Arne Hoel, The World Bank

Uzbekistan: Indorama Kokand/Hamkor Bank-01/Uzbekistan

CASE INFORMATION

 

Case Name

Indorama Kokand/Hamkor Bank-01/Uzbekistan

 

Complainants

Cotton laborers and human rights monitors (cotton fields)

 

Date Filed

June 30, 2016

 

Concerns

Forced labor, supply chain

 

Status

Open

 

Phase

Dispute Resolution

 

PROJECT OVERVIEW

IFC has an active project with Indorama Kokand Textile (IKT), a cotton yarn producer, to finance the expansion of a textile plant in Fergana Valley, Uzbekistan. IFC also has seven active projects with Hamkorbank, a licensed commercial bank headquartered in Andijan, Uzbekistan.  These projects include a combination of equity and loan investments, as well as a Global Trade Finance Program. According to IFC, its loans aim to enable Hamkorbank to expand the scope of its lending program to micro, small, and medium enterprises (MSMEs), with a focus on remote areas, which is aligned with IFC’s financial markets strategy for Uzbekistan. IFC’s Global Trade Finance Program (GTFP) supports selected Hamkorbank export/import transactions.

 

COMPLAINT

In June 2016, CAO received a complaint related to several IFC projects in Uzbekistan.  CAO found the complaint eligible in August 2016 in relation to two IFC clients: IKT and Hamkorbank. The complaint was filed by a coalition of non-governmental organizations (NGOs) on behalf of Uzbek human rights monitors and alleged victims of forced labor in the cotton fields (the “Complainants”). The complaint raises concerns about the existence of forced labor in IKT’s supply chain. With regard to Hamkorbank, the complainants state that there is significant risk that Hamkorbank participates in a “coercive financial system and is not conducting adequate due diligence to ensure its participation is not supporting forced labor and the related attacks against independent labor monitors.” The complaint also states that IFC’s investment in Hamkorbank may finance companies that utilize or benefit from forced labor in the cotton system, and that IFC has not fulfilled its due diligence and supervision responsibilities. 

 

CAO ACTION

CAO found the complaint eligible for assessment in August 2016. During the assessment, complainants, IKT, and Hamkorbank agreed to engage in a voluntary dialogue process facilitated by CAO. CAO’s assessment report is available at the below links in English, Russian and Uzbek.


In July 2018, CAO convened and facilitated a meeting between IFC and the complainants (along with other local Uzbek human rights defenders) related to the case and ongoing dispute resolution process. A communique, drafted jointly by IFC and the complainant group, is available at the below links in English, Russian and Uzbek.


The complainants and additional local human rights defenders invited by the complainants to participate in the process organized themselves into the so-called “Group in Mediation” (GM). In January 2019, three of the complainants split off and left the GM. CAO has convened multiple meetings between the GM and Hamkorbank, and as a result, the parties signed a Framework Agreement in July 2019 and an Interim Agreement in October 2019. The parties decided to keep the original agreements confidential. As per the provisions of the Interim Agreement, the Group in Mediation monitored the occurrence of forced labor among Hamkorbank employees (direct involvement, as well as indirect participation) from October 21 to December 20, 2019. In July 2020, the Group in Mediation declared that they were satisfied with the results of the abovementioned monitoring and that they believed the claims against Hamkorbank indicated in the complaint were resolved. The parties have jointly drafted three public communiques, available below in English, Russian and Uzbek.


CAO has also convened joint meetings between IKT and the GM. IKT and the GM signed an interim agreement in November 2020 in their joint efforts towards dispute resolution and decided that, once reached, their final agreement will be duly published.


CAO is also continuing discussions with the three non-GM complainants, some of whom are in exile outside Uzbekistan, and all parties regarding these other complainants’ involvement in the dispute resolution process.


The restrictions on travel due to COVID-19 have resulted in delays in the process. However, with the support of CAO, parties have made efforts to adjust and have been able to move the process forward over emails and conference calls.

 

STATUS

A dispute resolution process is underway.

 

Status as of November 30, 2020

 

DOCUMENT LINKS

 

Joint Statement by Hamkorbank and the Group in Mediation Human Rights Defenders, July, 2020

Russian, English and Uzbek

 

CAO Meeting Communique, October 2019

Russian, English and Uzbek

 

CAO Meeting Communique, July 2019

English

Russian

Uzbek

 

CAO Meeting Communique, July 2018

English

Russian

Uzbek

 

CAO Assessment Report, March 2018

English

Russian

Uzbek

 

IFC’s Response to CAO Assessment Report, March 13, 2018

English

 

Letter of Complaint, June 2016

English