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JBIC's Compliance Mechanism

The new JBIC Environmental Guidelines stipulate that JBIC must accept complaints regarding non-compliance from third parties. JBIC is therefore now preparing a complaints mechanism to put into effect together with the Environmental Guidelines on 1 October 2002.

Public consultations in which NGOs are also participating began in June 2002. Through this process, NGOs have put forward a recommended outline for a compliance mechanism. The NGO proposal includes both a mechanism for affected parties to file for an inspection for violation of the Environmental Guidelines (similar to the inspection functions of the ADB or World Bank), as well as an ombudsperson function, which would facilitate resolution of conflicts that may or may not be a direct result of violation of the Guidelines. JBIC, however, has released its own outline for a complaints mechanism.

JBIC's proposed mechanism is extremely weak and illustrates the lack of political will at JBIC to strictly implement its own guidelines. It could also be an indication of the powerful corporate lobby which has hit the public consultations for the complaints mechanism. The private sector did not actively participate in the actual drafting of the Environmental Guidelines, but once they were adopted, the corporate sector has come out in force. Some have gone so far as to say that JBIC is capable of dealing with complaints regarding projects, and a complaints procedure is therefore not necessary.

Main Points proposed for a Compliance Mechanism: NGO Proposal

The main points of the compliance mechanism proposed by NGOs are as follows:

Basic Principles--The mechanism must be:

  1. Fair: Complaints should be received by a body independent of JBIC's finance divisions, and there should be guarantees of a transparent process, with the participation of fully informed stakeholders.
  2. Objective and Transparent: In order to guarantee that decisions are based on objective information, the independence of the inspectors and staff must be guaranteed, and a transparent process is essential.
  3. Efficient: Procedures must be carried out in a timely manner.


  1. To inspect whether or not environmental impacts from JBIC financed projects are a result of failure to comply with JBIC's Environmental Guidelines.
  2. To respect to the spirit of the new Environmental Guidelines: the complaints procedure should strive to resolve problems relating to environmental and social impacts, regardless of whether or not problems are a direct result of failure to comply with the Guidelines or not.
  3. To link to policy reform of JBIC
  4. To increase accountability of JBIC.

Proposed Mechanism:

  1. Establishment of Inspection Panel-- For the fulfillment of Objective a, an inspection panel should be established. This Panel should report directly to the JBIC president and have a permanent secretariat with full and part-time Panel members, researchers, and administrative staff. It should also be independent from JBIC's finance departments. Based on the complaints brought forward, the Panel should conduct an investigation to determine whether damages were a result of failure to comply with the Guidelines. Results should be taken to the President, and the President should respect this decision.
  2. Ombudsperson -- To fulfill Objective b, an Ombudsperson will be established. The Ombudsperson must be independent of JBIC's investment and finance divisions, and report directly to the President. It should have a permanent secretariat with full and part-time members, researchers, and administrative staff. Regardless of whether problems are a direct result of failure to comply with the Guidelines or not, the Ombudsperson will work to resolve the problems which arise by working with relevant parties, and call for responsibility to be taken by the President.
  3. Joint meetings for the Environmental Guidelines-- To fulfill Objective c, the Inspection Panel and Ombudsperson should meet together once a year. They will review lessons learned from the complaints raised through the year and make recommendations for policy change/improvement to the President.

Main Concerns regarding JBIC's Proposed Complaints Mechanism (as of early October 2002):

There are several serious concerns regarding the complaints procedure first proposed by JBIC. These concerns include:

  1. Potential Lack of Independence: An "Environmental Inspector" will be responsible for investigating complaints, but the criteria for this position do not ensure the Inspector's independence. In order to ensure neutrality, it is specified that the Inspector must be independent of JBIC's investing and lending units and cannot belong to those implementing the project or the parties filing complaints. Other than this, there are no criteria to ensure that the Inspector would not face a conflict of interest due to her/his role in the project under investigation. For example, with the current draft procedure, the Inspector could come from JBIC's Environment Analysis Division, which is responsible for reviewing environmental impact assessments.
  2. Intimidation of Those who File Complaints: It is mentioned several times in the draft procedures that those who file complaints may be held liable for covering the cost of preliminary investigations or the inspection if any false statements are found in their submitted documentation.
  3. Timing of Complaints: Complaints can be filed only after serious damages due to non-compliance have occurred and after loan agreements have been signed. This means that complaints cannot be raised regarding foreseeable negative impacts. It is very difficult for investment and project plans to be changed after loan agreements are signed. These requirements show a disturbing lack of political will on the part of JBIC to address problems early and prevent serious damage.
  4. Underlying suspicions: The tone of the procedure shows a strong underlying suspicion that those who will file complaints are not to be trusted. Multiple references are made to the need to ensure the procedure is not abused for ulterior political or economic motives. Transparency is demanded of those who file complaints, while confidentiality of borrowers is to be taken into account.

A tentative and unofficial English translation of JBIC's proposed complaints procedure can be seen at:

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