Human Rights Monitoring Assessment for the BTC & SCP Projects in Georgia January 31, 2006

Transcription

1 Human Rights Monitoring Assessment for the BTC & SCP Projects in Georgia January 31, 2006 Prepared by: Gare A. Smith Daniel Feldman Jonas Monast

2 ABBREVIATIONS AND DEFINITIONS AGT Companies or AGT Acronym for Azerbaijan-Georgia-Turkey Companies, or, jointly, BTC Co. and SCP Co. AGT Projects The Baku-Tbilisi-Ceyhan Pipeline Project and the South Caucasus Pipeline Project APLR Association for the Protection of Landowners Rights Assessment This immediate document, i.e. the Human Rights Monitoring Assessment BTC Co. Baku-Tbilisi-Ceyhan Company CDAP Caspian Development Advisory Panel CLO Community Liaison Officer Contractor Any company with a direct contractual relationship with the AGT Companies, including SPJV Construction Phase The period of time during which construction of the BTC and SCP pipelines and facilities occurs, until all construction is complete ESIA Environmental and Social Impact Assessment ESMS Environmental and Social Management System HGA Host Government Agreement Host Government(s) Each or all of the Republic of Azerbaijan, the Republic of Georgia, and the Republic of Turkey HSE Health, Safety and Environment Human Rights Commitments Those commitments defined in section 2.4 below IFC International Finance Corporation ILO International Labor Organization Major Contracts Contracts between BTC Co. and SPJV (or the equivalent contracts between SCP Co. and SPJV), specifically: Contract C-02-BTC-45198: Onshore Pipeline Installation Georgia; Contract C-02-BTC-45197: Facilities Installation Georgia. Monitoring Visit Monitors trip to Georgia of July 18-23, 2005 Monitors/Monitoring Team Foley Hoag LLP attorneys Daniel Feldman and Jonas Monast - ii -

3 NGO Non-Governmental Organization OECD Organization for Economic Cooperation and Development Operations Phase The period of time during which BTC and SCP pipelines and facilities are operational, after construction has been completed Operator BTC Co. and SCP Co. Prevailing Legal Regime The legal regime applicable to the BTC Project PSG1 Pump Station Georgia 1 PSG2 Pump Station Georgia 2 SCP Co. South Caucasus Pipeline Company SPJV Spie Capag Petrofac Joint Venture SRAP Social and Resettlement Action Plan Subcontractors Any contractor to whom any part of Project work has been sub-contracted UDHR The Universal Declaration of Human Rights Voluntary Principles The Voluntary Principles on Security and Human Rights - iii -

4 TABLE OF CONTENTS I. EXECUTIVE SUMMARY Overview Summary of Findings and Recommendations Level 1 -- High Risk: Potential Breach of AGT s Human Rights Commitments Level 2 -- Medium Risk: Areas of Concern that Could Lead to a Breach of AGT s Human Rights Commitments if Left Unaddressed Level 3 - Low Risk: Unlikely to Lead to Breach of AGT s Human Rights Commitments No Action Necessary AGT Project in Apparent Compliance Notable Progress and Leadership Highlights...6 II. MONITORING AS A MEANS OF MANAGING LEGAL AND REPUTATIONAL RISKS Background Human Rights Monitoring Assessment Scope of Monitoring Visit and Assessment AGT Human Rights Commitments Non-Discrimination Freedom of Association Working Conditions and Remuneration Forced Labor Child Labor Migrant and Temporary Labor Occupational Health and Safety Freedom of Opinion and Expression Minority/Ethnic Rights Freedom from Torture Freedom of Movement Anti-Corruption Labor Grievance Procedures Temporary and Voluntary Resettlement Methodology Employed for Monitoring Visit and this Assessment Structure of the Monitoring Assessment...15 III. ASSESSMENT Introduction Framework for Implementation of Human Rights Commitments Human and Labor Rights Findings in Georgia Non-Discrimination Freedom of Association Working Conditions and Remuneration Forced Labor iv -

