The Flip Side Of The ‘Dirty’ Dollar

The IB report gave only one side of the foreign funds used for protests. A larger corpus is used for a dirty game in a legal no-man’s land, says Ushinor Majumdar

Dark secrets The Sasan project is the jewel in the crown of Reliance Power, Photo: Joe Athialy

In June, a government review of select NGOs and their foreign funding, prepared by the Intelligence Bureau (IB), was strategically leaked. It was touted as an analysis of the havoc that such protests aided by foreign funders had wreaked on the Indian economy. Publicly, it was said that the damage to the GDP was by around 2-3 percent; privately, it was claimed to be 5-6 percent.

The Narendra had just taken over and it was a good baseline for the new regime to take refuge under later. Activism became a dirty word in ‘growth’ circles and now the government could say that these protests were motivated and financed by foreign hands.

One of the major targets was Greenpeace, which has faced an existential crisis since the review was leaked. Salaries have been delayed and non-permanent employees have been told that their contracts will not be renewed. Campaigners have realised that it is not a good time for raising environmental issues.

But what about the funds that go into financing the projects that people protest against? Where do they originate and what kind of accountability do they carry?

One of Greenpeace’s high-voltage protests was against violations in the Sasan ultra mega power project (UMPP) in Singrauli, Madhya Pradesh. This Rs 20,000 crore project is the jewel in the crown of Reliance Power, a subsidiary of the Reliance Anil Dhirubhai Ambani Group.

This coal-based power project was the hot topic of debate in the mainstream media after the IB review was leaked and was heralded as everything that is wrong with foreign-funded activism.

In September, the Supreme Court cancelled 214 coal blocks illegally allotted to (mostly) private corporations. However, the apex court left out four coal blocks allotted to UMPPs, one of which was Sasan. But that does not mean that there was no controversy surrounding the allotment of the Sasan project to Reliance Power.

The main investor in the Sasan project is the Export-Import Bank of the United States, which lent $900 million (Rs 5,527 crore) to the 3,960 MW power project.

At the same time, it also lent $30 million to a solar power project in Rajasthan based on its 10 percent renewable energy funding goal commitment to the US legislature.

The bank’s websites says, “The Export-Import Bank of the United States is an independent, self-sustaining agency with an 80-year record of supporting US jobs by financing the export of American goods and services.”

In the case of the Sasan project, the bank seems to have exported the bad practices of US businesses to India.

The corpus of the ExIm Bank is built on US taxpayers’ money and it has previously attracted criticism for giving subsidies to large corporations in violation of its principal loyalty to US taxpayers. It has been pulled up publicly for subsidising corporations such as Enron, Boeing, China National Nuclear Power Corporation, etc.

While the ExIm Bank says it finances energy security, it has been sued a lot for giving subsidised loans to fossil fuel-based energy companies without monitoring environmental concerns. This has raised eyebrows because it was in contradiction to US President Barack Obama’s commitment to cut subsidies in this sector.

Some US-based organisations, including Sierra Club,, Carbon Market Watch, Pacific Environment and Friends of the Earth US, sent a fact-finding mission to study ExIm Bank’s financing of the Sasan project. They claim to have found serious air and water as well as concerns about health hazards for the workers.

In October, the ExIm Bank’s representatives visited India to inspect the site of the mines and plant. Reliance Power extended true Indian hospitality and flew them down to Singrauli. Out of what can only be called concern for their safety and security, Reliance Power officials even stood outside their hotel rooms, noting down the names of local dissidents who wanted to voice their concerns to the ExIm Bank officials. Such dissidents have a history of evaporating into the night or disappearing off the face of the earth.

As per the fact-finding team, tribal and other indigenous communities have been at the receiving end of violations right from the stage of land acquisition for mining and construction of the plant to the resettlement process.

While coal dust over arable lands and crops, and problems in sifting and disposing of industrial waste (such as fly ash) are common and often overlooked in India, the law is more stringent on these issues in the US. This means that the US legislature might hold the ExIm Bank responsible for not maintaining the said standards, including Equator Principles, the International Finance Corporation Performance Standards and the Environment and Social Impact Assessment (ESIA) standards, as per the report.

For these, the institution’s internal reports and assessment by independent agencies will be important, provided that the US Congress verifies them further. The depositions by ExIm Bank officials, if it comes to that, will also have a bearing as will that of any independent bodies that are pointing out the lack of adherence to the committed standards of environmental protection.

The report by the US-based organisations has levelled serious allegations against the Sasan project and even if the Indian government and agencies such as the National Human Rights Commission may overlook or delay them, the ExIm Bank may be pulled up by the US legislature.

The ExIm Bank officials did not conduct any public meetings though that is what the Supreme Court directs in all such issues and what may be expected of a concerned investor who has made promises to its legislature.

The officials preferred to meet with only the borrowers. That may be good for keeping on top of your business but it also means that the bank is not keeping up with commitments regarding environmental protection regulations that it has maintained before its legislature.

Different yardstick The ExIm Bank does not owe any performance standards compliance to India

In 2010, ExIm Bank chairman Fred Hochberg appeared before the Subcommittee on International Monetary Policy and Trade and the Subcommittee on Oversight and Investigations Committee on Financial Services of the US House of Representatives. “The ExIm Bank was the first, and thus far only, ECA (export credit agency) to institute a carbon policy,” he said at the hearing. “One notable example of how this policy is working to benefit the environment and US exporters is the Sasan power project. The ExIm Bank’s board of directors originally voted to decline support for the sale of draglines and other mining equipment for the construction and operation of the coal-fired power plant to be operated by Reliance Power due to environmental concerns. However, after the board’s initial decision, Reliance executed a memorandum of understanding, agreeing to supply 250 MW of renewable energy sourced from the US and agreed to operate the plant so its carbon intensity not exceed 850 grams CO2/kWh. This is the first time a financing has been made conditional on carbon emissions performance.”

