We write to ask you, the European investor, to disinvest from the South Korean steel giant POSCO – whether you hold this equity through pension funds, or through a private or public mutual fund, or directly. The immediate grounds for this request are the extensive human rights abuses and environmental destruction associated with POSCO’s attempts to build a giant steel plant in the state of Orissa, in eastern India.
POSCO proposes to build an integrated steel plant with an annual capacity of 12 million tons -- temporarily scaled down to 8 million tons -- in Jagatsinghpur on the coast of Orissa. This 12 billion USD project, touted as the largest ever foreign direct investment in India, comprises a steel plant, captive mines and a dedicated private port (ongoing negotiations between the state government and POSCO may results in POSCO ‘settling’ for a dedicated berth at the existing Paradip port instead of building a new port). Each component of this project will have disastrous consequences for the Adivasi (indigenous) and non-Adivasi communities which live in the project-affected areas. These communities are unequivocally opposed to the project, and several independent bodies (including panels of experts appointed by the Indian government), government regulatory agencies and appellate bodies have all pointed to irregularities and fatal flaws in the project.
The lives of the local community, predominantly small farmers, farm-laborers, craftsmen, fishermen and small traders, are intricately linked to yours as it is your money, through your investments, that enables POSCO to pursue projects such as the one in Orissa where the forcible takeover of land and destruction of livelihoods appears to be POSCO’s modus operandi. Pension funds such as the Dutch ABP and the Norwegian GPFG (Government Pension Fund Global) hold considerable investments in POSCO. Your gains and theirs are linked – unfortunately negatively – as POSCO’s desire to keep the value of its stock high necessarily means that it employs whatever means it can get away with to enhance its profits. In this, tragically, POSCO is aided by the Indian central government and the Orissa state government, who continue to push forward despite reports from government oversight bodies and court rulings that have exposed gross violations of the law.
Research into the particulars of the project, including a comprehensive study by an independent international monitoring body, Mining Zone Peoples’ Solidarity Group (MZPSG), reveals an unacceptable pattern of wrongdoing and exploitative behavior incommensurate with fundamental norms and practices of ethical conduct. Consider the following three issues:
1. POSCO Justifies the project Based on Repeated Falsification of Data
- POSCO claims that its project will create 870,000 jobs. But analysis of these figures by MZPSG shows that a maximum of 48,000 jobs will be created over the next 30 years.
- POSCO has failed to disclose that its claims of the “benefits” of the project, claims that it repeatedly deploys to justify the project, issue from a study by NCAER (National Council of Applied Economic Research), a study that POSCO paid for! We cannot in good conscience permit ourselves to be party to such brazen manufacturing of data, or such cynical manipulation of the apparatus of social science research.
- The NCAER study claims to follow the guidelines of the Asian Development Bank, which require that such analyses must recognize the costs of lost homes and livelihoods, and of lost access to forests, rivers, and other natural resources. But the NCAER study not only violates these guidelines, it also fails to account for the social effect of the elimination of jobs and livelihoods of the immediate project-affected on the well-being of the larger local community.
- The potential harm to the environment, to the local community, and to the local economy have been misrepresented given that POSCO chose to perform a so-called “rapid” Environmental Impact Assessment (EIA), rather than a regular, comprehensive assessment. As the National Green Tribunal (NGT) ruling of March 2012 notes: “a project of this magnitude … has been dealt with casually, without there being any comprehensive scientific data regarding the possible environmental impacts. No meticulous scientific study was made on each and every aspect of the matter leaving lingering and threatening environmental and ecological doubts un-answered. … The current EIA report is a huge under representation of the scale of impact that the project will have on the surrounding environment and the community. … [C]onsidering the nature and extent of [the] project, it was necessary to have a comprehensive and integrated EIA rather than rapid fragmented EIA.” [Emphasis added.]
2. POSCO Has Directly and Indirectly Engaged in Illegalities and Corruption of Process in the Project Approval Process
- The environmental clearances obtained by POSCO are not only fraudulent but also illegal as they violate numerous Indian environmental laws with reference to protection of wildlife, marine life, public health, etc., including the laws meant to protect coasts and beaches. A comprehensive rather than a “rapid” EIA is also a requirement under Indian Law. Furthermore, the “rapid” EIA was done for a plant with an annual steel output of four million tons, whereas the project capacity had always been intended and advertised as 12 million tons per annum. The Indian Ministry of Environment & Forests (MoEF) chose to ignore the gross inadequacy of the “rapid” EIA, but the National Green Tribunal has suspended the final environmental clearance given by the MoEF and asked it to do an exhaustive review and reappraisal.
- The public hearing process which offers the local community an opportunity to voice their concerns was compromised by the presence of police. Local, national and international groups have protested this vitiation of process, and the “connivance between the state and POSCO to manufacture consensus without the consent of those affected.”