5 3.3.5 Child Labor Migrant or Temporary Labor Occupational Health and Safety Freedom of Opinion and Expression Minority/Ethnic Rights Freedom from Torture Freedom of Movement Anti-Corruption Labor Grievance Procedures Temporary or Voluntary Resettlement...28 IV. RECOMMENDATIONS Introduction Recommendations Regarding Implementation of Human Rights Commitments Non-Discrimination Freedom of Association Working Conditions and Remuneration Forced Labor Child Labor Migrant or Temporary Labor Occupational Health and Safety Freedom of Opinion and Expression Minority/Ethnic Rights Freedom from Torture Freedom of Movement Anti-Corruption Labor Grievance Procedures Temporary or Voluntary Resettlement v -

6 I. EXECUTIVE SUMMARY 1.1 Overview This Human Rights Monitoring Assessment (the Assessment ) was commissioned by BP Exploration Caspian Sea Ltd. to monitor the implementation of commitments by the Baku- Tbilisi-Ceyhan ( BTC Co. ) Project and the South Caucuses and Shah Deniz Pipelines ( SCP Co. ) (collectively the AGT Projects or the AGT Companies ) to respect the fundamental human rights of their employees and members of local communities affected by the AGT Projects. The independent Monitoring Team, comprised of attorneys Daniel Feldman and Jonas Monast from the U.S. law firm of Foley Hoag LLP, visited Georgia from July 18 through July 23, The Monitoring Team s mandate was to assess BTC Co. and SCP Co. s compliance with their Human Rights Commitments in the Republic of Georgia, including through their Contractors and Subcontractors. The Assessment is grounded in international legal standards regarding human and labor rights, as they are defined by AGT s Prevailing Legal Regime. Management of BTC Co., SCP Co., Contractors, and Subcontractors provided the Monitors with access to all requested documents, workers, and affected communities. This access, and the confidential nature of the interviews conducted, produced a snapshot of the state of compliance in Georgia with respect to AGT s Human Rights Commitments. The Assessment does not purport to be a fully comprehensive or statistically significant evaluation. The Monitors conducted in-depth interviews, on an anonymous basis, to encourage full disclosure by participants, and met with a broad array of those affected by the AGT Projects. In addition to interviews with representatives from BTC. Co., SCP Co., and Contractors management, key non-governmental organizations ( NGOs ), and villagers from four projectaffected communities, the Monitors conducted more than 50 interviews with SPJV and Subcontractor employees. Interviewees generally spoke openly about their experiences working with the AGT Projects -- as evidenced by the wide spectrum of views presented. Workers and community members expressed both satisfaction and frustration with AGT policies and working conditions. Many were appreciative that AGT had requested human rights monitoring. 1.2 Summary of Findings and Recommendations Overall, the Assessment finds the AGT Projects to be in substantial compliance with AGT s Human Rights Commitments in Georgia and, most importantly, that there were no high priority breaches or potential breaches of these commitments. In most instances in which Monitors identified areas of concern the situation could be remedied through improved or expanded procedures, monitoring, and communication between AGT, SPJV, and Subcontractors. This Section summarizes the Monitors major findings and recommendations. Detailed findings can be found in Subsection 3.3 and Monitors recommendations can be found in full in Section IV. The findings and recommendations are presented within the ambit of three categories. Level 1 cites potential breaches of AGT s Human Rights Commitments requiring immediate corrective action. Level 2 cites areas of concern that could lead to a breach of AGT s

