LETTER FROM CRUDE ACCOUNTABILITY TO MR. PAUL WOLFOWITZ
Mr. Paul Wolfowitz
President
The World Bank
1818 H Street, NW
Washington, DC 20433
Dear Mr. Wolfowitz:
I am writing you on behalf of the international NGO, Crude Accountability, with regard to the International Finance Corporation’s investment of $150 million into the Karachaganak Petroleum Operating (KPO, B.V.) activity at the Karachaganak Oil and Gas Condensate Field in western Kazakhstan. As you may be aware, in 2002 the IFC provided $150 million in loans to Russia’s LUKoil, one of the partners in the KPO consortium.
This project has caused considerable environmental health damage to local communities around the Karachaganak field, most notably, the village of Berezovka, which is located 5 kilometers from the field. Forty-five percent of the village’s population is chronically ill as a result of atmospheric emissions, water pollution and other contamination from the field.
Karachaganak’s record is so poor that in April 2005, the government of Kazakhstan denied KPO an operating license citing the consortium’s failure to comply with a series of environmental regulations. Among the violations cited were: emitting 56 thousand tons of toxic emissions into the atmosphere during 2004, failure to properly store solid toxic waste on the Karachaganak field, and dumping toxic effluent into the water table.
During this same period, a report by the IFC’s Office of the Compliance Advisor Ombudsman (CAO) found that KPO had failed to comply with IFC standards for public disclosure and information dissemination of environmental and health data impacting local communities. The CAO recommended that KPO reach out to the local community to build greater trust and work toward a more effective relationship. Crude Accountability has offered to work with KPO to meet the recommendations of the CAO, but we have yet to receive any reply from KPO.
Unfortunately, the IFC has repeatedly refused to acknowledge its own responsibility in the shortcomings of the KPO project at Karachaganak. Mr. Rashad Kaldany, Director of the IFC’s Oil, Gas, Mining and Chemicals Department, has sent Crude Accountability numerous letters denying any responsibility.
Crude Accountability wrote a letter of complaint to Mr. Wolfensohn on January 31, 2005, requesting that the World Bank and the Board of Directors investigate the situation at Karachaganak. We received a short response stating that until the CAO report was issued, Mr. Wolfensohn would be unable to respond. The CAO report was issued on April 15, 2005, and on June 20, 2005, in a truly Orwellian turn of events, Crude Accountability received a response to our inquiry from Mr. Kaldany—the object of our complaint. Mr. Kaldany advised Crude Accountability to, “engage with the project operator and use the project’s grievance mechanism for any matters that remain of concern,” apparently washing his hands of this matter.
I am writing to request a meeting with you to discuss the situation at Karachaganak and the World Bank’s role in alleviating poverty and working for the benefit of the people living around Karachaganak—in accordance with the Bank’s mission.
I have attached for your reference the CAO report, and Crude Accountability’s correspondence with Mr. Kaldany and Mr. Wolfensohn. Additional background information on this situation is available at www.crudeaccountability.org. I look forward to hearing from you soon, and thank you in advance for your consideration of this matter.
Sincerely,
Kate Watters
Executive Director
Cc: Meg Taylor, CAO
July 12, 2005