A World Bank investigation into a tea plantation project in India that it jointly finances with tea giant Tata Global Beverages has found that it has failed to tackle alleged abuses of impoverished workers, the group said on Wednesday. The International Finance Corporation (IFC) – a member of the World Bank Group – said its accountability office began a probe into the project, run by Amalgamated Plantations Private Limited (APPL), after reports tea pickers were being exploited.
In a statement emailed to the Thomson Reuters Foundation, the IFC said it welcomed the investigation by the Compliance Advisor Ombudsman (CAO) and would work towards improving conditions for workers in plantations in India’s Assam state.
“IFC is continually working with APPL in its ongoing programme of improving living and working conditions and will continue to collaborate with the CAO on the next steps, post-audit,” it said.
Officials from Tata Global Beverages and APPL were not immediately available for comment.
APPL was set up in 2009 to acquire and manage tea plantations previously owned by Tata Global Beverages – which owns Tetley, the second-largest tea brand in the world.
The IFC’s $7.8 million involvement in the $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.
But complaints by charities and trade unions about exploitation and abuse of tea-pickers – including long working hours, low wages, lack of freedom of association, over-exposure 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 the IFC failed to identify and address labour, social and environmental issues, including potential violations of Indian and international law, including those related to housing and wages.
“CAO finds that IFC has not assured itself that the wages paid by the client are consistent with IFC’s commitment to support jobs which offer a ‘way out of poverty’ or ‘protect and promote the health’ of workers,” it said.
The IFC’s investment also supported a problematic employee share-purchase programme, 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 HRW.
“The IFC’s board should send the action plan back to the staff and require it to consult with workers and the groups that filed the complaints to make sure that all the violations are addressed and appropriate responses are developed.”