both negates the project’s intended climate impacts and may have led to a significant national price spike in charcoal prices.

Limited liability

OPIC says that is aware of the “unconfirmed allegations” around the Buchanan Renewables project and is currently working to determine what “additional steps it may take”.

“One of OPIC’s driving principles is positive development impact, and we regularly monitor OPIC-supported projects to ensure that all appropriate protections are in place to support this principle,” Charles Stadtlander, a press representative for OPIC, told IPS.

“While Liberia is a post-conflict country with a challenging social and economic operating environment, the Buchanan project was subject to these same protections. OPIC’s support of this project ended in January 2013 after its loan was repaid and the contract concluded.”

Accountability Counsel’s Fields says that OPIC’s accountability rules are limited, with the agency seeing the repayment of loans as essentially ending its liability. Yet she also notes that OPIC’s role is set to increase significantly around a spate of new U.S.-led electrification projects in Africa, and that the Liberia experience thus offers important lessons.

“This really calls into question whether OPIC can be trusted at all for investments on development and positive climate impacts,” she says. “Faced with a project that should have been an obvious alert, they dropped the ball. There’s no reason they should now be trusted with any project without additional oversight.”

 
Republish | | Print |

X
NEXT STOP SDGS
  • Tracking global progress towards a sustainable world

Weekly Newsletter