June 2, 2011By: Toh Han Shih
Industrial and Commercial Bank of China (SEHK: 1398) (ICBC) has remained tight-lipped about accusations from non-governmental organizations over the state-owned bank’s financing of the controversial Gibe 3 dam in Ethiopia.
The US$1.75 billion hydropower project, expected to be completed by 2014, is Ethiopia’s largest investment project and the world’s fourth-largest dam under construction.
In July, the world’s largest bank by market value extended a US$500 million loan to it, the Hong Kong and Shanghai-listed bank has confirmed to NGOs.
“The Gibe 3 Dam is Africa’s most destructive power project. It will ravage the fragile ecosystems of the Lower Omo Valley in Ethiopia and Lake Turkana in Kenya, and the 500,000 poor indigenous people who depend on them,” said Peter Bosshard, policy director of International Rivers, an international NGO focusing on dams.
“The Gibe 3 dam raises serious technical, economic and financial questions,” said a letter to ICBC chairman Jiang Jianqing on May 21 last year from three NGOs – International Rivers, Friends of Lake Turkana and Bank Track.
That letter and another sent to ICBC by International Rivers in September never received any response, said Bosshard. “We also contacted ICBC representatives several times by e-mail asking whether they could meet with us. They never responded to these messages either.”
ICBC has not responded to inquiries from the South China Morning Post (SEHK: 0583, announcements, news) either.
Construction on the Gibe 3 project began in 2006 without an environmental and social impact assessment, according to a report commissioned by the African Development Bank, which is not involved in the project. Since then, there have been studies into the potential impact of the dam, but these have been inadequate, with questions unanswered, according to the report.
Bosshard warned the dam would draw water from the Omo River in Ethiopia, thus depriving Lake Turkana of water. This would deplete scarce resources there and in the lower Omo Valley, sparking the risk of conflict in these regions.
No other major international financial institution has financed the dam, Bosshard said.
“ICBC is the only international financier to provide support to this project. If ICBC aspires to be a leading global brand and an ambassador of China’s soft power around the world, it needs to follow international standards and engage in open dialogue with the public.”
Ikal Angelei, chair of Friends of Lake Turkana, an NGO working with local people living around the lake, said: “ICBC is underwriting the destruction of our people. Their funding is a hideous gesture of the destruction Chinese funds can bring to Africa’s poorest communities.”
Sonja Willems, campaign co-ordinator of BankTrack, said: “This loan makes a mockery of ICBC’s actions to establish itself as a socially and environmentally responsible lender. As the world’s largest bank, ICBC should strive to become an environmental leader, but instead is financing untouchable projects.”
ICBC has issued a “Green Credit Framework” to all its branches to underscore its “goal of turning ICBC into a leading green financial institution in the country and top-class in the world”, according to the bank’s website. “Being a large publicly traded bank with international influence, ICBC recognises the far-reaching role of resources and environment to economic and social development,” it says.
Since 2007, China has imposed the so-called Greed Credit Policy under which Chinese companies that violate the country’s environmental laws stand to forfeit their loans.
Under the guidelines of the State-owned Assets Supervision and Administration Commission, state-owned enterprises expanding overseas are required to protect the environment and contribute to the social development of nations they operate in.
06/02/2011 – 12:00