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Federal Criminal Case Against Botnia Resumes Activity

World Bank Executive Directors Could be Detained in Argentina for Questioning

November 19, 2007 - Concepción del Uruguay – Argentina. In this small provincial community, a federal court is dealing with perhaps what may be one of the most intriguing cases it will ever hear, on how to hold foreign corporate CEOs and World Bank directors, accountable for human rights violations committed across the border which spill over into national territory.

The case stems from a complaint filed by local community stakeholders, the provincial governor, and the Center for Human Rights and Environment (CEDHA), against the corporate directors of Botnia and ENCE, two controversial pulp mill companies constructing two of the world's largest paper pulpmills on a border river between Argentina and Uruguay. The projects were given a thumbs down by the World Bank's own oversight agency which monitor's social and environmental safeguard compliance by loans given by the World Bank's International Finance Corporation (IFC). The IFC went ahead with the loans despite an adverse audit by its own compliance agency, a glitch in the World Bank's justice system, which allows for projects to go forward despite confirmed safeguard violations.

The original criminal complaint filed in 2006, was brought against nine company executives of both Botnia and ENCE, for the violation of Article 55 of the Argentine Criminal Code, including the criminal intent to violate national Argentine legislation with respect to dangerous substances and for actions that will endanger the health of some 300,000 Argentine inhabitants residing in the zone of direct environmental impact of the plants located in Fray Bentos Uruguay, near Gualeguaychú.

When the 23 World Bank directors decided to authorize US$470 million in financing to the project, despite that the IFC's control body, the Compliance Advisory Ombudsman (CAO) said the projects were not up to standard, the complainants presented the court with the names of each of the Board of Directors members, claiming they were knowingly granting loans to a questioned project, despite the high social and environmental risks the project involved for local communities. (*1)

The court case got caught up in bilateral politics and did not move for most of the last year, but it has picked up more recently however, as several accidents at the Finnish pulp mill company Botnia have raised the attention and concern on both sides of the border over Botnia's safety controls and risks to human life and environmental resources, even before Botnia's mill began producing pulp only a week ago.

Botnia, led by CEO Erkki Varis, fearing that an outstanding international complaint filed by Argentina against Uruguay at the International Court of Justice (ICJ) claiming the mill project violates international law, sped up construction of the pulp mill to avoid what many believe will be an adverse ICJ verdict, that could conceivably order a reversal and dismantling of the project. This speed-up led to lax security controls, and a series of serious accidents on Botnia's construction site, which have resulted in limb amputations, severe intoxication of workers and even death.

The federal judge in charge of the case, Quadrini, has all of a sudden taken up interest in moving the hearings along at a faster pace. Attorneys in the case believe that the federal judge, given the evident dangers poised by the mill (which have come to the forefront only recently with the accidents) may make a bold move to call to witness, not only the company CEO, Erkki Varis, which would have him summoned from Finland, but also World Bank Executive Directors who voted in favor of the loan, since it was the World Bank's loan approval that opened the financing gates for Botnia's accelerated construction.

Stakeholders, and legal advisors to the Citizen's Assembly of Gualeguaychú, who criticize the IFC for muscling the project through its Board of Directors despite that they new it had severe gaps in policy compliance, say that the approval to grant Botnia funds despite knowledge that the project violated World Bank policy, and given the serious accidents that have occurred as a consequence, is tantamount to complicity in the death and accidents of the Botnia workers. The lawyers, taking advantage of Quadrini's renewed interest in moving the case, and the confirmation of impacts that the Botnia accidents show, are now pressing the courts to call World Bank Board Members to testify before the judge.

While it seems unlikey that the judge would summon 23 Board Members to travel from Washington DC, local advocates will begin to monitor Executive Director travel schedules and should any come through Argentina, attempt to get a court order to detain them for questioning. Local stakeholders want to send a clear message to the World Bank, “think about the projects you finance and your responsibility”. Should any of them travel or transit through Argentina, they may simply have to take a few days to render explanations to Judge Quadrini.

(*1) The complaint goes on to name personally each of the Directors present in the Board vote of that day. Those are: Jenna Dorn (USA), Makoto Hosomi (Japan), Eckhard Deutscher (Germnay), Thomas Scholar (UK), Pierre Duquesne (France), Shuja Shah (Pakistan), Gino Alzette (Belgium), Otaviano Canuto dos Santos Filho (Brazil), Mulu Ketsela (Ethiopia), Samy Watson (Canada), Ms. Jiayi Zou (China), Louis Philippe Ong Seng (Mauritius), Svein Aass (Norway), Dhanendra Kumar (India), Herwi Dayatmo, Giovanni Majnoni (Italy), Merza H. Hasan (Kuwait), Herman Wijffels (Netherlands), Joong-Kyung Choi (Korea), Alexey Kvasov (Russia), Abdulrahman Almofadhi (Saudi Arabia), Jorge Familiar (Mexico), Michel Mordasini (Switzerland).

For More Information

jdtaillant@cedha.org.ar