Message-ID: <Pine.SOL.3.91.970306224650.16129D-100000@fox.ksu.ksu.edu> Date: Thu, 6 Mar 1997 22:47:21 -0600 From: kerry miller <mailto:astingsh@KSU.EDU> Subject: World Bank President Turns Up Heat On Energy Scandal (fwd) To: mailto:DEVEL-L@AMERICAN.EDU
---------- Forwarded message ----------/** headlines: 148.0 **/ ** Topic: World Bank President Turns Up Heat On Energy Scandal ** ** Written 9:54 AM Mar 4, 1997 by econet in cdp:headlines ** /* Written 4:11 PM Feb 28, 1997 by mailto:jrubinstein@igc.org in dev.worldbank */ /* ---------- "Wolfenson acts on Bio Bio" ---------- */
From: Joel Rubinstein <mailto:jrubinstein@igc.apc.org>
Copyright 1997 InterPress Service, all rights reserved. Worldwide distribution via the APC networks.
*** 24-Feb-97 ***
Title: CHILE-DEVELOPMENT: World Bank Head Turns Up Heat on Energy Scandal
by Abid Aslam
WASHINGTON, Feb 24 (IPS) - World Bank president James Wolfensohn has turned up the heat on a scandal involving the Bank's private sector affiliate and Chile's largest power company.
The Bank's International Finance Corporation (IFC) is hoping to persuade the company, Endesa, to live up to the terms of the agreement for the construction of a complex of five dams on the Bio Bio river, one of Chile's mightiest.
In a letter to Chilean finance minister Eduardo Aninat, Wolfensohn, who also oversees the IFC, is threatening to hold its client in default for alleged violations of environmental and social conditions in its loan agreement.
The unprecedented move follows a year of tortured negotiations that were going nowhere and numerous bids by IFC officials to sweep the matter under a carpet of secrecy, officials and analysts say.
Endesa ''appears to have taken a less than constructive approach to its environmental and social obligations...under the IFC financing agreements,'' Wolfensohn says in his Feb. 6 letter.
''If Endesa continues on the course it seems to have taken, we are heading toward a conflict and we will have no choice but to declare Endesa in default,'' Wolfensohn adds.
Endesa said last Thursday that it had complied with all its obligations.
The IFC loaned some 70 million dollars for the first of the five dams -- the Pangue dam, scheduled for inauguration next month. The agency brokered an additional 142 million dollars from the Swedish Board for Industrial and Technical Cooperation (BITS), the Norwegian Agency for Development Cooperation (NORAD), and 10 European banks, according to the California-based International Rivers Network.
Under pressure from environmentalists and human rights activists, the IFC included terms in its loan agreement to evaluate and minimise environmental damage, and to set up a foundation to help Pehuenche Indians whose homes and ancestral lands would be flooded.
Two independent reviews have blasted Endesa and a subsidiary, Pangue S.A., for violating those conditions. But they also ''are highly critical of IFC's handling of the environmental appraisal and supervision of the Pangue project and of the compliance of Pangue S.A. and Endesa with their obligations under the IFC agreement,'' Wolfensohn notes in the letter.
''It is our intention to disclose these two reports, despite the strong objections of Pangue S.A.,'' he warns, adding: ''We will of course remove any confidential business information but we owe it to our shareholders and to the other stakeholders of our organisation to be as transparent and open as possible.''
Just when and what portions of the reports will be released, however, remains to be seen. If the agency feels it can use the threat of public exposure to bring Endesa to heel, it will put off a release, and limit what it shares with the public, an IFC spokesman says.
The agency has had ''positive discussions'' with Endesa in the past week, the spokesman added.
But IFC officials themselves have opposed making the reports public, well-placed sources say. In particular, they are said to have been deeply concerned that a report by Jay Hair, former head of the World Conservation Union, also known as the IUCN, is even more damning of their agency than the allegations Hair investigated.
Those allegations were contained in a 1995 complaint filed by the Grupo de Accion por el Bio Bio (GABB), a Chilean non- governmental body, with the World Bank's independent inspection panel. IFC management sought to dismiss the complaint on the grounds that the panel lacks jurisdiction over the agency. But they agreed to launch their own investigation under pressure from activists and reform-minded colleagues.
Hair is expected to submit his final report next month, after reviewing the agency's comments on a draft.
GABB argued the IFC had failed to conduct proper environmental reviews when planning the dam project, and ignored information about its likely consequences for communities, farms, and industries downstream.
The group further charged that the IFC overlooked Endesa's alleged violations of the terms of its loans, and instead continued to find additional funding from other official and private sources -- allegations Wolfensohn seems implicitly to confirm.
Parts of the other report, written by University of Arizona anthropologist Theodore Downing, were leaked in draft form to the Chilean press last November. ''The results of the Endesa programme (to aid and resettle Pehuenche around Pangue) have been negligible,'' it was quoted as stating.
The rugged territory along the Bio Bio's upper reaches is home to some 10,000 Pehuenche, survivors of armed conquest and assimilationist legislation criticised for seeking to erase their identity and, with it, their land rights.
The Pehuenche now face losing their land as the river is dammed. The Pangue dam -- the first of five planned to girdle the river -- is said to threaten some 2,400 Pehuenche.
Many turned to the foundation created under the IFC agreement to safeguard their interests -- only to be betrayed, according to the GABB complaint.
''The Fundacion Pehuen and other Pangue/Endesa-related personnel...are deceiving and pressuring the Pehuenche communities to relocate...despite Pehuenche rights, under the new Indigenous Law, to remain on their land,'' the complaint states. (END/IPS/AA/YJC/97)
Origin: Washington/CHILE-DEVELOPMENT/ ----
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** End of text from cdp:headlines **
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