Mekong Watch CATFISH TALES
29 November 2002 Issue #8 SPECIAL EDITION
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SPECIAL EDITION on the COMPLAINTS PROCEDURE FOR JBIC's ENVIRONMENTAL
GUIDELINES
The Japan Bank for International Cooperation (JBIC) has held a series of
public consultations in its process of establishing a complaints procedure
for its new Environmental Guidelines. The last consultation was held on 18
November 2002. This Special Edition builds on the information given in
past issues of Catfish Tales and explains the problems remaining after the
last public consultation. While improvements were made during the process,
information disclosure and the timing during which JBIC will accept formal
complaints are two issues that NGOs and JBIC have not yet been able to
agree upon.
CONTENTS:
A. Background to Complaints Procedure
B. Why is Mekong Watch Participating in the Process?
C. Results of the Final Public Consultation on the Complaints Procedure
1. Timing of Filing Complaints
a. For Yen Loans
b. For International Financial Operations
2. Information Disclosure
D. What's Next?
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COMPLAINTS PROCEDURE FOR THE ENVIRONMENTAL GUIDELINES OF THE JAPAN BANK FOR
INTERNATIONAL COOPERATION: PUBLIC CONSULTATIONS FOR JBIC COMPLAINTS
PROCEDURE COMPLETED (18 November 2002)
A. BACKGROUND TO COMPLAINTS PROCEDURE
The Japan Bank for International Cooperation (JBIC) established its new
Environmental Guidelines for both ODA and International Financial
operations. These guidelines will go into full effect from 1 October
2003. In order to ensure that the guidelines are enforced, JBIC is now in
the process of establishing a complaints procedure through which project
stakeholders can file complaints if JBIC fails to follow its new
guidelines. If approved, the complaint will be investigated by an
Environmental Inspector, making this complaints procedure a form of
inspection mechanism as well.
JBIC has been holding public consultations, making it possible for NGOs,
private corporations, and other stakeholders to participate in the
development of the new complaints procedure. The first draft of the
complaints procedure was released in late August, and many weaknesses in
the draft have been addressed through the consultation process. As
reported in Catfish Tales Issue #7, however, serious concerns regarding
information disclosure and the timing in which complaints would be accepted
by JBIC remained, even immediately before the final consultation held on 18
November.
B. WHY IS MEKONG WATCH PARTICIPATING IN THE PROCESS?
Mekong Watch and other NGOs have been participating in this consultation
process in order to make the resulting policies as useful as possible for
people in the Mekong Region. For communities affected by development
projects, policy makers and those responsible for implementing policies are
often inaccessible, making participation or input into decision-making very
difficult.
JBIC's role in development in the Mekong Region is significant. Looking at
some of the major "problem projects" such as the Samut Prakarn Wastewater
Management Project or the Hin Krut and Bor Nok Coal-Fired Power Plants in
Thailand, it is clear that both JBIC's ODA (yen loan) and international
financial operations (ie: export and import loans, and other operations
which provide more direct benefit to Japanese corporations) need to be
addressed.
While Mekong Watch has traditionally focused on specific projects in the
Mekong Region, we have found it important to participate in the
policy-making process in Japan. The previous lack of sound policies for
environmental and social considerations in JBIC's operations was one factor
contributing to the lack of transparency and accountability in the way
JBIC-financed projects were decided and implemented. The lack of policy
also meant that there were few tools for NGOs and project-affected
communities to use to raise their concerns regarding projects. And of
course, there were many projects in dire need of addressing!
Mekong Watch hopes that the new policies, both the environmental guidelines
and the complaints procedure for the Guidelines, will be tools which NGOs
and project-affected communities can use to address and prevent many of the
problems we have seen in the past.
C. RESULTS OF FINAL PUBLIC CONSULTATION ON COMPLAINTS PROCEDURE
During the last public consultation, the two main topics of discussion were
information disclosure and the timing from which JBIC would begin accepting
complaints filed through the complaints procedure.
1. TIMING OF FILING OF COMPLAINTS
JBIC's position was that complaints could be filed only after Loan
Agreements (L/A) were signed. This would mean that the complaints
procedure would be completely ineffective for addressing concerns during a
decision-making period in which modifications to L/As would be possible.
