A World Bank investigation into a tea plantation project in India that it jointly finances with tea giant Tata Global Beverages Ltd has found that it has failed to tackle alleged abuses of impoverished workers.
International Finance Corp (IFC) — a member of the World Bank Group — said its accountability office began a probe into the project, run by Amalgamated Plantations Private Ltd (APPL), after reports tea pickers were being exploited.
In a statement, the IFC said it welcomed the investigation by the Compliance Advisor Ombudsman (CAO) and would work toward improving conditions for workers in plantations in the Indian state of Assam.
APPL said it was currently implementing a project focused on areas such as housing, sanitation, medical facilities, health and safety, and worker engagement following an independent assessment into conditions at its tea estates in June 2014.
APPL said its charitable arm, the PPL Foundation, was monitoring the project and ensuring that workers benefited from it in the best possible way.
APPL was set up in 2009 to acquire and manage tea plantations previously owned by Tata Global Beverages, which owns Tetley, the world’s No. 2 tea brand.
The IFC’s US$7.8 million involvement in the US$87 million “Tata Tea” project was aimed at promoting shareholder workers and helping to create more than 30,000 permanent jobs.
Tata Global Beverages took a 41 percent stake in APPL and the IFC took 20 percent, with the remainder held by workers and smaller firms.
However, complaints by charities and trade unions about exploitation and abuse of tea pickers — including long working hours, low wages, lack of freedom of association, overexposure to pesticides, and poor health and living conditions — prompted the CAO to launch an investigation in February 2014.
The CAO’s findings, released on Monday, found that the IFC failed to identify and address labor, social and environmental issues, including potential violations of Indian and international law, including those related to housing and wages.
The IFC’s investment also supported a problematic employee share-purchase program, the CAO found.
It said APPL misrepresented the risks associated with buying stock, resulting in debt incurred by workers who came under pressure to buy shares.
The CAO said the IFC supported issuing more shares, reducing the value of workers’ shares and diluting their stake in APPL, without consulting worker-shareholders.
Human Rights Watch called on the IFC to conduct a review of the social impact of its investment and work with its clients to improve the plight of impoverished tea pickers in Assam.
“The IFC has been sluggish in responding to its endemic failures and done little to remedy the impact of its past mistakes at the community level,” said Jessica Evans, senior international financial institutions researcher at Human Rights Watch.
She urged the IFC to “make sure that all the violations are addressed and appropriate responses are developed.”
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