European Bank for Reconstruction and Development
Established in 1991,the european Bank for Reconstruction and Development (EBRD), is the largest single investor in the region and mobilises significant foreign direct investment beyond its own financing. It is owned by 69 countries, the european Union (eU) and the EIB 1 . The aim of the EBRD is to provide project financing for banks, industries and businesses, both new ventures and investment in existing companies. It also works with publicly owned companies that aim to support privatisation, restructure state-owned firms and improve municipal services.
What are the issues that can be dealt with?
The EBRD doesn’t mention the term ’human rights standards’ in its guiding policies 2 ; yet, it focuses on environmental sustainability in the broad sense of the term to encompass not only ecological impacts but also worker, health and safety and community issues. The Bank chooses the projects it may finance according to three principles :
- Social and environmental sustainability;
- Respect for the rights of affected workers and communities; and
- Compliance with applicable regulatory requirements and good international practices 3 .
To ensure the respect of these principles, the EBRD adopted, on May 6, 2009, a new Project Complaint Mechanism (PCM) to replace and render more effective the existing Independent Recourse Mechanism (IRM) which had been in use since 2004. It was renamed Independent Project Accountability Mechanism (IPAM). IPAM operates according to the rules set out in the 2019 Project Accountability Policy, which set out the procedures about how a complaint may be filed and how it will be processed. 4
IPAM has two functions : 5
- The Problem-solving Initiative, which has the objective of restoring dialogue between the parties and of trying to resolve the underlying issues giving rise to the complaint or grievance where possible.
- The Compliance Review function, which seeks to assess whether a Bank approved project complies with relevant EBRD policies, relevant environmental policies and project-specific provisions of the Public Information Policy.
Complainants may request a Problem-solving Initiative, a Compliance Review, or both.
As the EBRD is an international financial institution which is owned by 69 countries, the eU, and the EIB, it is not possible to lodge complaints concerning this bank with the european Ombudsman.
Who can file a complaint?
- With regard to the Problem solving Initiative : one or more individual(s), located in an area adversely affected by an EBRD-project, or who has or have an economic interest in such area.
- With regard to the Compliance Review : one or more individual(s) or organisation(s).
Under what conditions? 6
- IPAM will not accept complaints relating to the adequacy or suitability of EBRD policies, or to matters in regards to which a Complaint has already been processed by IPAM or its predecessor IRM (unless there is new evidence or circumstances), or if the complaints raises allegations of fraud or relates to procurement matters. 7
- Anonymous complaints will not be accepted. However, complainants who are not organisations may ask for the complaint to be treated confidentially. 8
- Complaints can be submitted in any of the working languages of the Bank (english, French, German and Russian) or in any of the official languages of the Bank’s countries of operation 9 .
- Complaints can be submitted in any written format, and the IPAM officer can be contacted for guidance on how to write and submit a complaint 10 .
In case of a complaint filed under the Problem-solving Initiative, the complaint must 11 :
- relate to a project in which the Bank has presented a clear interest in financing the project;
- relate to a project in which the Bank maintains a financial interest, in which case the complaint must be received within 12 months of the last disbursement of funds from the Bank.
- describe the efforts made to address the issues pointed out in the complaint through discussions with the Bank and/or its Client, and the results of such efforts. This obligation may be waived by the IPAM Officer if he/she considers them futile or detrimental to the Complainant.
- be filed after the EBRD has shown clear interest in financing the project, and no later than 12 months after the last disbursement of funds, or in the case of equity funding, where the Bank has not sold or exited from its investment.
In case of a complaint filed under the Compliance Review, the complaint must relate to a Project that has been approved for financing by the Board or the Bank Committee 12 .
The complaint must be submitted after the EBRD has approved the project, and no later than 24 months after the Bank has ceased to participate in the project.
Process and Outcome
- IPAM Officer will consider whether to register, and will notify the relevant parties of its decision.
- Once the complaint is registered, the Bank Management will send its response to the Complainant within 21 business days, and within 5 days following registration of the complaint, IPAM Officer will appoint an Expert to conduct an eligibility Assessment.
- Once eligibility has been determined, and within 40 business days after the submission of the Bank Management response to the Complainant, the eligibility Assessors will issue an eligibility Assessment Report that will notify whether the complaint is eligible for a Problem-solving Initiative, Compliance Review or both.
- The eligibility of the complaint will not suspend the Bank’s interest in the project. However, interim recommendations to suspend the Bank’s proceeding with the process or disbursements can be made by IPAM Officer to prevent irreparable harm 15 .
In case of a complaint filed under the Problem-solving Initiative:
The objective is to restore dialogue between an affected group and the client, as well as any relevant party, to try to resolve the issues underlying a complaint without attributing blame or fault to any party. It may be undertaken instead of, or as well as, a compliance review.
