IFC Loan To Uzbek Cotton Firm Risks Fuelling Forced Labour

Market News

IFC Loan To Uzbek Cotton Firm Risks Fuelling Forced Labour

Four Uzbek nationals have filed a complaint against the World Bank's private sector arm, charging that a US$ 40 million loan to an Uzbek textile company risked stoking the practice of forced labour in the central Asian country's cotton fields. The complaint filed with the International Finance Corporation (IFC) demands an investigation into forced labour related to Uzbekistan-based Indorama Kokand Textile. The complaint to an IFC ombudsman made public last week charges that the private lending group "does not have adequate mitigation measures to ensure its investments ... are not supporting forced labour. The complainants request a compliance review of the IFC loan to Indorama Kokand Textile," it said.

The plaintiffs said they believed Indorama's practices breached international law and the IFC's policies against forced labour. "The IFC should support sustainable rural development in Uzbekistan, not projects that perpetuate the government's forced labour system for cotton production," Dmitry Tikhonov, a rights activist living in France and one of the plaintiffs, said in a statement.

IFC spokeswoman Elizabeth Price said the organisation was committed to ensuring responsible labour 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 labour," Price said.

She said the IFC was supporting the Uzbek government in efforts to reform its labour practices and eliminate forced and child labour in the cotton industry. The IFC, which invests in developing the private sector in emerging economies, approved the loan of up to US$ 40 million to Indorama Kokand Textile in December 2015. The loan aims to finance the expansion of a cotton plant in the Uzbek city of Kokan.