The World Bank Lending Strategy Must Aim To Place People Above Profit!

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The attention of the Daily Observer is drawn to a front- page story carried in its July 4, 2019 edition headlined, “SRC’s Investment Faces Hiccups”. According to the story written by Daily Observer contributing writer Alloycious David, the Salala Rubber Corporation(SRC), dogged by persistent claims of human rights and environmental degradation has become the subject of action by the International Finance Corporation (IFC), which has tabled all SRC’s loan application processes pending full scale investigation into a recent complaint filed against it by 22 indigenous Liberian communities.

Of key concern here to the Daily Observer is the revelation that the SRC, a subsidiary of Luxembourg-based transnational corporation SOCFIN is a client of the International Finance Corporation (IFC) which is a member of the World Bank Group. The IFC also has holdings in the Aureus Gold Mines at Kinjor, Grand Cape Mount County and, like the SRC, the Aureus Gold has also been accused of land grabbing, environmental pollution and degradation and violations of human rights.

Available evidence shows that World Bank lending policies have often caused harm to poor underdeveloped countries who find themselves unable to legally challenge such policies, largely due to the absolute immunity from accountability upon which these institutions rely when their policies do go wrong. In some cases, lending is provided to companies whose concession agreements were illegally concluded like the fake and failed Buchanan Renewables that was touted to be a leader in the conversion of biomass to electricity.

Further, in a number of instances, as evidenced in Liberia, World Bank support has gone to multinational corporations involved in vicious land grabs that have succeeded in displacing thousands of poor villagers from their ancestral lands. Moreover, their activities, much of which are unregulated have caused significant damage to the environment. The pollution of creeks and other water sources by poisonous chemical spills in Firestone, LAC, Kinjor, MNG Gold, are well documented.

The problem is that, poor people and communities alike, affected by the activities of these transnational conglomerates have had little or no recourse to justice. Successive governments have remained virtually aloof and allowed such naked exploitation to continue. The Hummingbird gold concession awarded through the influence of shareholder and Senate President Pro Tempore granting mineral and exploitation rights of virtually the entire southeast to a rather shady company was also reportedly a recipient of funding from the World Bank Group.

According to a 2015 International Consortium of Investigative Journalists(ICIJ) report entitled, “Evicted and Abandoned”, between 2004 and 2013, an estimated 3.4 million people were physically or economically displaced by World Bank sponsored projects. The ICIJ also discovered that the World Bank, in most instances, failed to respect its own rules for resettling displaced communities and ensuring that they were protected violent evictions and other human rights abuse as we have seen at Aureus Gold in Kinjor and the Salala Rubber Corporation (SRC).

But the situation is not completely hopeless and the examples of two communities continents apart are currently engaged in a legal battle to determine the level of immunity from lawsuits on which these large international organizations (World Bank, etc.) rely when development causes harm. The examples of a fishing community in India and rural palm oil workers in the South American state of Honduras have raised hopes of change with a US Supreme Court ruling (majority decision) stripping the World Bank of absolute immunity, a status which it has long enjoyed.

On February 27, 2019 the US Supreme Court decided in favor of a minority fishing community which was seeking compensation based on a complaint that an IFC funded coal-fired plant built near the waters of their settlement by the powerful Tata Group was driving polluted water into their fishing grounds, driving away all the fish and destroying their livelihoods.

In the other case, 17 Honduran farmers sued the World Bank, charging that the powerful Dinant Corporation had terrorized, shot or killed their relatives who were involved in a bitter land conflict with locals over control of palm oil plantations. The farmers maintained that the IFC provided loans to the Dinant company at the time it was using paramilitary death squads and hired killers to target its opponents.

According to the ICIJ, although the World Bank Group had refused to comment on the suit, it had previously acknowledged flaws in the handling of the Dinant investment.

Coming back to home, aggrieved communities in the SRC concession area in Bong and Margibi Counties, according to the Daily Observer story, have charged that World Bank money (US$10 million) is being used by the SRC to facilitate illegal land grabs without due and appropriate compensation and to perpetrate sexual and other forms of violence against local people.

But while the US Supreme Court, in the cases mentioned earlier, may have struck down the World Bank’s claim of absolute immunity, according to the ICIJ, it did not “resolve significant issues that will determine the outcome of these cases.”

However, arguments put forth by both communities could serve to establish legal long-lasting precedents. Questions as to which types of development loans are subject to litigation will be decided largely by lower US Courts, according to the ICIJ.

Additionally, the US Supreme Court decision portends to have far reaching implications, even for Liberia, especially in view of the complaint filed by 22 communities before the Compliance Advisor Ombudsman (CAO) at the IFC on 27 May 2019, alleging that the expansion has undermined their livelihoods and has been accompanied by violence against women and community leaders.

The Daily Observer awaits the outcome of this investigation and welcomes and supports the peaceful disposition of the affected people who have sought redress through legal action, which may possibly land in US Courts. It now remains to be seen whether and how the World Bank will draw lessons from this.

