Posco's Odisha Project: OECD National Contact Point Complaints and a Decade of Resistance

By Samantha Balaton-Chrimes

This case study focuses on a protracted conflict between Korean steel giant POSCO, and communities affected by a proposed steel plant in the eastern Indian state of Odisha. In 2005, POSCO signed a Memorandum of Understanding with the Odisha state government in India to build a US $12 billion integrated steel project, involving a plant, mine and associated infrastructure. For the ten years since then the project has faced strong opposition from the communities affected by the proposed steel plant.

Issues

The conflict and specific complaints addressed in this report pertain to failures to respect rights to free, prior and informed consent over land acquisition, inadequate consultation with affected communities, the risks of economic and physical displacement, and multiple incidents of violence and intimidation by police and other actors against anti-POSCO protestors,

Non-judicial redress mechanisms

This report focuses on a complaint made to the Organisation for Economic Cooperation and Development (OECD) National Contact Points (NCP) in South Korea, the Netherlands and Norway. The Korean complaint concerned POSCO directly, while the Norwegian and Dutch complained concerned national pensions funds invested in POSCO. The Korean NCP rejected the case, and the Norwegian Pension Fund refused to cooperate. The Dutch process facilitated discussion between ABP/APG, the complainants’ representatives and, ultimately, POSCO, with the objective of launching a fact-finding mission, which could then form the basis of a dialogue. However, parties could not agree to the terms of the mission, and the complainants refused to engage in dialogue while land acquisition was ongoing, and in the absence of a fact-finding mission. The NCPs ultimately had no positive impact on human rights in this case.

The report situates the NCP complaints within a broader system of remedy. The POSCO project has faced multiple domestic judicial and regulatory hurdles in relation to clearance to divert forest land (on which communities reside) for non-forest purposes, environmental clearances, land acquisition and prospecting licences for iron ore. Some of these are still ongoing. At the same time, the anti-POSCO Peoples’ Movement (PPSS) has engaged in non-violent direct action, such as blockades, to prevent land acquisition, and has gained support from a broad informal network of civil society activists in Odisha, India, Korea, the United States (US) and Europe.

Executive Summary

In 2005, Korean steel giant POSCO signed a Memorandum of Understanding with the Odisha state government in India to build a US$12billion integrated steel project, involving a plant, mine and associated infrastructure. For the ten years since then the project has faced strong opposition from the communities affected by the proposed steel plant, who do not want to relinquish their agricultural lands and face displacement. The conflict between the company and the communities has escalated in that time, and has involved multiple incidents of violence and intimidation by police and other actors against anti-POSCO protestors, and filing of hundreds of criminal cases against protesters, the legality of which has been called into question. This is a case not only of human rights risks and harms, but also, much more broadly, of contests over development agendas, and who gets to set them.

The POSCO project has faced multiple domestic judicial and regulatory hurdles in relation to clearance to divert forest land (on which communities reside) for non-forest purposes, environmental clearances, land acquisition and prospecting licences for iron ore. Some of these are still ongoing. At the same time, the anti-POSCO Peoples’ Movement (PPSS) has engaged in non-violent direct action, such as blockades, to prevent land acquisition, and has gained support from a broad informal network of civil society activists in Odisha, India, Korea, the United States (US) and Europe.

Together, the political mobilization and judicial challenges have stalled the progress of the POSCO project for a decade, but the conflict remains unresolved. POSCO has not categorically committed to relocating or stopping its project, as PPSS aims for. At the time of writing, POSCO has acquired a significant portion, but not all, of the land it needs for the plant. No construction has begun at this stage, most likely because the company is still waiting on prospecting licences for iron ore.

The OECD NCP process

In October 2012, Bhubaneshwar-based group Lok Shakti Abhiyan, with international supporters filed a complaint to the Organisation for Economic Cooperation and Development (OECD) National Contact Points (NCP) in South Korea, the Netherlands and Norway. The complaint alleged that POSCO had not conducted due diligence or meaningful stakeholder negotiation regarding the human rights and environmental impact of its proposed project, particularly the required land acquisition, and had failed to seek to prevent or mitigate the human rights abuses committed by the Indian state in its violent efforts to acquire land for POSCO. The complaint also argues that minority shareholders, the Dutch Pension Fund Algemeen Burgerlijk Pensioenfonds/Algemene Pensioen Groep (ABP/APG) and the Norwegian Pension Fund Norges Bank Investment Management (NBIM), should exercise leverage over POSCO to address these human rights concerns, and consider divestment if that fails.

The NCP processes had mixed outcomes. The Korean NCP rejected the case, and the Norwegian Pension Fund refused to cooperate. The Dutch process facilitated discussion between ABP/APG, the complainants’ representatives and, ultimately, POSCO, with the objective of launching a fact-finding mission, which could then form the basis of a dialogue. However, parties could not agree to the terms of the mission, and the complainants refused to engage in dialogue while land acquisition was ongoing, and in the absence of a fact-finding mission.

The major success of this NCP process is a purely policy-based one: it established that minority shareholders have obligations regarding due diligence and facilitating access to remedy in the event of human rights harms to which it is directly connected (even if it has not directly caused or contributed to those harms). This raises the possibility of engaging minority shareholders, particularly those, like national pension funds, that have unique forms of leverage, to pressure companies engaged in human rights harms.

However, the NCP case also demonstrated that there is a lack of functional equivalence between NCPs, as all three generated different outcomes. OECD Watch argues that there is an ongoing and urgent need for all NCPs to be functionally equivalent at the most robust levels of complaint handling.

Furthermore, the failure to launch a fact-finding mission represents a missed opportunity to make a positive impact on human rights fulfilment in Odisha. In a context where most of the information about the project is controlled by POSCO and the largely pro-POSCO government, and there is very little publicly available information about human rights impacts, it is unreasonable for the NCP to expect communities to engage in dialogue based on such information. This pressure demonstrates a failure to appreciate the importance of the political and economic context for the possibilities regarding the resolution of a dispute.

In relation to the OECD NCP process, the report therefore finds that despite some reasonable efforts from the Dutch and Norwegian NCPs, the NCP process made no identifiable positive contributions to protecting, respecting or remedying the human rights concerns directly raised in the complaint.

Enabling and constraining resistance and remedy

This report also examines the broader context in which the communities affected by POSCO have sought remedy for past harms, and sought to resist future harms associated with land acquisition. The report finds that the major constraints to resistance and remedy more broadly, including but not limited to the NCP process, in this case pertain to:

·         the political economy of the Odisha context, where all authoritative arms of government are supportive of the project

·         an environment of insecurity and intimidation that acts to suppress opposition to the project

·         inadequate provision of information about the project’s impacts, particularly in relation to social impacts and human rights

The report finds that the significant factors enabling resistance and remedy in this case pertain to:

·         The resilience and strength of opposition to the project in the affected area

·         The strength of local leadership and organization, including in the form of networks of civil society support from other similar movements across India

·         The availability of a socially and environmentally progressive judicial body, the National Green Tribunal (NGT), and a team of legal activists able to engage it

·         The multi-pronged support of transnational civil society

The report also finds that:

·         The international business and human rights discourse has had ambivalent effects in this case. It has led POSCO, which was previously inexperienced in this area, to develop some voluntary human rights commitments, but has not led to any tangible changes in its business behaviour in India. Furthermore, it may have equipped POSCO with tools to deflect criticism without making changes on the ground, thereby having an ultimately damaging effect on human rights fulfilment.