CAO Cases

Arne Hoel, The World Bank

South Asia

India / Tata Tea-02/Assam

Complainant
Peoples’ Action for Development; Promotion and Advancement of Justice, Harmony and Rights of Adivasis, Diocesan Board of Social Services.
Date Filed
February 02, 2013
Concerns
Labor and working conditions
Case Status
Open - Compliance
 

Synopsis

Complaint
IFC’s project with Amalgamated Plantations Private Limited (APPL) is to enable the setting up of a company which would acquire and manage the 24 tea plantations located in Assam and West Bengal currently owned by Tata Tea Limited (TTL) and implement a sustainable “worker-shareholder” model, in which the management and employees would have a significant shareholding.  The total project cost including capital expenditure and working capital is estimated at $87 million; the IFC investment comprises an equity investment of $7.8 million.

 

In February 2013, three local NGOs filed a complaint on behalf of tea workers working and living in the company’s tea plantation areas.  The complaint raises concerns about labor and working conditions at three different plantations, specifically citing long working hours, unpaid compensation, poor hygiene and health conditions, and a lack of freedom to associate among plantation workers. Furthermore, the complainants question the worker share-buying program, contending workers have been pressured into buying shares, often without proper information about the risks of such an investment.

 

CAO Action
CAO found the complaint eligible for assessment in February 2013 and an assessment of the issues raised in the complaint was initiated. Given that CAO was not able to find agreement among the stakeholders on a dispute resolution process, the case was transferred to the CAO compliance function in November 2013. In February 2014, CAO completed a compliance appraisal in relation to this complaint. The appraisal determined that CAO would conduct a compliance investigation of IFC’s E&S performance in relation to its investment in APPL, considering both the issues raised by the current complaint and the issues discussed in the January 2013 appraisal related to the Tata Tea-01 case (see link below).

 

Status

CAO's appraisal report and terms of reference for a compliance investigation are available at the link below. CAO has another case open under its compliance function related to IFC's involvement in APPL. Details of that case (India/Tata Tea/CAO Vice President Request) can be found through the link at the bottom of this page. The terms of reference posted under this cover both cases.

 

CAO’s investigation report was released in November 2016. 

While noting that IFC’s investment in the company had potential for significant development impact, CAO’s investigation identifies a number of non-compliances related to IFC’s assessment and management of environmental and social (E&S) risk associated with the investment.

Given the vulnerable status of workers and the client’s responsibility to provide a range of basic services to workers, CAO finds that IFC’s pre-investment E&S review of the investment was not commensurate to risk. Shortcomings in this review, led to the development of mitigation measures which were insufficiently detailed and did not address key risk areas. During supervision, CAO found that IFC did not assure itself of compliance with its Performance Standards. As a result, E&S compliance issues raised by the complainants remain unaddressed.

CAO’s investigation makes a number of specific non-compliance findings in relation to IFC’s assessment and supervision of living and working conditions on the plantations, reported use of banned pesticides, information disclosure, consultation and response to security incidents.


Status
IFC has released a public response to CAO’s investigation report. CAO will monitor IFC’s actions in response to the investigation findings and will issue a monitoring report within a year. 


Status as of November 07, 2016

Project information

Institution
IFC
Project Name & Number
Tata Tea 25074
Department
Agribusiness
Company
Amalgamated Plantations Private Limited (APPL)
Sector
Agribusiness
Region
South Asia
Country
India
Environmental Category
B
Commitment
$7.87m Equity

Case Tracker

Ombudsman

  • Eligible: Completed
  • Assessment Period: Completed

Compliance

  • Under Appraisal: Completed
  • Under Audit: Completed
  • Monitoring: In Process

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