Report: IFC project violated timber workers’ rights

The BWI has published a new report summarizing the findings of a damning investigation by the Compliance Advisor Ombudsman to the International Financing Corporation (IFC), an independent monitoring mechanism for the World Bank’s IFC.

The investigation finds that IFC’s lending was in violation of its labour rules (contained in Performance Standard 2) in its investments in BILT, the parent company to Sabah Forest Industries (SFI), where workers have now struggled for thirty years to have their union recognised.

“The tragedy of IFC’s intervention at SFI is that they had the capacity to improve the situation, but as the report indicates, they failed to do so at each step,” said BWI General Secretary Ambet Yuson. He continued, “Their actions served to undermine the efforts of workers organising on the ground, in violation of their own policies and procedures.” 

“They had adequate information from the outset that SFI was violating workers’ rights to freedom of association and collective bargaining; however, this information never made it to the Board. Working with the Sabah Timber Industry Employees Union (STIEU), we used the mechanisms available to inform IFC of what it was getting into.  By failing to adhere to our warnings, the IFC financed a union-busting company,” said Asia-Pacific Regional Representative Apolinar Tolentino.

The investigation’s findings vindicate the workers at SFI, who are still seeking justice in their long-running claim for trade union recognition. 

“On three separate occasions, SFI have used lengthy and expensive judicial review procedures to derail our members’ fundamental rights. We know that Malaysian law gives employers tools to steamroll these rights, but it was deeply disappointing to see the IFC turn a blind eye to this behavior in violation of their own policy,” said STIEU General Secretary Engrit Liaw.

The STIEU and BWI distributed copies of the report at the recent World Bank IMF Annual Meeting in Bali, Indonesia. 

“While we are glad to see the implementation of new labour rules that cover all World Bank lending operations, the STIEU experience with IFC should serve as a grave reminder to the World Bank about the importance of ensuring effective compliance mechanisms and ensuring workers’ voices are heard,” stated Ambet Yuson. 

Read the report here.