CAO Cases

Arne Hoel, The World Bank

East Asia & the Pacific

Malaysia / Bilt Paper-02/Sipitang

International and local labor unions
Date Filed
June 01, 2015
Labor, freedom of association
Case Status
Open - Compliance



IIn 2014, IFC disclosed a $100 million equity investment in Bilt Paper B.V., a company incorporated in the Netherlands. Bilt Paper owns subsidiaries that are leading pulp and paper manufacturers in India and Malaysia. Bilt Paper is a subsidiary of Ballarpur Industries Limited (BILT), which is headquartered in India and is also a previous IFC investee company. IFC also disclosed a $50 million direct loan and $100 million in syndicated loans in addition to its equity investment. Part of the investment proceeds were potentially to be directed to Sabah Forest Industries (SFI), whose operations are located in the Sabah state of Malaysia.


In June 2015, Building and Woodworkers International (BWI) union, filed a complaint on behalf of the Sabah Timber Industry Employees Union (STIEU), a BWI affiliate in Sabah, Malaysia. The complaint raises concerns about freedom of association for the workers of SFI and project compliance with IFC’s Performance Standard on Labor (PS2). 


CAO Action

The CAO found the complaint eligible for assessment in June 2015. Following discussions with the parties and the preference for compliance expressed by one of the parties, the case proceeded to CAO’s compliance function for appraisal of IFC’s due diligence of the project in accordance with CAO’s Operational Guidelines.


On April 13, 2018, CAO completed its compliance investigation for the Bilt Paper-02 complaint. As the complainants’ concerns relate to unionization of workers, the applicable PS2 requirements include: a) not to discourage workers from forming or joining organizations of their choosing and (b) to refrain from attempts to influence and control workers’ organizations. CAO finds that, prior to approval of the project, IFC did not correctly apply these requirements to SFI. Hence, IFC’s pre-investment review and mitigation of risks associated with the union recognition issue were insufficient to provide assurance of PS2 compliance.


Following approval of the project in 2014, CAO finds that IFC did not discharge its supervision duty in relation to the Freedom of Association issues raised in the complaint. During the initial stages of supervision (2014/15), IFC did not conduct the analysis necessary to determine SFI’s compliance with PS2. Between 2015/16, IFC suspended supervision at the client’s request. Thereafter, CAO finds that IFC did not exercise remedies in relation its client that it acknowledged was in breach of PS2, and was unwilling to accept IFC advice on the issue. CAO concludes that shortcomings in IFC’s review and supervision of this project have contributed to adverse outcomes for the complainants.


All documents relating to this case are available under "view Documents" tab below.



In accordance with CAO's Operational Guidelines, this case will remain open as CAO monitors IFC's response to the findings.



Status as of June 08, 2018

Project information

Project Name & Number
Bilt Paper B.V 34602
Global Manufacturing & Services
Bilt Paper B.V
East Asia & the Pacific
Environmental Category
$100 million Equity investment and $75 million in

Case Tracker


  • Eligible: Completed
  • Assessment Period: Completed


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