Above all, the World Bank should be reminded every step of the way to put people above profit, else it must brace itself to deal with what could be an avalanche of law suits ending up not in corruption prone local courts but in US, European and other courts.

5 COMMENTS

  1. What makes you think the World Bank is in Africa (Liberia) to help people thinking their lending should put people above profit? Have you considered that they’re doing exactly what they were planted on the continent to do, and that is, to grab land.

    When will we wake up and learn. The World Bank is a predatory entity planted in Africa to regain the power or land that was lost by the colonial powers. If you have been following their activities on the continent, you will know that land grabbing has being one of their main objectives. If they are not the one directly grabbing land, they’re sponsoring another entity to action on their behave.

    My suggestion to all African, change who you lend/borrow from. Is time you start lending/borrowing from African lenders. Not foreign entities based in Africa but your own people who have such institutions.

    I must also say this though, African lenders should make lending affordable for their people. Develop a market that urges the people to come to them instead of going to predatory entities like the World Bank.

  2. DaVoice gets it, dispossession of weak states has been economic and foreign policy goals of stronger ones; a la animal kingdom, might makes right. In his essay – on two biographies about British statesman Winston Churchill – entitled “Nasty, Brutish, and Great” published in the June 6, 2019 issue of the New York Review of Books, Ferdinand Mount narrated that while giving evidence in March 1937 to the Peel Commission, which was investigating unrest in Palestine, he [Churchlll] declared unashamedly:

    “I do not admit, for instance, that a great
    wrong has been done to the Red Indians of
    America, or the black people of Australia.
    I do not admit that a wrong has been done
    to those people by the fact that a stronger
    race, a higher grade race, or, at any rate, a
    more worldly-wise race, to put it that way,
    has come in and taken their place”.

    Although, Churchill, by no stretch, wasn’t the smartest of his generation, those observations are representative of the temper of the times: might makes right. Evidently, that perspective is still prevalent today. And reference World Bank’s reported shenanigans, as usual, the predator knows what should be done, it’s the prey confused. Upshot: the earlier our sub-Region integrates economically, the better for our posterity; otherwise, we will forever remain at the mercy of globalization, euphemism for neocolonialism.

  3. Every time I read these feel-good denunciations of the World Bank as a vampire sucking poor countries dry, I am left wondering who could really be sucking whom in these relationships? The World Bank just happens to be a for-profit multilateral financial institution, which lends out its monies in anticipation of making profits on those investments in return. Then we have certified pilferers and embezzlers as leaders of these shithole countries who squander those monies on personal indulgences and we blame the WB for what, asking for its money back? Very few countries, in fact, have paid the bank back the monies loaned them. Others have defaulted on their loan obligations, and even sought total cancellation/forgiveness in lieu of extenuating circumstances. Yet, the WB is a sucker? Mind you the conditions surrounding these loans and the repayment schedules or terms are spelt out at the onset, with nothing hidden and emerging later as surprises. Yet, the WB is a sucker? This must be the same charity or care-free mentality people employ with local banks, by contracting loans and refusing to pay back. The WB even extends grace periods to help recipient countries get situated or stabilized before the loan repayment begins, and that’s supposed to be exploitation? In that case, I agree with any decrier to find an alternative to this much maligned bank. And given the choice between “Neocolonialism” and the “authoritarian democracies” practiced in some of these shithole countries, I’ll pick my chances with the former any day over the latter. At least the expectations under “neocolonialism” will be known and expected, but that other democracy where nobody dares criticize the leader or say anything considered insulting and unacceptable, only God knows how each day rises and sets.

  4. There are findings from studies that suggest of how IMF policy prescription had led to the economic strangulation of debt-prone African countries like Liberia. However, the consensuses are overwhelming and very clear among the IMF policy experts that the blame is not wholly or solely that of the IMF; that it is largely due to the African leadership aged-old malaise which is “corruption”.

    As a matter of fact, the IMF does boast of its proven record and attests to the fact that the countries that often implement and adhere to its policy prescriptions and not yielding to fatal digressions have always exhibited sound economic and political stability.
    The deliberate hemorrhaging of the economic resources of Liberia with the intent of wielding an economic and political hegemony is not being forged on Liberia by the IMF. It is accompanied by a very deliberate, well crafted, and orchestrated effort on the part of the CDC establishment and its enablers.

    Some people are welcoming the idea of economic regionalism and that is amalgamating the economies of Liberia, Guinea, and Sierra Leone, in an effort to promote the use of a common currency and strengthen multilateral trade.

    For who does fully understand the vagaries of the leadership core at this juncture of Liberia’s national history? I read a line from a brief piece in the Daily Observer written by Mr. Right.To.Be.Anonymous, and it goes like this, “a government that has the propensity to move hell and heaven against its own citizens harbors the same propensity to move hell and heaven against any group or organization.

    Can Liberia become a trusted stakeholder within a genuine West African economic pact? I doubt it. Not with the present stock of leaders and its mentality. With the exception that Liberia’s only role might be that of a parasitic recipient, I cannot see what effective role that it will play.

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