7 Human Rights Commitments if left unaddressed. Level 3 cites issues that deserve attention, but are unlikely to lead to breaches of AGT s Human Rights Commitments. Since the Construction Phase of the AGT Projects is almost complete, it is critical that BTC Co. and SCP Co. ensure that any procedures that are adopted to monitor and communicate with Contractors are adapted to future contractors that will be active in the long-term Operations Phase of the AGT Projects. For this reason, the full Recommendations presented in Section IV were drafted to be equally relevant to the AGT Projects during the Operations Phase Level 1 -- High Risk: Potential Breach of AGT s Human Rights Commitments Monitors found no high priority breaches or potential breaches of the Human Rights Commitments Level 2 -- Medium Risk: Areas of Concern that Could Lead to a Breach of AGT s Human Rights Commitments if Left Unaddressed. Monitors findings with respect to Non-Discrimination, Working Conditions and Remuneration, Anti-Corruption, and Labor Grievance Procedures could lead to violations of the Human Rights Commitments. Although no specific findings were made in the Freedom of Association or Freedom of Opinion and Expression categories, those issue areas are also listed under Level 2 because of factors that created a general reluctance on the part of workers to freely associate and express their opinions. In particular, there were several factors which appeared to make workers reluctant to raise concerns about their working conditions. One was the widespread use of month-to-month contracts with the unskilled labor force. Another was that few employees knew about the Contractor s labor grievance procedures by which to file complaints. Moreover, in the absence of widely communicating a non-retaliation policy, most workers interviewed feared raising concerns with management. Employees of Subcontractors were particularly vulnerable, because it did not appear that the Subcontractors had any labor grievance procedure policies in place. Workers interviewed were wholly ignorant of any such grievance procedures or policies by AGT or the primary construction contractor, the Spie Capag Petrofac Joint Venture ( SPJV ). These factors, in and of themselves, do not indicate that worker rights have been violated, and there are well-recognized business reasons for utilizing month-to-month contracts. They do, however, potentially complicate efforts by the AGT Companies to identify and address concerns in a proactive and timely manner. For example, workers who are perceived as troublesome may risk not having their contracts renewed. In Monitors opinion, in the absence of job security, many workers were justifiably concerned about raising complaints regarding the terms of their employment. In an effort to address these issues systemically, since they touch upon many categories in the Human Rights Commitments, Monitors recommend a variety of initiatives, including: Communicating widely AGT s labor grievance and non-retaliation policy and ensuring that all Contractors and principal Subcontractors adopt similar policies

8 Reviewing labor grievance procedures used by AGT, Contractors, and principal Subcontractors for their scope and effectiveness -- particularly how Subcontractor workers are included in the procedures. Conducting appropriate education and training regarding the labor grievance and non-retaliation policy procedures with Contractor and Subcontractor workers, as well as their supervisors. This should be part of a comprehensive training program conducted for all AGT, Contractor, and Subcontractor management regarding fundamental worker rights, and should specifically address International Labor Organization ( ILO ) Conventions and the current status of rights granted by the Georgian Labor Code. Ensuring more widespread use of drop boxes in camps and the adoption of other mechanisms by which workers can make anonymous complaints. In particular, AGT should consider more widely publicizing and utilizing BP s successful Open Talk program and increasing Contractors and principal Subcontractors awareness of this mechanism. Creating Industrial Grievance Officer positions, which would have responsibility within work camps or pump station facilities for educating all employees regarding fundamental human rights and labor rights issues, and receiving grievances about alleged violations of such policies from employees engaged in the AGT Projects, whether employed by AGT, SPJV, or major Subcontractors. Among other findings classified as Level 2 Non-Discrimination concerns, Monitors heard non- specific allegations, initially from a local NGO, of sexual harassment at AGT work camps. Monitors were unable to substantiate the allegations, however. Monitors specifically asked about sexual harassment issues with each of the female interviewees, but only one interviewed worker claimed that she had experienced any harassment, and she was unwilling to provide any details regarding this issue. Indeed, most of the women interviewed vociferously denied that sexual harassment was an issue. The little information Monitors were able to gather did not include any specifics regarding the nature and scope of the alleged harassment, who was involved, how widespread any actions were, or if any victim had sought to report harassments. Monitors heard allegations that SPJV employment contracts varied among expatriate employees in like positions, with European expatriates receiving more generous compensation and rotation schedules than non-european expatriate workers. Monitors also heard allegations that local employees who held skilled positions were paid less than expatriates in like positions. Therefore Monitors recommend AGT should continue to strive to create similar work conditions for those employed in like positions, whether employed by AGT, a Contractor, or a Subcontractor. In addition, local employees indicated a general sense of inequity due to the separate cafeterias used by AGT managers, SPJV managers, and unskilled workers in many of the camps. On this basis Monitors recommend that AGT encourage Contractors and Subcontractors to adopt a policy that promotes the equal treatment of all employees, regardless of professional or educational background

