On 17 June 2019 the South Korean Civil Society Task Force Team filed a specific instance at the Korean NCP against SK Engineering & Construction Co. Ltd. (SK E&C), Korea Western Power Co. Ltd., and the Export-Import Bank of Korea (KEXIM). The complaint concerns the activities of SK E&C, Korea Western Power, and KEXIM in Laos in relation to the collapse of the Xe-Pian Xe-Namnoy dam. SK E&C was in charge of the design and construction of the dam, Korea Western Power was in charge of operation of the dam after construction, and both are shareholders of PNPC, the joint investment venture and principal agent of the Xe-Pian Xe-Namnoy hydroelectric project.
The Xe-Pian Xe-Namnoy dam collapsed on 23 July 2018, claiming hundreds of lives and displacing thousands. The complainants allege that the conduct of SK E&C and Korea Western Power in relation to the dam and its collapse violated several provisions of the Guidelines. Of note, the complaint argues the companies failed to address a flaw in the design and construction of the dam and failed to implement necessary safety measures despite the call for an environmental risk response plan in the dam’s Environmental Impact Assessment Report. The complaint also argues the companies increased the collapse’s harmful impacts both by delaying undertaking emergency water discharge operations and failing to issue essential cautionary measures such as an evacuation order.
Regarding KEXIM, the complaint argues that KEXIM, a financial advisor to the project, is responsible for breaches of the Guidelines through failing to conduct due diligence of the project and its risks, and refusing to communicate with civil society or respond to information disclosure requests.
The complainants seek mediation from the NCP to support dialogue towards ensuring remedy for the impacted communities.
Relevant OECD Guidelines
- Chapter IV
- Chapter IV Paragraph 1
- Chapter IV Paragraph 2
- Chapter IV Paragraph 5
- Chapter IV Paragraph 6
- Chapter VI
- Chapter VI Paragraph 1 a
- Chapter VI Paragraph 5
On 25 September 2019 the Korean NCP completed an initial assessment accepting complaints against SK E&C and Korea Western Power given their role in the dam’s design and implementation, but rejecting the complaint against KEXIM.
The Korean NCP excluded KEXIM from the planned mediation process by concluding that the Guidelines are not applicable to KEXIM as the export credit agency is participating in the project as an Official Development Assistance (ODA) agency. The NCP referred to its own decision in the Jalaur Dam case in 2018 and explained that there is no precedent where an NCP found the Guidelines applicable to an ODA project.
The NCP offered good offices to the complainants and SK E&C and Korea Western Power, but the two companies declined the NCP’s offer of good offices.
Instead of proceeding with an investigation, on 30 July 2020 the Korean NCP published a final statement concluding the specific instance. It made the following recommendations to SK E&C and Korea Western Power; that they:
(1) Establish a communication channel to discuss issues raised by the complainant;
(2) Give an explanation with integrity to the complainant regarding the details of recovery and relief activities, compensation for the residents, and measures to prevent further accidents, among others;
(3) Adopt an internal system to create settings and cooperate on responsible business conduct (RBC) of MNEs, including the OECD Guidelines for MNEs and the OECD Due Diligence Guidance for RBC;
(4) Send a report to the Korean NCP on their progress regarding the matter within six months of receiving the final assessment.
The complainants were disappointed both that the Korean NCP was not able to encourage the company to engage in the good offices process, and that it closed the complaint following the company’s refusal to participate instead of engaging in an independent evaluation of the facts presented.
- South Korean Civil Society Task Force Team vs. KEXIM
- South Korean Civil Society Task Force vs. SK E&C