Date filed
12 December 2019
Keywords
Countries of harm
Current status
Rejected
Sectors
NCP

Allegations

On 12 December 2019, KTNC Watch, PUSAKA, SKP-KAMe, and WALHI Papua filed a specific instance against Posco International and two of its financiers, the the Export-Import Bank of Korean (KEXIM) and the National Pension Service (NPS) at the Korean NCP. The complaint argues that POSCO International‘s subsidiary in the palm industry in Papua, Indonesia, has been engaged in business activities causing a range of adverse health, labour rights, and environmental impacts. The complaint alleges that POSCO as well as its financiers (lenders) failed to implement adequate human rights due diligence to identify and address the adverse impacts caused by the subsidiary.

The complainants seek the Korean NCP’s good offices to encourage the three companies to adopt policies for reviewing environmental and social risks in developing natural resources overseas, and more specifically to refrain from providing further loans to support the operations of POSCO International‘s subsidiary in Papua, Indonesia.

Relevant OECD Guidelines

Outcome

On 16 March 2020, the Korean NCP issued an initial assessment accepting the complaint for good offices. The NCP accepted the complaint regarding POSCO and the NPS; it also accepted the complaint against KEXIM without having yet received a final reply from KEXIM regarding a supplementary (second) submission by the complainants. The NCP’s initial assessment stated (in Korean only) that in this matter, KEXIM could be considered a multinational enterprise covered by the OECD Guidelines because 1) it has oversea branches in the United Kingdom, Indonesia, and Vietnam; 2) in this case, its funding of POSCO was not related to any official development assistance projects; and 3) the financial services it provided to POSCO, providing loans and taking interest, were commercial in nature like those of a typical financial institution. The NCP also found the complaint satisfied the other Guidelines’ admissibility criteria.

In April 2020, KEXIM submitted a final reply protesting the acceptance of the complaint and requested a review of the initial assessment.

On 17 September 2020, the Korean NCP breached the Procedural Guidance by reversing its acceptance of the complaint against KEXIM (in Korean only). This time, the Korean NCP argued, on similar grounds as it had argued in prior cases against KEXIM, that the Guidelines did not cover KEXIM’s activities because:

1. The bank is a public corporation to perform public purposes, regulated by a special act.
2. The project in this case effectively constitutes oversees development assistance falling under a governmental “comprehensive plan for overseas agricultural development.”
3. The bank’s activities (including receiving interest in accordance with the OECD Export Credit Arrangement) cannot be considered commercial activities, particularly vis-à-vis domestic case law addressing the Korean Resources Corporation.
4. Using the reasoning applied by other NCPs (Finland, the Netherlands) to their export credit agencies, the Guidelines do not apply to KEXIM in this case.

More details

Defendant
Other companies involved
Complainants
Affected people
Date rejected / concluded
17 September 2017

Related complaints

Documents