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Issue 2, February 2004 Oil Giant BP Accused of Major Corruption and Cover-Up on Controversial Caspian Pipeline, Groups Demand Independent InquiryHuman rights and environmental groups demanded an independent inquiry into BP’s controversial Baku-Tbilisi-Ceyhan (BTC) oil pipeline Feb. 18. This inquiry followed allegations in the
A Nov. 2002 BP consultant report warned that the company was “completely out on a limb” over its choice of joint coating for the Azeri and Georgian sectors of the pipeline, which the report noted was likely to result in widespread oil leakage, “astronomical” repair costs and “open-ended” legal liabilities. BP also carried out an internal inquiry into alleged procurement fraud over the coating contract. International funders backing the project were only secured in November and December 2003. Friends of the Earth and other groups insist that an immediate investigation must be launched into whether BP disclosed either the risk of leakage or the fraud investigation to potential funders, as it was legally obliged to do. The company’s failure to disclose the risks from the faulty coating material, if confirmed, could constitute a default under its loan agreements, potentially requiring major funders to suspend their loans. BP has consistently claimed that the BTC project is being built to “the highest international standards.”
Friends of the Earth Criticizes Anti-Environmental Investor Suit Provisions in CAFTA, Highlights Contrast with US - Australia Free Trade Agreement Criticizing the recently released Central America Free Trade Agreement (CAFTA) as a trade deal that will undermine environmental protection, 10 leading environmental groups announced their opposition to the agreement Feb. 18. The groups pointed to CAFTA provisions that will allow foreign investors to challenge hard-won environmental laws and regulations under rules similar to those in NAFTA’s much criticized Chapter 11. The groups said that the investment rules violate the Trade Act of 2002 by providing foreign investors with rights and privileges that go significantly beyond
In bringing these cases, foreign investors can demand monetary compensation for the implementation of legitimate environmental protections. For developing Central American countries, the environmental groups argued, the simple threat of costly investor challenges could freeze adoption of environmental standards. They also said that rules in CAFTA intended to encourage environmental protection are inadequate, and that the environmental safeguards in the agreement are completely lacking in teeth compared to the monetary compensation that multinational corporations can demand under the investment rules. In contrast, Friends of the Earth notes that the US-Australia Free Trade Agreement does not include the highly controversial investment provisions that allow foreign investors to directly sue governments before international tribunals. “The differences between the agreements could have enormous consequences,” said David Waskow, trade policy analyst for Friends of the Earth. “Foreign investors will not be able to use international suits as a club they can wield to challenge Australian environmental laws and regulations, but they will certainly be able to do so in
California Treasurer Launches Landmark “Green Wave” Environmental Investment Initiative On Feb. 3, California State Treasurer Phil Angelides launched a landmark environmental “Green Wave” initiative to bolster financial returns, create jobs and clean up the environment. The four-pronged initiative calls on the State’s two large public pension funds – the California Public Employees’ Retirement System and the California State Teachers’ Retirement System – to marry the jet stream of finance and capital markets with public purpose by committing $1.5 billion to investments in cutting-edge technologies and environmentally responsible companies. The goal of the initiative is to improve long-term financial returns for pensioners and taxpayers through investments in the burgeoning environmental technology sector, while also reducing the risks to the pension funds posed by corporate environmental liabilities.
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