9 Within the Working Conditions and Remuneration context, a small number of SPJV and Subcontractor workers interviewed expressed some disagreement and confusion over such matters as the proper multiplier for overtime wages, overtime rates for work on public holidays, and compensation for travel time. In addition, some workers -- primarily those employed by Subcontractors -- reported signing monthly employment contracts but not often receiving copies, which may have contributed to this confusion. AGT management and worker interviews confirmed that workers regularly exceed the overtime limit of 120 hours per year set by the Georgian Labor Code. Monitors note, however, that under the Prevailing Legal Regime, the AGT Project is not required to follow any employment practices that exceed those international labor standards or practices customary in international Petroleum transportation projects. 1 Accordingly, the Prevailing Legal Regime indicates that Contractors and Subcontractors are not compelled to abide by an overtime provision that clearly exceeds customary standards in similar projects. Because this is an ongoing concern to NGOs, it is recommended that AGT prepare an analysis on the overtime issue. AGT legal opinions regarding Project overtime indicate that international labor standards or practices which are customary in international Petroleum transportation projects, rather than the Georgian Labor Code, are applicable. AGT should supplement these opinions with an analysis of the international labor standards or practices which are customary in international Petroleum transportation projects, as referenced in the Georgian HGA. AGT should also develop a comprehensive policy specifying the governing labor standards and identifying those areas where international standards apply in lieu of the Georgian Labor Code. Monitors also heard questions regarding the use of monthly contracts for long-term and indefinite projects. While AGT is confident that such contracts comply with Georgian law, Monitors suggest that worker rights under monthly contracts should be clarified. In light of the highly visible role that demobilization will play in the AGT Projects during the next few months, and that workers have little information regarding how such decisions will be made, Monitors also recommend that AGT ensure that all demobilizations of personnel during the final Construction Phase are undertaken as transparently as possible. This will help to minimize or eliminate potential employee concerns that demobilization could serve as a form of retaliation. AGT should continue to ensure that the hiring of employees working full time on BTC Co. or SCP Co. sites by Contractors or Subcontractors for the Operations Phase of the AGT Projects is performed as consistently and transparently as possible. Skilled employees should be employed solely on merit and unskilled employees randomly selected from local villages along the pipelines route. Monitors findings regarding Anti-Corruption were generally positive, as there were no allegations of improper behavior by AGT or SPJV management. There were, however, some specific and seemingly credible allegations of local corruption in the hiring process (i.e. not 1 Host Government Agreement, Georgia, Clause

