Strominvest is a Belarusian construction company focused on developing commercial property and affordable housing projects in Belarus. Strominvest was initially established as a construction Company in 1993 and has been an IFC Client since 2008. IFC’s first project (#26107) with Strominvest was for the development of a commercial real-estate building in Minsk and was approved in June 2008. While the second project (#31993) approved in October 2015 is a corporate loan of US$17 million for development of affordable housing projects in Belarus.

In March 2016, CAO received a complaint from a local Minsk resident who filed on behalf of himself, his mother, and other community members. The complaint raises concerns about possible forced evictions and fear of resettling people against their will to affordable housing built by Strominvest.

CAO found the complaint eligible for further assessment in April 2016. At the conclusion of the assessment, the complainants and Strominvest stated their preference to engage with one another through CAO-facilitated dialogue to try to resolve the complaint. Therefore, in accordance with CAO’s Operational Guidelines, the complaint was referred to CAO’s Dispute Resolution function. As the parties were unable to reach agreement, CAO’s Dispute Resolution function concluded its involvement in this case, and the case has been transferred to CAO Compliance for appraisal of IFC’s performance related to the project.

CAO released its compliance appraisal in March 2018. CAO noted that as IFC’s investment was for general corporate purposes, IFC was required to consider the client’s ability to meet IFC’s E&S requirements across its entire business. IFC’s appraisal, however, focused on an affordable housing project and did not consider whether the client had in place policies that reflected IFC requirements for land acquisition in accordance with Performance Standard 5 (PS5). To the extent that the client was reliant on government involvement in the land acquisition process, IFC’s Sustainability Policy also required an assessment of third party and contextual risk. This type of assessment was absent from IFC’s appraisal documentation.

IFC became aware of the complainant’s concerns regarding a housing development at Timiriazeva (“Timiriazeva project”) through local media and the complaint to CAO in 2016. CAO is concerned that IFC, once notified of the complainant’s concerns, did not review the client’s Environmental and Social Management System to ensure that it reflected the requirements of PS5. However, in October 2017, after the client advised IFC that it was considering reengaging with the Timiriazeva project, IFC advised the client that it would need to apply PS5 to any land acquisition. In doing this IFC, provided advice that was consistent with its obligation to address E&S impacts that were not foreseen at appraisal. In December 2017, the client decided to voluntarily repay the IFC loan due to excess liquidity.

CAO decided to close this case without further investigation. In reaching this conclusion, CAO noted potential non-compliance in relation to IFC’s review and supervision of PS5. CAO also noted IFC advice to the client in October 2017 and the client’s decision to repay the loan in December 2017. While CAO notes the complainant’s assertion that the city government has placed restrictions on his ability to sell his house and his assertion that gas and water to his house had been cut off due to his opposition to the Timiriazeva project, it is not clear that these issues raise questions in terms of compliance with IFC’s requirements for review and supervision of project E&S risks. In these circumstances, CAO decided that a compliance investigation – which would focus on IFC’s application of its E&S standards to the client’s operations - is not the appropriate response.