31 March 2006
In its recently posted audit, the Compliance Advisor Ombudsman (CAO) found several compliance issues regarding the International Financial Corporation's environmental and social due diligence in considering the Orion-Celulosas de M'Bopicua (CMB) paper mill projects in Uruguay.
On March 24, 2006, the Compliance Advisor Ombudsman (CAO) publicly disclosed its audit of the environmental and social due diligence performed by the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA) in considering financing the Orion and Celulosas de M'Bopicua (CMB) eucalyptus kraft pulp mills in Uruguay. The IFC is considering financing both the Orion and CMB projects, while MIGA is considering providing political risk insurance to the Orion project.
Among other things, the CAO concluded that:
- Environmental Assessments prepared by the IFC for environmentally-sensitive ‘Category A’ projects were not complete at the time of their public disclosure, and as such, IFC was not in compliance with requirements established by its Disclosure of Information Policy;
- The IFC’s Environmental and Social Review Procedures- the processes that IFC staff are required to follow when initially screening projects to determine whether the Corporation should provide project financing- are neither “rigorous [n]or robust enough to sufficiently support an outcome that is in compliance with the [IFC’s] Disclosure Policy”; and
- MIGA was in compliance with its policies and procedures for disclosing relevant project documents
In its response to the audit, while acknowledging some shortcomings in its disclosure requirements for appraising a client’s social and environmental due diligence, the IFC contends that recent revisions to its safeguards and disclosure policies will adequately address the procedural inadequacies identified by the CAO.
Additional Information
- These documents are also available in Spanish on the CAO website