10 systemic and not involving AGT or SPJV management), including alleged instances of bribery for jobs. Although the random selection process used by SPJV and the Subcontractors to hire unskilled workers from local communities was generally successful, it appeared possible to circumvent this hiring process. With regard to Temporary or Voluntary Resettlement, Monitors found no evidence that any person had been removed from his or her home as a result of AGT Project construction. During meetings held with four local communities, frustration was expressed to Monitors by villagers who alleged a lack of timely responsiveness from AGT and SPJV about complaints regarding land and property. In addition, there remains a general sense of confusion among community members regarding some ongoing aspects of the AGT Projects, such as the allowable uses for the 500-meter corridor along the right-of-way. Due to the ongoing nature of these community concerns, which Monitors assume will extend into the Operations Phase of the AGT Projects, Monitors recommend that AGT retain Community Liaison Officers ( CLOs ) and Land Officers for a period of at least one full year from the commencement of Operations. Monitors understand that AGT has already committed to this extension in the time period since the Monitoring Visit. AGT should also continue to provide communities with information in an ongoing and pro-active manner. For example the information contained in the land use booklet, which Monitors are advised at the time of publication of this Assessment, is being distributed to affected landowners Level 3 -- Low Risk: Unlikely to Lead to Breach of AGT s Human Rights Commitments Monitors made several other findings, particularly in the areas of HSE, Working Conditions, and Non-Discrimination, that are categorized as low risk. These Level 3 concerns include issues that are unlikely to lead to a breach of the AGT Projects Human Rights Commitments, but which nonetheless merit attention. Monitors generally observed high levels of compliance with HSE policies and procedures by AGT, SPJV, and Subcontractors. A minor violation was observed, however, when workers for one AGT contractor were not equipped with personal protective equipment ( PPE ) 2. Monitors have subsequently been advised that distribution of PPE to this contractor s employees has been addressed. In addition to the Non-Discrimination concerns and corresponding recommendations listed previously, Monitors heard feedback from employees interviewed that some expatriate managers seemed not to be respectful of local employees due, at least in part, to language barriers. Although this issue does not rise to a Level 2 concern, Monitors suggest that Contractors and Subcontractors seek to minimize miscommunications between employees who speak different languages, perhaps by ensuring that at least one employee at each work site is conversant in the major languages spoken at the site. Other low risk concerns include specific findings about workplace conditions. 2 Laborers on the right-of-way, but outside the construction area, were not wearing high visibility vests

11 1.2.4 No Action Necessary AGT Project in Apparent Compliance Monitors did not find evidence of problems regarding implementation of the commitments to Forced Labor, Child Labor, Migrant or Temporary Labor, Minority/Ethnic Rights, Freedom from Torture, or Freedom of Movement. Consequently, no actions are recommended in these areas. 1.3 Notable Progress and Leadership Highlights In general, BTC Co. and SCP Co. efforts to address human rights-related issues follow the best practices for the industry and, in some instances, set new standards. The fact that Monitors found no high priority breaches or potential breaches of the Human Rights Commitments reflects this achievement -- particularly inasmuch as, rather than monitoring randomly, Monitors made a point of visiting regions that were perceived as troublesome or problematic. -The impression in the field that BTC Co. and SCP Co. s commitments to respecting human rights are genuine, and come from the highest echelons of the AGT Companies, appears to have empowered employees to embrace and implement human rights standards. As a consequence, there are several areas in which AGT s commitment to human rights is making a noticeable impact on the ground. The AGT Companies should be recognized for the manner in which they have responded to and managed the frequent work stoppages throughout Georgia. In their many meetings and interviews with workers, community members, and NGOs, Monitors did not hear any claims that AGT, its Contractor, or any affiliated entity sought to employ force to end a work stoppage. To the contrary, AGT has established a process that is quite effective in resolving the stoppages in a manner that respects the rights of all participants, and interested parties were quick to credit AGT for their policies and actions to this effect. During the past few years, residents in the city of Rustavi have posed a unique challenge, and the AGT Companies approach to their concerns is noteworthy. Although the pipeline rightof-way passes within approximately 200 meters of a block of Rustavi apartment buildings, the size of the city population prevented the area from being classified as an affected community under the Community Investment Program which was launched in February As an urban community, however, the relevant micro-districts were targeted for assistance under the Improved Schools Program which was launched in mid Residents of the relevant microdistricts filed a complaint with the IFC Ombudsman in March During the course of the past year, however, AGT s increased liaison efforts and launching of the Improved Schools Program has significantly improved relationships. Implementation of the AGT Projects HSE program is also noteworthy. With the exception of a minor HSE violation by some short-term laborers employed by one of the AGT Contractors, there was a uniformly high level of worker awareness of and conformity with HSE standards. The top-to-bottom implementation of HSE rules and regulations demonstrates the value BTC Co. and SCP Co. place on worker safety. AGT could use the capacity they have - 6 -

