IFC Haiti project funding goes ahead despite investigation’s "mixed results"

News|Bretton Woods Project|3 February 2004|update 38|url
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On 15 January, the World Bank's private sector arm, the International Finance Corporation (IFC) committed $20 million to help Dominican company Grupo M finance an industrial park in a new Haitian free trade zone. The decision comes after an investigation into allegations regarding the abuse of workers' rights at a Grupo M plant in the Dominican Republic. In October 2003, as a result of the allegations by international trade unions, the IFC decided to make the Grupo M loan contingent on the addition of freedom of association and collective bargaining covenants into the agreement. It also declared that the loan agreement would depend on the findings of an investigation into the charges of anti-union practices in the Dominican Republic. (see Update 36). On receipt of the investigation report, the IFC concluded that the "project deserves continued strong support given its development impact, even if some wrongdoing was demonstrated."

IFC contracted ALGI of the United States to conduct the investigation, selected "because they were Fair Labor Association certified and had extensive experience working in the Dominican Republic." ALGI described its findings as "simultaneously troubling and reassuring." It found that Grupo M was guilty of targeting some employees for dismissal because they were members of the union organizing committee; discouraging employees from joining the committee; and preferentially treating "the aggressors who beat up two members of the organizing committee". The report goes on to defend Grupo M however, saying that there was no evidence that management hired the "aggressors" who beat up the organising committee; that the incidents were not reflective of "systemic" problems at Grupo M; and that "recent developments suggest a much more constructive and respectful relationship."

The NGO Haiti Support Group, echoing concerns of Haitian civil society organisations and labour organisations, is expressing reservations about the decision and the way it was taken. Representative Charles Arthur was "staggered" that the loan was approved on the basis of an investigation carried out by Fair Labor Association-certified monitoring organisation. The Fair Labor Association, a coalition of textile industry, university and NGO representatives, has been criticised for being too weak and industry-friendly by organisations such as Global Exchange and the UNITE union. Arthur also expressed his surprise that the International Confederation of Free Trade Unions appeared to accept the findings of a report which, at the time of the loan decision, had only been reviewed and interpreted by the IFC.

A Remedial Action Plan will form part of IFC's loan agreement with Grupo M, including:

• training all managers on all aspects of freedom of association and collective bargaining rights;
• creating an ombudsman function to resolve disputes and a Social Comliance Officer to monitor compliance with labour laws and codes of conduct; and
• giving clear, written explanations to unionised workers who are laid off.

The loan agreement will contain specific covenants requiring:

• adherence to Grupo M's code of conduct including freedom of association;
• annual compliance audits (unannounced); and
• a report to IFC within one year on progress made in implementing the remedial action plan.

Those wishing to review the ALGI report may do so on a "read-only" basis at IFC offices worldwide. Contact Mark Constantine at (202) 473-9331

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Published: 3 February 2004 , last edited: 29 June 2009

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