- POSCO is gearing up to proceed with the project, although, seven years after the initial Memorandum of Understanding was signed in 2005, no environmental impact assessment has been performed in the Kandadhar forests where the mining operations will be located, and which is home to many Adivasi (indigenous) communities.
3. POSCO Is Complicit in the Violation of Democratic Norms and Human Rights Abuses, Including Use of Physical Violence
- POSCO’s claim to over 3,000 acres of forest land for the steel plant is a direct assault on local people’s struggle for recognition of their land rights via the use of landmark legislation such as the Forest Rights Act of India (2006). Since the conception of the project, POSCO and the Government of Orissa have been running roughshod over all processes and legal obligations in an attempt to evict the peasants of Jagatsinghpur and the indigenous communities of the Kandadhar hill tract. Their collaboration was best expressed in a recent letter by the Orissa steel and mines department: “Every possible effort has been made by government of Odisha to complete the process of handing over the balance required land. The activities of administration such as betel vine demolition, tree cutting, demolition of prawn ponds should be accompanied by activities of Posco-India.” Further evidence of the state doing the dirty work for POSCO comes from the recent destruction of the homes and belongings of 20 families of the Paudi Bhuiyan tribal group who live in the Kandadhar region. On April 15, 2012, officials and workers of the Odisha State Forest Department burned tribal dwellings in the forests under Bonai subdivision of Sundargarh district. This is the area where POSCO has been granted mining rights but the local residents have refused to give up their ancestral lands.
- Various forms of intimidation and coercion have been used against members of the community in Jagatsinghpur opposing the project, including physical violence. Gunfire directed at a protest in June 2008 claimed the life of Dula Mandal, a local villager who opposed the project. Local activists have also charged POSCO with unleashing its hired thugs on them. State repression has taken the form of attacks on unarmed protesters by armed police and paramilitary forces, cutting off access to medical care and educational services, and the filing of false criminal cases – including extremely serious charges such as murder, rape and extortion – against local activists and supporters.
- Even as the state of Orissa has abdicated its responsibilities towards its citizens and has effectively become an agent of POSCO, the latter has repeatedly used diplomatic channels to push the project. This is best evident in the recent intervention of the South Korean ambassador to India, Kim Joong-Keun, on POSCO’s behalf and his comment that the bilateral relationship between India and South Korea “would have been better had the project got completed.”
- The non-violent resistance movement on the ground continues despite the many attempts at repressing it. The people have rejected POSCO’s beggarly package which offers them a third of their income of one single year in exchange for permanent displacement from their homes and lands. POSCO has refused to recognize the community’s right to choose against the project – in so doing, POSCO is acting in contempt of democracy itself. It also appears that POSCO’s human rights abuses in Orissa are part of a larger pattern of unethical practices, as documented by the international environmental organization, EarthRights International in its report about companies involved in oil and gas projects in Burma.
In addition to the above-mentioned economic, environmental and social arguments against the POSCO project, we also note the following reports and statements about the project:
- Report in October 2010 by the majority of an expert committee appointed by the Indian ministry of environment & forests to assess the validity of the POSCO project. The majority report of the panel recommended cancelling the environmental clearance given to the project.
- Judgment on March 30, 2012 by the National Green Tribunal recommending suspension of the environmental clearance given to the project until a full and exhaustive review of the project could be undertaken.
- Audit reports released in April 2012 by the Office of the Comptroller and Auditor General of India that exposed a whole series of irregularities and illegalities in the acquisition of privately owned land and the transfer of public land for the POSCO project.
- Public Statements by human rights and environmental organizations including Amnesty International, Centre for Science and Environment, among others.
As academics and public intellectuals, we are deeply troubled by the high costs borne by the people attempting to save their communities and livelihoods from the certain destruction that the POSCO project will bring. The police, paramilitary forces, and private mercenaries have created an atmosphere of fear and dread among local residents, resulting in a state of siege where people are unwilling to leave their villages for fear of being arrested on trumped up charges and thrown into prison, or worse. This has taken a terrible toll on their lives and livelihoods. Many within these villages require serious medical attention, only available outside their villages, and livelihoods have suffered.
In as much as
- claims by POSCO and Orissa State govt. about the economic benefits of the project have been conclusively shown to be based on fraudulent data, by MZPSG’s report, among others,
- various government agencies and government-appointed committees including the Comptroller and Auditor General of India, the National Green Tribunal of India, and the Supreme Court of India have found that the processes of land acquisition and environmental clearance of the project have been both undemocratic and illegal,
- support for POSCO directly translates to severe consequences such as loss of life and land, displacement and destitution for the poorest people of Jagatsinghpur and Khandadhar in Orissa
we submit to you that divestment from POSCO is the only responsible course of action.
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