An international coalition of 14 civil society organisations alleges that the services provided by the Pöyry Group to the government of Lao PDR as a part of the preparations for construction of the Xayaburi hydroelectric dam are in breach of the Guidelines. The construction of the dam is controversial because it would have severe environmental and social impacts along the entire Lower Mekong Basin. Impacts include displacement of villagers and a loss of fertile land, income, livelihoods and food security due to alterations of one of the world’s most productive freshwater fisheries.
Neighbouring Mekong countries, scientists, experts and NGOs have called for the deferment of construction until additional research on the dams impacts has been conducted. Despite these protests, the government of Lao PDR is justifying proceeding with the project without additional research based on the advice of the Pöyry Group, a Finland-based consulting firm it hired for technical advice. Though it acknowledges numerous technical shortcomings and the need for additional research, Pöyry has advised Lao PDR to proceed with construction.
The Mekong River Commission for Sustainable Development Secretariat (MRCS) reviewed Pöyrys report to the Laotian government and disputes Pöyry’s main finding that any studies on the Xayaburi Dam site can be conducted after construction is already underway.
The complaint alleges that the services provided by Pöyry undermine the co-operative regional process regarding the use of Mekong trans-boundary water resources. The complaint also accuses Pöyry of not contributing to sustainable development and failing to conduct appropriate due diligence. The complainants requested that a process be initiated with the aim of correcting Pöyrys behaviour, mitigating the damage already caused, and preventing further damage. They called on Pöyry to engage in dialogue with relevant stakeholders and, where applicable, compensate those adversely impacted.
Relevant OECD Guidelines
- Chapter II
- Chapter II Paragraph A1
- Chapter II Paragraph A11
- Chapter II Paragraph A12
- Chapter II Paragraph A13
- Chapter IV
- Chapter IV Paragraph 2
- Chapter IV Paragraph 3
- Chapter VI
- Chapter VI Paragraph 4
- Chapter VI Paragraph 6
- Chapter VI Paragraph 6 b
- Chapter VI Paragraph 6 c
- Chapter VI Paragraph 8
As part of the initial assessment, the Finnish NCP solicited comments on the complaint from Pöyry. In a public response, Pöyry rejected all of the complaints allegations. Pöyry also issued a separate response directly to the NCP, but insisted that this remain confidential and not be shared with the complainants. The NCP accepted the complaint in October 2012 and invited the parties for mediation.
The NCP facilitated a meeting between the parties in December 2012 intended to clarify the positions of both parties. After the meeting Pöyry stated it was not interested in further dialogue with the complainant. The Finnish Ministries of Environment and Foreign Affairs both of which advise the NCP issued public statements on the complaint. The ministries affirmed Pöyrys responsibilities in the case and reaffirmed the complainants’ argument that the possibility of an adverse impact on human rights exists, but stated that they were unable to assess the extent to which Pöyry fulfilled its due diligence obligations without additional information from Pöyry.
Both parties responded to the statements of the ministries and the complainants engaged with the NCP to provide additional information and discuss the case further. Given Pöyrys unwillingness to engage in further dialogue, the NCP issued a final statement.
The final statement confirms that consulting and business service companies such as Pöyry are covered by the Guidelines and have a responsibility to conduct due diligence to avoid being linked to adverse social and environmental impacts caused by their clients. However, the NCP determined that Pöyry had not acted in breach of the Guidelines in this case. Finnwatch, an NGO advising the NCP, issued a statement disputing this finding.
The case, which was the first ever handled by the Finnish NCP, raises serious concerns about the NCPs equitability. The NCP gave in to Pöyrys demands for an excessive degree of confidentiality and did not allow the complainants to see or rebut the companys response to the allegations. The NCP based part of its final statement on Pöyrys confidential response, which was never shared with the complainants a practice that has been deemed unacceptable by other NCPs. Recall that a similar lack of equitability led the UK NCPs Steering Board to overturn its own flawed final statement in the BP BTC case in 2011.
- Company in violation
- Other companies involved
- Cambodian Buddhist Association for Environmental Development
- Community Resource Center
- Finnish Asiatic Society
- Focus on the Global South
- Friend of the Earth Finland
- International Rivers Network
- Mekong Energy and Ecology Network
- NGO Forum on Cambodia
- People and Nature Reconciliation
- Public Eye
- Siemenpuu Foundation
- The Center for Water Resources Conservation and Development
- The Corner House
- Towards Ecological Recovery and Regional Alliance
- Vietnam Rivers Network
- Affected people