Egypt: Alex Dev Ltd-03/Beni Suef
A group of three former employees claiming to represent 300 other former workers
Labor issues, compliance with national law and IFC standards
80 million euros
IFC has an active project with Titan Group to support and expand its Egyptian cement operations, which consist of two entities: Beni Suef Cement Company (BSCC) and Alexandria Portland Cement Company (APCC). The plants have a combined production capacity of 3.5 million tons per annum (mtpa) and are engaged in an investment program to add a second integrated cement production line of 1.5 mtpa in BSCC and various debottlenecking investments in both plants.
As per IFC, its project with Titan Group for the expansion of their cement manufacturing in Egypt (#27022) was a EUR80 million equity investment in Titan’s investment holding company, Alexandria Development Limited (ADL).
In May 2017, a complaint was lodged with CAO by three former employees of BSCC, claiming to represent more than 300 other former workers through the Egyptian Association for Collective Rights and the Egyptian Center for Civil and Legislative Reform. The complaint raises concerns regarding labor issues, notably involuntary early retirement.
CAO found the complaint eligible for further assessment in July 2017 and an assessment trip was conducted that same month. During the assessment, there was a lack of consensus amongst the parties to engage in a CAO-facilitated dispute resolution process. Hence, in accordance with CAO’s Operational Guidelines, the case was referred to CAO’s Compliance function for appraisal.
The purpose of a compliance appraisal is to determine whether an investigation of IFC's role in the project is merited to provide assurance of IFC’s compliance with relevant environmental and social policies and procedures.
In August 2018, CAO merged this case with a previous case, the Alex Dev Ltd.-02 case (ADL-02), as both cases raise concerns regarding project impacts on the health, safety, and livelihoods of current and former workers that are substantial in nature, considering both the impacts of retrenchment, loss of wages, and workplace injuries, and the number of potentially impacted workers. A review of IFC’s pre-investment due diligence and supervision of the project raised compliance questions relevant to the issues in the complaints, namely, whether IFC discharged its review and supervision duties in relation to:
i. The client’s handling of its ongoing dispute with workers alleging forced early retirement in 2003.
ii. The client’s suspension and retrenchment of workers in 2016/2017.
iii. The client’s OHS policies and practices.
In this context, CAO concluded that the ADL-02 and ADL-03 cases merited a compliance investigation.
In March 2023, CAO finalized its compliance investigation report, identifying non-compliance findings in relation to all three areas of the complaints.
CAO found that IFC should have considered the 2002-2003 retrenchment program a ‘significant historical impact’ under IFC’s Sustainability Policy given its scale and should have ascertained whether Beni Suef Cement Company was complying with relevant national laws. CAO also found that IFC failed to adequately supervise the 2016-2017 retrenchment process affecting seven complainants. As a result, CAO concludes that there are indications of harm to the complainants from this event.
Regarding workers’ health and safety concerns, CAO’s found that IFC’s supervision of OHS requirements was generally adequate. However, the investigation identified non-compliance regarding IFC’s supervision of the company’s use of a nearby sand quarry.
June 15, 2023, IFC submitted a management report to the board, which included a Management Action Plan (MAP). Both CAO and the complainants also submitted separate comments on IFC’s proposed action plan to the Board.
IFC’s management action plan outlines areas for improvement in response to CAO’s systemic recommendations, including that:
• IFC will engage with competent labor organizations with expertise on Egyptian labor law to support ongoing and new investments in Egypt; and.
• IFC will facilitate the organization of a country-level workshop to discuss and understand the gaps, if any, between Performance Standards and Egyptian labor laws with respect to retrenchment practices. The workshop will inform IFC practice to strengthen screening, appraisals, and monitoring of future investments in Egypt.
On November 7, 2023, IFC and CAO issued a joint press release announcing the approval of the Management Action Plan and the publication of the investigation report.
The Board approved IFC’s Management Action Plan on November 2, 2023. After circulating the documents to the parties, CAO published its Investigation Report, IFC’s Management Report, and Management Action Plan on November 6, 2023. In accordance with the CAO Policy, CAO will now monitor the effective implementation of IFC’s Management Action Plan and publish IFC's progress reports on this page and in an annual monitoring report.
Status as of November 6, 2023