The reason JBIC gave for this is the legal definition of "complaints
procedure." In Japan, there is a law regulating the filing of complaints
regarding non-compliance with administrative procedures. According to this
law, complaints can be filed only in regard to decisions already made by
the administrative body. Decisions still in the process of being made are
not subject to this legal complaints procedure. In principle, people can
raise concerns during the decision-making process which can be taken into
consideration, influencing the final decision.
JBIC has chosen to stick with this very strict legal interpretation of the
term "complaints procedure," while NGOs had considered it in more general
terms. JBIC's interpretation changed the nature of the debate to define the
precise point at which it could be said the Bank had made a decision on a
project's compliance with the environmental guidelines. JBIC initially
insisted that the L/A was the point at which a final decision is made on a
project, and it was therefore only after the L/A that complaints could be
filed in line with the complaints procedure.
NGOs participated in this public consultation and pushed strongly for
acceptance of complaints prior to signing of L/As and for sufficient
information disclosure to ensure that the complaints procedure is
responsive, transparent and accountable.
While JBIC refused to budge on these points in regard to its international
financing operations, more flexibility was shown for ODA (yen loan)
operations.
a. TIMING OF FILING OF COMPLAINTS FOR YEN LOANS
In regard to yen loans, JBIC will accept complaints through the complaints
procedure prior to the L/A. Prior to the L/A, JBIC must send a
recommendation to the three line ministries (MOFA, MOF and METI) for a
project's approval, and the Cabinet then gives its approval and a pledge
(political commitment) can be made before the L/A is signed. JBIC
acknowledged that at the point it sends the recommendation to the line
ministries, it has made a decision on the environmental soundness of a
project. It will, therefore, accept complaints through the complaints
procedure after it has sent the recommendation to the ministries (prior to
the L/A).
b. TIMING OF FILING OF COMPLAINTS FOR INTERNATIONAL FINANCIAL OPERATIONS
In regard to international financial operations, however, JBIC stood firm
in its position that it would not accept complaints until after the L/A had
been signed.
In the case of international financing, which provides more direct
assistance to private corporations, JBIC insisted that though it makes
certain decisions regarding a project's environmental soundness before the
L/A, there is no political commitment as with yen loans, and subjecting
international finance projects to the complaints procedure prior to the L/A
could disadvantage companies in bidding processes. For these reasons, JBIC
refuses to allow complaints to be filed through the official complaints
procedure in regard to international finance projects prior to the L/A.
Participants in the consultation who came from private corporations made
comments supporting JBIC's position, stating that even prior to the L/A,
people can raise concerns regarding a project to JBIC's Environmental
Inspection office, and that should be sufficient.
One of the difficulties that NGOs have faced, however, is being unable to
measure to what degree interventions are actually taken into consideration
in decision-making processes at JBIC. While expressions of concern
regarding projects may be heard at JBIC before an L/A is signed, past
experience indicates that those concerns are not necessarily appropriately
incorporated into final decisions.
2. INFORMATION DISCLOSURE
In regard to information disclosure, there was again a distinction made
between yen loans and international financing. Generally for yen loans,
JBIC has agreed to disclose JBIC documents. For international financing,
however, information such as the name of the project or the content of the
complaint may not be disclosed.
Though the public consultations are now over, JBIC has recognized that
there remain 3 points which could be considered further.
(1) In the case that there are concerns raised repeatedly over a project
to the responsible party at JBIC, and no understanding can be reached prior
to the L/A, JBIC should accept the filing of a complaint in accordance to
the complaints procedure.
(2) Clarification must be provided regarding the content and timing of
information disclosure.
(3) Once a report has been made to the JBIC President regarding a complaint
filed, it should be disclosed immediately, without waiting for the response
required within the next month of the international finance division of
JBIC. The final report should be written in a way that also makes clear
the opinions of all stakeholders.
D. WHAT's NEXT?
In February 2003, JBIC will compile the feedback on the complaints
procedure from governments of developing countries and release its final
draft for public comment. In mid-March, public consultations will be held
again, with discussions to be based on the comments received. The final
version of the complaints procedure will be released at the end of March,
and then will be put into effect together with the Environmental Guidelines
in October of 2003.
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