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As the International Finance Corporation (IFC) marks its golden anniversary, the institution claims to serve “as a catalyst for innovative, market-based solutions for reducing poverty and addressing environmental and social challenges”. The reality fails to justify such a glittering perspective. Problem projects in Ghana, Peru and Kyrgyzstan, criticisms over its recent performance standards (see article on page 6), and serious weaknesses in its recent human rights impact assessment programme undermine the future credibility of an institution that is increasingly losing out to private finance.

An upcoming briefing by a coalition of NGOs looks specifically at the IFC’s involvement in the gold mining industry and challenges the institution to prove how it is genuinely fulfilling its development role. The document points out that the IFC refuses to report on its development impacts on a project-by-project basis and instead produces an annual report that presents its “aggregate” development impact data. So there is no way to evaluate their performance – whether on mining or other sectors. Human and environmental costs and benefits can not be averaged across the IFC’s portfolio, unlike financial profits and losses: “The farmer who loses his land in Peru does not benefit when a small business owner in central Europe gets a catering contract with a mining company”.

they use language which is vague

Ahafo, Ghana: In recent decades, the IFC has invested millions of dollars in large-scale goldmines in Ghana. In January 2006 it approved $125 million to Newmont mining’s Ahafo goldmine (see 50) and in July Newmont announced that it was about to produce its first gold bars. The goldmine has been at the centre of controversy concerning the livelihood impacts of the massive resettlement of more than 9000 people in its first phase alone, and outstanding environmental issues such as the risk of contaminating the local water supply through the use of cyanide in gold extraction and destruction of protected forest zones. Environmental and human rights NGOs have questioned the need for the project citing concerns over environmental monitoring, land replacement policies, food security for affected subsistence farmers, water and soil contamination, and water access for affected households. There are also concerns regarding weaknesses in the terms of reference for the external monitoring body established by the IFC and Newmont.

Yanacocha, Peru: The IFC has been investing in Newmont’s Yanacocha gold mine in Cajamarca, Peru since 1993 (see Update43). In June 2000 one of Minera Yanacocha’s contractors spilled 150 kilogrammes of mercury from the mine along a 43-kilometre stretch of road through the towns of Choropampa, Magdalena and San Juan affecting more than 1000 people. In August the mine was forced to shut down for 24 hours following a blockade by local community leaders protesting at the mine’s failure to benefit the highly-impoverished local community.

Kumtor, Kyrgyztan: This mine has benefited from $40 million in loans and equity investments from IFC, despite a catalogue of problems. In May 1998, the release of nearly two tons of cyanide and sodium hypochloride poisoned the Barskoon River, leaving several people dead and hundreds seeking medical treatment. In July 1998, 70 litres of nitric acid were spilt, and in July 2002, a Kyrgyz worker was buried in the collapse of a 200 meter high pit wall at the mine. In 2004, the IFC sold its holdings Kumtor, earning a substantial profit and distancing itself from liability for the social and environmental harms experienced in the project area.

Ignoring the law

Despite the detrimental impacts of its activities mentioned above, Newmont has been cheer leading the IFC’s new human rights impact assessment (HRIA) programme. In June the IFC produced the first draft of the HRIA, to be completed by December 2006 jointly with the International Business Leader’s Forum. The programme claims to address human rights concerns through the recently launched performance standards, including those dealing with the process of establishing a grievance mechanism, core labour standards and indigenous people’s rights. The draft HRIA “represents an additional tool for IFC clients and the wider private sector to look at human rights concerns and at how to address them”.

Peter Frankental, of Amnesty International said: “The IFC’s performance standards ignore the evolution of international human rights law within the UN system, which should have been the basis for applying minimum standards to their clients. Instead they use language and concepts which are vague, open to interpretation and may not provide the protections that are required under international law”. According to Diana Bronson of Canadian organisation Rights and Democracy said: “it would have been much better for the IFC to clearly state that it intends to comply with international law and to ensure that its projects do not undermine human rights directly or indirectly, as called for in the Extractive Industries Review. The process surrounding the development of this new HRIA has been opaque, with little consultation with directly affected communities or civil society groups working in the area.”