(Back to news)

Thursday 23rd October

BANKS UNDER FIRE OVER CASPIAN PIPELINE

High street banks slammed for breaking ‘Equator Principles’ lending rules

Two high street banks came under fire today for breaking their own environmental rules over a Caspian Sea oil project. ABN Amro and Citigroup were attacked by environment and human rights groups for taking on the financial arranging job on BP's $3.6 billion Baku-Tbilisi-Ceyhan (BTC) pipeline.

But this summer, the two banks signed onto the ‘Equator Principles’ - a set of undertakings aimed to prevent loans to environmentally and socially damaging projects. Campaigners say the pipeline breaks those rules on a staggering 157 counts - so should be excluded [1].

Citigroup is well aware of the controversy surrounding the project. Earlier in the year, Chris Beale, Managing Director of Global Project Finance for the group, described BTC's social impacts as a potential "train wreck". [2]

Two other banks - Mizuho and Société Générale - have also been appointed as arrangers.

The environment and human rights groups have written to 35 other leading banks, urging them not to back the project. The 14 groups, from 10 countries, are now encouraging their members - consumers - to confront the banks on their lending practices. [3]

Hannah Griffiths, of Friends of the Earth, commented,
“The litmus test of whether the Equator Principles are a serious step or just a PR gesture is in what projects the banks finance. Nice words are not enough - it’s action that counts”.

Greg Muttitt, of PLATFORM, added,
"It's hard to see how ABN and Citi square their supposed environmental commitment with their involvement in the BTC pipeline. Our research makes it clear that financing this pipeline is not consistent with the Equator Principles. Banks should put their money where their mouth is - and stay out of damaging projects".

The BTC project has failed to apply any measures to protect ethnic minorities, in spite of major human rights concerns. In Turkey, for example, pipeline security will be provided by the state Gendarmerie, which has been censured by the Council of Europe for persistent human rights abuses - including torture and 'disappearances' - against the Kurds. The European Commission has announced an investigation of the human rights impact of the pipeline in Turkey. [4]

The pipeline has also been criticised for not addressing its environmental impacts, especially on the important mineral water springs of Borjomi in Georgia. A court case which is being heard in Georgia alleges that the pipeline consortium put undue pressure on the Environment Minister to approve the routing through the sensitive area.

Notes for editors

1: the research finds 127 violations of 5 International Finance Corporation policies which Equator banks are committed to applying, plus a further 30 direct breaches of the Equator Principles.

2: in Oil & Gas Journal, 13 October 2003, 'Oil project lending faces new environmental litmus test'

3: The groups involved are: Amis de la Terre (France), Berne Declaration (Switzerland), Campagna per la Riforma della Banca Mondiale (Italy), the Corner House (UK), Friends of the Earth (England, Wales & Northern Ireland), Friends of the Earth Japan, Friends of the Earth US, Green Alternative (Georgia), Kurdish Human Rights Project (UK), Milieudefensie (Netherlands), Netwerk Vlaanderen (Belgium), PLATFORM (UK), Rainforest Action Network (USA), Urgewald (Germany)

4: In a letter dated 4th August 2003, the Enlargement Directorate of the EC stated, "Turkey has undertaken to comply with the EU accession criteria, including the Copenhagen political criteria on democracy, the protection of human rights and of minority rights. For this reason, any human rights or national minority rights violations arising from the implementation of the above mentioned Pipeline Project would have to be seen in the context of the Copenhagen political criteria. The Commission will continue to follow closely the developments in Turkey surrounding this case and give an assessment of the human rights and minority rights situation in its regular report in November this year." See letter

More news>>>