Pöyry ‘off the hook’ in Mekong OECD complaint
The Finnish engineering consultant Pöyry did not violate OECD ethical guidelines in its project in Laos, according to a government panel. But critics, including the aid minister, say the review process was flawed.
Pöyry was accused in 2011 by 15 civil society organisations of violating OECD guidelines for multinational companies in a report the company delivered to the Lao government on the Xayaburi hydropower project, the first dam on the mainstream of the Lower Mekong River.
The Pöyry report gave a thumbs-up for the controversial project. The complaint states that Laos then used this to justify proceeding unilaterally with construction of Xayaburi in spite of objections from other Mekong countries. “[Pöyry] is thus party to an attempt to circumvent [an] … on-going regional consultation process,” the NGOs wrote.
The complaint was submitted to the Finnish Ministry of Employment and Economy, which is the contact point for upholding these OECD guidelines.
In a statement issued June 18, the ministry says Pöyry did not violate OECD Corporate Social Responsibility Guidelines in its dam project in Laos. It states further that the company made an effort to mitigate the environmental risks and negative impacts of the project by means of several detailed recommendations.
But the statement contains criticism, mainly from the Environment Ministry and the Foreign Ministry, which were both consulted about the matter. The Foreign Ministry highlights the concerns of the Mekong River Commission, of which Finland is the largest donor. The MRC was established in 1995 to facilitate cooperation among the four member countries – Thailand, Vietnam, Laos and Cambodia – especially on the issue of dam building on trans-boundary waters. “In the opinion of the MRC,” the Foreign Ministry writes, “it would be better for [studies] to be carried out before construction commences, instead of simultaneously with construction” as Pöyry proposes. The Environment Ministry says Pöyry should have used its considerable influence to delay commencement of construction until all studies had been completed.
The Ministry of Employment’s final statement adds that Pöyry “should have addressed the ambiguities related to environmental issues and human rights more clearly in its report to the government of Laos”.
There were two civil society representatives on the advisory board attached to the Ministry of Employment committee that reviewed the case. One of the members, Sonja Vartiala of Finnwatch, does not agree with the final ruling. She says the Employment Ministry did not do proper research into the matter.
“They just made their decision based on the responses from Pöyry. Many of the points we were concerned about didn’t get answered,” she says to Development Today. “A big issue for us was the due diligence process and finding out what human rights assessment Pöyry did. None of this was researched.”
The other NGO representative on the advisory board was Kati Malmelin of WWF Finland. She abstained from giving an opinion on the case because she was not able to confer with the rest of WWF.
“Much of the material was defined as confidential. That prevented me from being able to have background discussions with my organisation about the case.” she tells DT.
Meanwhile, the organisations that submitted the complaint, led by Siemenpuu Foundation, are up in arms.
“They really let Pöyry off the hook very easily,” says Otto Bruun of Siemenpuu Foundation. He points to two main flaws in the process: the lack of transparency and the company’s refusal to meet with the complainants.
“This ruling was based on information that was kept confidential not only for the public but also from the complainants. That is not acceptable practice,” Bruun says. “Moreover, we specifically requested to interact with Pöyry, but the company did not want to have contact with us in the framework of the complaint.
Pöyry’s insistence that its response to the complaint be kept secret was a sore point from the beginning. The Ministry of Employment intended initially to have the documents open to the public. “We would prefer to make it public; the main principle is transparency,” Jorma Imonen at the ministry told DT a year ago. (See DT 8/12) In the end, however, lawyers at the ministry supported Pöyry’s claim that the documents contained commercial secrets protected by Finnish law.
The decision to respect Pöyry’s confidentiality in this case has not gone over well with Development Minister Heidi Hautala. “It is unheard of that the response of the company was declared a business secret even to the appealing party,” Hautala says to Development Today.
“This appeal process was used for the first time after the human rights clauses were added to the OECD guidelines in 2011. It is clear that it needs to be evalued and rectified. There were obvious problems with openness and clarity of the process.”
While she has supported the NGOs’ criticism of the process, she questions their claim that Finnish aid has been wasted because Pöyry’s work contradicted Finland’s support to the MRC.
The Mekong commission is being severely tested as Laos moves ahead with the Xayaburi project, in spite of objections from downstream member states.
“It goes without saying that Finland considers the Mekong River Commission a vital body for the region. I have expressed our willingness to the members states to contribute to revising some of the ambiguous articles of the Mekong Agreement of 1995, in order to avoid the kind of shortcomings we are now witnessing in the project.
DT 8/2013 June 25, 2013