IFC didn’t follow due process while investing in APPL: World Bank

A World Bank probe found that workers had not been given promised benefits by tea producer Amalgamated Plantations


Amalgamated Plantations produces the Tata Tea brand of packaged tea. Photo: Pradeep Gaur/Mint
Amalgamated Plantations produces the Tata Tea brand of packaged tea. Photo: Pradeep Gaur/Mint

Mumbai: The World Bank has found serious shortcomings in the way Amalgamated Plantations Pvt. Ltd (APPL), India’s second largest tea producer, treated workers at its Assam plantations, said a study released on Monday.

After a two-year-long investigation, the World Bank found that its arm, International Finance Corporation (IFC), had not followed due process while investing $7.8 million in APPL’s Assam tea plantations and that workers had not been given promised benefits by the tea producer.

The Compliance Advisor Ombudsman (CAO), an independent grievance office that holds the World Bank Group accountable to its own policies, found that APPL fell short on several parameters related to the welfare of plantation workers such as compensation, living conditions, use of child labour, health concerns, freedom of association and handling of grievances.

APPL produces the Tata Tea brand of packaged tea. Tata Global Beverages Ltd (TGBL) at present owns a stake of about 49.6% in APPL, while IFC owns 19.9%. The rest is owned by the management, workers and other investors.

APPL was formed in October 2006 when TGBL agreed to sell a 20% stake in the company, until then known as Tata Tea, to IFC against an investment of $7.8 million. IFC, which released the first tranche of its investment in April 2009, was brought in for the specific purpose of improving the living conditions of the workers at these plantations.

The APPL project was created to provide a sustainable livelihood for tea plantation workers and affects 155,000 people, including 30,000 workers and their families.

The probe into IFC’s investment in APPL was triggered by a number of events at the tea plantations in Assam and after various non-government organizations (NGOs) complained about the company.

In February 2013, the CAO said it had received a complaint from three NGOs on behalf of workers on three of APPL’s plantations in Assam, namely Hattigor, Majuli and Nahorani.

The complaint raised concerns about living and working conditions on the tea estates, specifically long working hours, inadequate compensation, restrictions on freedom of association, poor hygiene and health concerns, poor living conditions and inadequate protection for workers using pesticides.

A year later, the CAO initiated an investigation. It found IFC had faltered at many stages of the investment, including the pre-investment study of the plantation where the World Bank arm had not adequately assessed the contextual risk involved.

“CAO finds that IFC’s review relied significantly on the client’s (APPL’s) good reputation and its commitment to participate in external certification schemes,” the report noted.

TGBL had called for an independent assessment of the situation in June 2014 after the CAO investigation was initiated. In response to an emailed query, TGBL said it was mindful of the developments at the Assam tea plantations and working with APPL on improving the living conditions of the workers there.

It said a draft action plan is being considered and is pending review and approval by APPL’s board. It also said that an APPL initiative called Project Unnati, aimed at improving the living conditions of plantation workers, is also underway.

“TGB will work along with IFC to engage a third party to undertake an annual audit and worker perception survey of progress of Project Unnati and other improvement measures to independently verify implementation status and assess effectiveness,” TGBL said.

In a separate response, APPL said that though it had faced financial difficulties like the rest of the tea industry, the difficulties had not impeded its efforts to bring about a positive change in the tea plantations ecosystem through Project Unnati.

“There is a larger political, social and historical context that makes Adivasi workers in Assam’s tea plantations particularly vulnerable to economic exploitation and extreme deprivation. It will require consistent and diligent effort to address this structural poverty,” said Jayshree Satpute, human rights lawyer and co-founder of Nazdeek, a legal empowerment organization.

“The Tata brand has been a leader in corporate social responsibility and now they must take responsibility of the workers employed in their own plantations and give them fair wage and dignified treatment,” Satpute said.

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