The Problem-solving Initiative is considered completed when the relevant parties reach an agreement, or when no further progress can be made according to the Problem-solving expert. Upon completion, the expert will issue a report available to all relevant parties, the President and the Board. The report and the decision will be publicly released and posted on the IPAM website, if the parties agree. IPAM will monitor the implementation of any agreements reached during a Problem-solving initiative. a Problem-solving initiative might include independent fact-finding, mediation, conciliation, dialogue facilitation, investigation or reporting.
In case of a complaint filed under the Compliance Review:
The objective is to establish whether any of the Bank’s action (or failure to act) in respect of an approved project has resulted in non-compliance with a relevant EBRD policy. In carrying out the assessment, the IPAM expert might use any of the following methods:
- Review of the key documents;
- Consultations with relevant parties; and
- Site visits 16 .
If the Compliance Review expert concludes the Bank was not in compliance with relevant EBRD policies, she/he will issue a draft Compliance Review Report with recommendations to address these non-compliance issues, either with adapting the Bank’s systems or procedures, for similar issues not to happen in the future, or with changing the scope and implementation of the relevant Bank-financed project, if possible. A final Compliance Review Report will then be drafted on the basis of the Bank Management’s Action Plan and Complainants’ comments. The IPAM Officer monitors the implementation of the recommendations and the Action Plan by issuing a Compliance Review Monitoring Report at least twice a year until IPAM determines that such monitoring is no longer needed. These reports will be made publicly available on the IPAM website 17 .
IPAM in action
The IPAM mechanism received 195 complaints between 2010 and 2019 (it received 40 in 2019). Among them, 46 were registered, while 149 were considered ineligible. These complaints were mainly related to projects in the power and energy sector, and to a lesser extent, to projects related to the transport sector. 18
BTC pipeline complaint
The complaint which was examined concerned the BTC (Baku-Tbilisi-Ceyhan) pipeline in Georgia, a project operated by the company British Petroleum (BP). A complaint was submitted by seven residents of the Atskuri village. It was determined eligible for further processing through a problem-solving initiative, but not through a compliance review.
The individual complaints brought under the then IRM covered the following issues:
- The clearance work and the damage to land on the oil pipeline construction route exceeded the area indicated in the proposal package for which compensation was available;
- The area covered by the pipeline passage exceeded the area indicated in the proposal package for which compensation was available;
- Heavy construction traffic and road improvements carried out during the construction of the pipeline caused loss due to vibration, and subsequently damage to houses and other buildings;
- Damage to the irrigation channel of the village during the construction of the pipeline caused loss of harvests;
- The lack of economic viability of ’orphan’ land caused loss of harvests;
- There has been undue delay and uneven treatment in the payment of compensation for damage to land and plants and for uncollected harvests; and
- There have been a lack of responsiveness and undue delay in the project grievance procedure and an inadequate application of that procedure.
Previous attempts to carry out a problem-solving initiative under the IRM in relation to two other complaints concerning alleged impacts of the BTC pipeline construction on residents in the Gyrakh Kesemenli village in Azerbaijan and in the Akhali Samgori village in Georgia had both been unsuccessful.
Following the review of the individual complaints against BP/BTC during Spring 2008, BP/BTC subsequently made an additional compensation payment to one complainant for crop loss related to the years 2004 and 2005, and also Commissioned a geological survey to investigate the damage to property allegedly arising from road widening in connection with the pipeline project. BP/BTC also undertook a field survey concerning the alleged damage to the irrigation channel serving one of the agricultural plots, and subsequently agreed that construction had indeed impacted it. Since then, BP/BTC has informed the particular complainant that it will compensate for the work required to re-build the channel. BP/BTC also reviewed its records in relation to several of the claims regarding alleged crop loss, and presented evidence from satellite imagery of pre and post pipeline construction to the problem-solving facilitator supporting its rejection of several of the individual claims for compensation. In relation to alleged vibration damage to three properties from the passage of heavy construction vehicles, BP/BTC considered that a technical review conducted by the International Finance Corporation (IFC)’s Office of Compliance Advisor/Ombudsman (CAO) and the decision of CAO in June 2006 to close the complaints concerning cultural monuments in the village had adequately dealt with the issue of vibration damage. In light of BP/BTC’s reliance on that review and its view that complaints to the IRM concerning alleged damage to property as a result of vibration damage during construction of the pipeline should be similarly dealt with, the IRM decided it would not be productive to pursue this aspect of the IRM complaint any further 19 . Therefore, all complaints before the IRM were closed, and the problem-solving completion report was published in September 2008. Yet this project remains highly controversial and the individual country strategy used by the Bank has been criticised as overestimating development possibilities while severely disregarding the environmental risks and the poverty issues caused by the BTC pipeline project 20 .
The EBRD, like other banks, remains highly criticised by civil society groups for financing a number of environmentally and/or socially harmful projects, for its lack of transparency and for its approach (such as the use of country strategies mostly based on economic indicators) which is considered contrary to its guiding policies. 21