Jul 8, 2016
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World Bank arm's loan to Uzbek cotton firm risks fuelling forced labor, say activists

Jul 8, 2016

Four Uzbek nationals have filed a complaint against the World Bank's private sector arm, charging that a $40 million loan to an Uzbek textile company risked stoking the practice of forced labor in the central Asian country's cotton fields.

The complaint filed with the International Finance Corporation (IFC) demands an investigation into forced labor related to Uzbekistan-based Indorama Kokand Textile.

Human rights groups say Uzbekistan operates a massive, state-orchestrated forced labor system that underpins its position as the world's fifth-largest cotton exporter.

The U.S. government's annual report on human trafficking, published last week, said "(Uzbek) government-compelled forced labor of adults remained endemic in the 2015 cotton harvest."

The complaint to an IFC ombudsman made public on Thursday charges that the private lending group "does not have adequate mitigation measures to ensure its investments ... are not supporting forced labor."

"The complainants request a compliance review of the IFC loan to [Indorama Kokand Textile]," it said.

IFC spokeswoman Elizabeth Price said the organization was committed to ensuring responsible labor practices in the projects it finances.

"Indorama Kokand Textile ... can trace its cotton supply to ensure it sources only from areas covered by third-party monitoring against child and forced labor," Price told the Thomson Reuters Foundation.

She said the IFC was supporting the Uzbek government in efforts to reform its labor practices and eliminate forced and child labor in the cotton industry.

The IFC, which invests in developing the private sector in emerging economies, approved the loan of up to $40 million to Indorama Kokand Textile in December 2015, according to its website.

The loan aims to finance the expansion of a cotton plant in the Uzbek city of Kokan, the website said, with a view of encouraging exports.

Indorama Kokand Textile, a leading cotton producer in Uzbekistan, says on its website that more 90 percent of its production is for export to Latin America, Europe, Bangladesh, former Soviet countries as well as Turkey.

A spokesman for Indorama Corporation, a majority owner of Indorama Kokand Textile through a chain of subsidiaries, said the company was studying details of the charges to "establish their veracity".

"Indorama Corporation has a strict policy of zero tolerance on use of any form of forced labor," spokesman Prakash Kejriwal said in an emailed statement.

"Indorama Kokand Textiles works closely with IFC to ensure adherence to IFC's labor standards and to eliminate the risk of forced labor in its cotton supply chain."

The plaintiffs said they believed Indorama's practices breached international law and the IFC's policies against forced labor.

"The IFC should support sustainable rural development in Uzbekistan, not projects that perpetuate the government's forced labor system for cotton production," Dmitry Tikhonov, a rights activist living in France and one of the plaintiffs, said in a statement.

The plaintiffs are an Uzbek national described as a victim of forced labor, whose identity was concealed, and three Uzbek human rights campaigners.

On a visit to Uzbekistan last year, U.N. Secretary-General Ban Ki-moon urged the country's president, Islam Karimov, to stop using forced labor in cotton fields.

Requests for comments by email and phone to the Uzbekistan embassy in Washington were not immediately returned.


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