Ombudsman finds the IFC failed to comply with its investment standards in Colombia

The Santurbán páramo in Colombia

The Santurbán páramo, Colombia. | Credit: Jorge Sánchez Latorre / AIDA.

August 31, 2016

The office of the Compliance Advisor Ombudsman found that the International Finance Corporation cannot guarantee that the Angostura mine will not have impacts on the environment.

Washington/Ottawa/Bogotá/Ámsterdam. The office of the Compliance Advisor Ombudsman (CAO) has issued its final report on the complaint brought against the International Finance Corporation's (IFC) investment in Eco Oro Minerals’ Angostura mine in the high-altitude wetlands – known as páramos – of Santurbán, Colombia. The office warned that the corporation has not met all the standards required of its investments, including an assessment of potential impacts on biodiversity.

The investigation was triggered by a complaint filed by the Comité por la Defensa del Agua y el Páramo de Santurbán (Committee for the Defense of Water and the Paramo de Santurban), with the support of the Center for International Environmental Law (CIEL), the Center for Research on Multinational Corporations (SOMO), the Interamerican Association for Environmental Defense (AIDA) and MiningWatch Canada.

"The biodiversity of Santurbán is critical to ensuring our water supply. Therefore, any threat to its biodiversity affects the water resources of the entire metropolitan area of Bucaramanga," said Alix Mancilla, of the Santurbán Committee.

The report also states that the IFC failed to assess the impacts of the entire mining project, and instead only concentrated on the impacts of the exploration stage, despite the fact that it justifies its investment on the basis of the supposed benefits that the eventual mine would bring. The CAO found that the "potential to comply with IFC’s environmental and social standards was uncertain and potentially challenging" during the extraction phase.

In its conclusion, the Ombudsman points out that "one of the stated purposes of the IFC's investment was to develop the studies necessary to determine whether the project could comply with IFC's [performance standards]. " However, the company did not complete the required studies, including an Environmental and Social Impact Assessment, a biodiversity baseline study, and critical habitat assessments. Despite repeated lack of compliance by the client, the CAO found that the "IFC has not pursued a remedy, but has made subsequent investments in the company."

"If the purpose of IFC's investment was to determine the viability of the project, there is no justification for the lack of studies – studies that are required to make an investment decision. You cannot greenlight a project in such a critical region for the population of Bucaramanga without assessing its actual consequences," declared Carla Garcia Zendejas of CIEL.

The IFC's response to the Ombudsman’s report did not acknowledge any wrongdoing or make commitments to address its findings. Instead, the IFC merely reiterated its justification for investing in the project, claiming that the eventual mine will bring employment and revenue. The response is silent regarding its client's intent to file an investment dispute under the Canada-Colombia Free Trade Agreement.

"It is very serious that despite failures in the risk assessment, the IFC has continued to invest in the Angostura mining project," added Kris Genovese, from SOMO. “It is disappointing, but not surprising, that the IFC has failed once again to respond to the findings of a CAO investigation.” 

AIDA attorney Carlos Lozano Acosta explained that “the project is illegal; that’s why its license was denied in 2011, and why the Constitutional Court ratified the prohibition of mining in páramos. It worries us that the IFC invested in a company whose project, from the beginning, was not viable, and who would file an international lawsuit against Colombia, one of the member states of the World Bank.”

The report reveals that the IFC has an explicit policy of investing in junior mining companies with limited capacity to manage environmental and social issues, in countries where the regulatory framework is weak or not enforced.

"It is time for the IFC to withdraw its investment in Eco Oro and stop investing in junior mining companies, as has been done in Colombia and elsewhere, knowing the serious social and environmental damage this entails and the context of impunity in which these companies are operating," stated Jen Moore of MiningWatch.

"As communities affected by the mine, we will continue challenging the project in court, and we will use all legal means at our disposal to stop it, as we have done so far," affirmed Elizabeth Martinez from the Committee for Santurban.

Currently, Colombia's Constitutional Court is considering a legal action filed by the Santurbán Committee with support from AIDA, concerning the lack of citizen participation in the demarcation of the wetland. A decision is expected soon.

The IFC is the private-sector lending arm of the World Bank Group. The CAO is an independent accountability mechanism that receives complaints from people who may be affected by IFC investment projects.

 

The CAO’s report and communiqué, including the IFC’s response can be found here:

Communiqué:

http://www.cao-ombudsman.org/cases/document-links/documents/CAOCommuniqueEcoOroSummaryofFindingsAugust252016.pdf

Report:

http://www.cao-ombudsman.org/cases/document-links/documents/CAOComplianceInvestigationReportonIFCinvestmentinEcoOroMinerals-English.pdf

Response by the IFC:

http://www.cao-ombudsman.org/cases/document-links/documents/EcoOro-IFCManagementResponsetoCAOInvestigationReport-5August2016.pdf