Going by this statement, even Indian citizens would welcome such funding because it meant that the ‘growth’ beanstalk would not have any giants climbing down them to stomp on forests and livelihoods. However, the survey by the US-based environmental organisations found questionable practices at the Sasan project and they demanded environmental reports and other documents from the bank.

A statement by Nicole Ghio of the Sierra Club International Climate Program notes, “What we uncovered in our trips to Sasan was heartbreaking. We heard from villagers whose homes were destroyed in the middle of the night while they were still living in them. We met indigenous residents whose children were denied entry into schools. And we learned how Reliance covers up injuries — and even deaths — at the project.

“There were two groups, though, that we did not hear from. Reliance Power refused to meet the fact-finding team, and the ExIm Bank refused to provide the supplemental environmental reports — including the remediation or mitigation plans and related monitoring documents — that Reliance is required to submit to the ExIm Bank, and which federal legislation and the bank’s own policies require be made available on request.”

At the 2010 hearing, Hochberg had also said: “The ExIm Bank is the leader among both OECD (Organisation of Economic Cooperation and Development) and non-OECD countries on climate-change issues, and is the only ECA that regularly reports the carbon emissions of the projects it supports. The ExIm Bank’s new carbon policy resulted in significant changes in the Indian project. Balancing the interests of some US exporters with the ExIm Bank’s environmental obligations remains a challenge, but the ExIm Bank is committed to being a leader in the ECA community on this issue, and the bank is advocating that other ECAs adopt similar policies to reduce greenhouse gases. In this way, the ExIm Bank can help maintain a level-playing field for US exporters and their workers.”

Meanwhile, the CAG had also conducted an audit of the UMPPs and noted that there were irregularities in their functioning; from land acquisition to construction of the plant.

There is an ongoing concern about environmental impact assessment reports and how they are stage-managed by the corporations. The common practice is that the consultants employed to prepare the report are known in some way to the corporation and/or its officials and therefore have a bias or a likelihood of bias, a principle that jeopardises any chances of a fair assessment.

The ExIm Bank is financing the Sasan project, but is only accountable to the US legislature and thus, will not owe any performance standards compliance to India. This foreign fund will ensure that a plant is up and running and generating power, no matter what it does to the environment.

The environmental lobby in India is taking a severe beating. The UPA regime put up a pretence of environmental concerns through smooth-talking, PR-savvy ministers such as Jairam Ramesh and eloquence from Congress spokespersons. The NDA seems to have no such pretence about its disregard for the environment. The government has already made plans to work around green laws such as the Forest Rights Act, while it has created committees to review all environmental protection laws and the endgame is one of eradicating all opposition to industry that damages the environment.

Before the US legislature makes its next move, officials from the ExIm Bank might need to make another visit, this time a little more independent probe.
The ExIm Bank website claims that a ‘Made in America’ tag is still preferred the world over. Hopefully, its dubious practices will not become the template for the ambitious ‘Make in India’ programme.


Key observations by the US fact-finding mission to Sasan

• Residents who protested against forced relocations were abducted and never found

• Houses were demolished in the middle of the night while families were still living in them

• Residents were not compensated or were compensated at levels below the legal requirement

• Housing at resettlement colonies was not made available to all the displaced people

• Colonies lack basic amenities, including those that villagers previously had access to, such as water pumps and schools

• Displaced persons did not receive priority in hiring and training, contradicting the Environment and Social Impact Assessment (ESIA), and locals financially affected by the project were denied jobs in favour of contract workers from other states

• Elderly residents did not get pensions promised in the ESIA

• Education stipends promised in the ESIA were not delivered and some children have been actively blocked from attending school

• Lack of a meaningful grievance process, leaving complaints levied against the project unaddressed and allowing human rights violations to continue

• Reported irregularities in worker time stamps: workers clocked in after their shifts, allowing injuries and deaths at the project to be recorded as having taken place outside of the site

• Workers handling toxic materials such as coal ash have reported skin diseases, suggesting necessary safety precautions are not taken

• No meaningful grievance process for labour violations

• Contract workers from other states hired making it easy to cover up accidents, as families do not reach Singrauli to look for lost loved ones until long after these incidents occur

• Free, prior and informed consent was not practised with the indigenous people moved for the project

• The ESIA states that affected indigenous families do not rely on forestland cleared for the mine. However, community members return daily to the area where they used to live to collect traditional plants, forest produce and other means of sustenance

• Relocated families were often not compensated or were compensated at levels below the legal requirement for indigenous people

• Many families are still waiting in temporary housing and have not been moved to relocation colonies

• Some families either refused to leave or returned to the edge of the project site because they could not maintain their way of life at the resettlement colonies

• Children were denied access to schools in violation of laws protecting indigenous people

• A meaningful grievance process has not been created or utilised, leaving complaints levied against the project unaddressed and allowing violations of indigenous rights to continue

• A thick layer of coal dust covered plants near the conveyor belt carrying coal from the mine to the power plant

• Residents reported being suffocated by coal dust and ash blowing in the wind

• Locals complain that material from ash ponds is seeping into groundwater, making it unfit for drinking

(Published in Tehelka Magazine, Volume 11 Issue 46, Dated 15 November 2014)