Uzbekistan: Indorama Kokand/Hamkor Bank-01

Date Filed
30 Jun 2016
Status
Open
Phase
Dispute Resolution (DR)
Country
Uzbekistan

Case Tracker

Eligibility
Eligibility
Assessment
Assessment
Dispute Resolution
Mediation
Compliance
CURRENT Status
Mediation (DISPUTE RESOLUTION)

Complaint Overview

Complainant

Cotton laborers and human rights monitors (cotton fields)

Concerns

Forced labor, supply chain

Cross-Cutting Issues
Labor

Project Information

Region
Europe & Central Asia
Institution
IFC
Name & Number
Indorama Kokand (38266), Hamkor Bank (30893, 32024, 35062, 33596, 27615, 36170, 30657)
Company
Indorama Kokand Textile and Hamkor Bank
Sector
Manufacturing
Category
FI
Commitment

Indorama Kokand Textile: $40 Million (US) debt

Hamkor Bank: $13.5 million (US) debt & $5.3 Million (US) equity

Synopsis

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 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 local human rights defenders they invited to participate in the process organized themselves into a “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. While the parties decided to keep the interim agreement confidential, they jointly drafted a communique regarding the results of their collaboration during the 2020 cotton harvest, which is available below in English and Russian. Additionally, the parties decided to continue their collaboration through the 2021 cotton harvest season and jointly selected an independent expert to advise them in developing a mutually acceptable methodology for labor monitoring practices related to IKT’s cotton supply chain. The jointly drafted TOR for the expert is available below. The work of the expert is funded by PeaceNexus, a private Swiss foundation which agreed to provide methodological input and funding for the parties to conduct the activities agreed upon in the interim agreement.


During 2021, one of the three non-GM complainants indicated that he no longer wished to be involved and decided to withdraw from the case. CAO is continuing discussions with the other two non-GM complainants, one of whom is 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 ongoing.

 

Status as of October 19, 2021

Dispute Resolution

  • Reports

    ASSESSMENT REPORT(S)
    CAO Assessment Report - Uzbekistan: Indorama Kokand/Hamkor Bank-01
    Mar 01, 2018
    English
    CAO Assessment Report - Uzbekistan: Indorama Kokand/Hamkor Bank-01
    ОТЧЕТ ОБ ОЦЕНКЕ, ПОДГОТОВЛЕННЫЙ CAO
    Mar 01, 2018
    pусский
    ОТЧЕТ ОБ ОЦЕНКЕ, ПОДГОТОВЛЕННЫЙ CAO
    CAO TOMONIDAN TAYYORLANGAN BAHOLASH HISOBOTI
    Mar 01, 2018
    o'zbek
    CAO TOMONIDAN TAYYORLANGAN BAHOLASH HISOBOTI
    IFC Response to CAO Assessment Report on Indorama Kokand-Hamkor
    Mar 13, 2018
    English
    IFC Response to CAO Assessment Report on Indorama Kokand-Hamkor
    Communiques & Joint Statements
    CAO Meeting Communique
    Jul 06, 2018
    English
    CAO Meeting Communique
    коммюнике на русском языке
    Jul 06, 2018
    pусский
    коммюнике на русском языке
    kommunike o'zbek
    Jul 06, 2018
    o'zbek
    kommunike o'zbek
    Joint Communique Meeting GM & Hamkorbank
    Jul 26, 2019
    English
    Joint Communique Meeting GM & Hamkorbank
    ИТОГОВОЕ КОММЮНИКЕ СОВМЕСТНОЙ ВСТРЕЧИ ПРАВОЗАЩИТНИКОВ, ВХОДЯЩИХ В ГРУППУ В МЕДИАЦИИ (ГМ) И ПРЕДСТАВИТЕЛЕЙ ХАМКОРБАНКА.
    Jul 26, 2019
    pусский
    ИТОГОВОЕ КОММЮНИКЕ СОВМЕСТНОЙ ВСТРЕЧИ ПРАВОЗАЩИТНИКОВ, ВХОДЯЩИХ В ГРУППУ В МЕДИАЦИИ (ГМ) И ПРЕДСТАВИТЕЛЕЙ ХАМКОРБАНКА.
    INSON HUQUQLARI HIMOYACHILARI, MEDIATSIYAGA OID GURUHINING (MG) A’ZOLARI BILAN HAMKORBANK VAKILLARI O’RTASIDAGI QO'SHMA YIG'ILISH NATIJALARI BO'YICHA BAYONNOMA.
    Jul 26, 2019
    o'zbek
    INSON HUQUQLARI HIMOYACHILARI, MEDIATSIYAGA OID GURUHINING (MG) A’ZOLARI BILAN HAMKORBANK VAKILLARI O’RTASIDAGI QO'SHMA YIG'ILISH NATIJALARI BO'YICHA BAYONNOMA.
    Joint Communique
    Oct 16, 2019
    English, Russian & Uzbek
    Joint Communique
    Joint Statement by Hamkorbank and the Group in Mediation Human Rights Defenders, July 2020
    Jul 08, 2020
    English, Russian & Uzbek
    Joint Statement by Hamkorbank and the Group in Mediation Human Rights Defenders, July 2020
    Joint Statement by Representatives of FE Indorama Kokand Textile LLC (‘’IKT’’) and Human Rights Activists of the Group in Mediation
    Jun 20, 2021
    English & Russian
    Joint Statement by Representatives of FE Indorama Kokand Textile LLC (‘’IKT’’) and Human Rights Activists of the Group in Mediation
    Terms of Reference (ToR)
    Call for Expressions of Interest (ToR) For Monitoring Labour Practices in the Cotton Supply Chai
    Jul 15, 2021
    English & Russian
    Call for Expressions of Interest (ToR) For Monitoring Labour Practices in the Cotton Supply Chai
  • Letter of Complaint
    Letter of Complaint, Uzbekistan
    Jun 01, 2016
    English
    Letter of Complaint, Uzbekistan