12 developed through the implementation of these HSE standards as a model with respect to the implementation of human rights standards. Monitors were also impressed that although there were laborers on the AGT Projects from numerous countries, reflecting many different ethnic groups, there were few complaints alleging discrimination. Indeed, some workers interviewed spoke positively about their sense of inter-ethnic teamwork on the AGT Projects. There appears to have been a concerted effort by AGT, SPJV, and Subcontractors to remedy issues related to working conditions that were raised earlier in the Construction Phase of the AGT Projects. For example, workers indicated that over the past year, the quality of food at work camps had improved; late payments by Subcontractors had been remedied; pay slips were typically included with time sheets, thereby providing workers with more knowledge about the calculation of their salaries; and overtime pay was typically provided. Although some communities expressed significant frustration with the AGT Projects, community members also typically expressed appreciation for the work of both the AGT and SPJV CLOs, and recognized the efforts that AGT was making to form positive relationships with the communities. In addition, community members often possessed very specific information regarding their land issues, suggesting that the CLOs and land team were effectively disseminating information about the land claim processes. Finally, although Monitors heard allegations of low-level corruption (i.e. not sanctioned by AGT or SPJV, nor committed by AGT or SPJV management), they also found good faith efforts to fight corruption at all levels of the AGT Project. Management of AGT Companies and the Contractors are clearly committed to foiling attempts by third parties to solicit bribes and to ensuring that the AGT Projects do not engage in any forms of corruption

13 II. MONITORING AS A MEANS OF MANAGING LEGAL AND REPUTATIONAL RISKS 2.1 Background Seminal initiatives have been established to manage and mitigate human rights-related risks presented by the AGT Projects to their investors. 3 Such initiatives include commitments to lenders regarding social and environmental issues, the adoption of provisions referencing international human and labor rights standards in project agreements with Host Governments, and explicit commitments regarding human rights standards made by and among the parties -- including in such documents as the BTC Human Rights Undertaking, the Joint Statement, and the Security Protocol. These documents, which together comprise the BTC Project s Prevailing Legal Regime 4, and the circumstances in which this regime may be applied, commit AGT to respecting the highest of applicable internationally-recognized human rights standards. The AGT Projects are being implemented concurrently, utilizing the same BP-led project team and external construction contractors and subcontractors. BP Exploration Caspian Sea, Ltd. is the manager of the BTC Project which, pursuant to the BTC/SCP Cooperation Agreement, has the lead in implementing all activities. The AGT Projects have one primary construction contractor (SPJV) in Georgia and a number of other smaller Contractors. SPJV is responsible for building the pipeline, as well as the construction of related facilities, such as pump stations. SPJV engages a number of Subcontractors. The AGT Companies relationships with SPJV will end once their respective construction projects are complete. Currently, the vast majority of workers engaged on the BTC and SCP pipelines are involved in construction, and employed directly by SPJV. Upon completion of the Construction Phase of the pipelines, however, employees responsible for the ongoing operation of the pipelines will work for BP, the operator of the pipelines. 3 The BTC pipeline spans 1,768 kilometers, and will be capable of transporting up to one million barrels of crude oil per day from the Azeri-Chirag-Gunashli ( ACG ) oil field in the Caspian Sea, across Azerbaijan, Georgia, and Turkey to a terminal in Ceyhan, Turkey. The BTC consortium consists of 11 shareholders. SCP will carry gas from the Shah Deniz field to customers in Azerbaijan, Georgia, Turkey and other countries. It follows the route of the BTC crude oil pipeline for 690 kilometers through Azerbaijan and Georgia to Turkey, where it will be linked to the Turkish gas distribution system. Upon completion, the pipeline will be capable of carrying up to seven billion cubic meters of gas each year from the Shah Deniz offshore field in the Caspian Sea. The SCP consortium consists of seven shareholders. BP p.l.c. is acting as Operator for and on behalf of the shareholder companies of both BTC and SCP. 4 The Prevailing Legal Regime is the legal framework that governs the construction and operation of the BTC pipeline. The Prevailing Legal Regime is founded on an intergovernmental agreement among the Republic of Azerbaijan, the Republic of Georgia, and the Republic of Turkey (the IGA ), and is further composed of a group of HGAs, Environmental and Social Impact Assessments ( ESIAs ), the Joint Statement issued by BTC Co. and representatives of the host governments, the BTC Human Rights Undertaking, the Security Protocol, existing national law, applicable public international law, BP policies, certain lender institution policies, and any additional documents that are entered into between BTC Co. and any of the Host Governments. The Prevailing Legal Regime is further described in the Citizen s Guide to the BTC Project Agreements: Environmental, Social and Human Rights Standards, relevant excerpts of which are attached as Appendix C

14 For the Operations Phase of the pipelines, the AGT Projects will utilize other contractors to manage such discrete areas as security, catering, and the operation of worker camps and guest houses. This forthcoming change in responsibilities will be significant, as AGT management will need to ensure that all new contractors understand and comply with the human rights commitments undertaken by both the BTC and SCP Projects. 2.2 Human Rights Monitoring Assessment This Assessment of the AGT Projects was commissioned by BP Exploration Caspian Sea Ltd. in order to monitor the AGT Companies implementation of commitments under the Prevailing Legal Regime regarding respect for fundamental worker rights and the human rights of members of local communities affected by the Projects. A parallel monitoring initiative was undertaken with respect to Project activities in the Republic of Azerbaijan, and a similar assessment will also be performed in the Republic of Turkey. This Assessment does not evaluate the AGT Companies implementation of security-related initiatives that address human rights commitments, which is the subject of a discrete monitoring undertaking. Although compliance with lender auditing and monitoring requirements is necessary, it is not sufficient to ensure Project compliance with the human rights obligations under the Prevailing Legal Regime. Indeed, the full range of human rights standards and obligations to which the AGT Companies are subject are not per se the subject of lender monitoring. Consequently, the AGT Companies and their investors have implemented multiple layers of monitoring, both internal and external, to provide the AGT Companies and the public with a comprehensive assessment of the AGT Companies performance. Monitoring efforts include, inter alia: the Caspian Development Advisory Panel ( CDAP ), 5 the Social and Resettlement Action Plan ( RAP ) Monitoring Panel, 6 local NGOs, and internal company monitoring, as well as distinct security monitoring efforts. The Monitoring Visit conducted for this Assessment was undertaken as part of AGT s Ten Layers of Monitoring, Assurance, and Oversight. An illustration of these layers is attached as Appendix E. Four of those layers are internal monitoring. The other six layers, including this Assessment, are external monitoring. 2.3 Scope of Monitoring Visit and Assessment The Monitoring Team, visited Georgia from July 18 through July 23, (For biographies of Monitoring Team members, see Appendix D.) The Monitors met with AGT Project and SPJV management at company headquarters in Tbilisi, and subsequently traveled incountry along the pipeline right-of-way to meet with and interview additional AGT personnel 7, 5 According to its mandate, CDAP is to provide BP with objective advice on the economic, environmental, and social impacts of the BTC pipeline and other related BP activities in the three host countries. 6 The Social and RAP Expert Panel Monitoring assesses the Companies progress with implementing the RAP, as well as community impacts related to the AGT Projects. 7 Although the Companies do not themselves have employees, this Assessment will use the terms AGT Projects Team, AGT personnel, and AGT staff to describe those persons seconded to the Companies by BP (as Manager) and - 9 -

15 SPJV management, other Contractor and Subcontractor representatives, workers, and individuals from affected communities. The Monitoring Team s mandate was to assess BTC Co. and SCP Co. s compliance in Georgia, including through their Contractors and Subcontractors. The focus of the Assessment is grounded in international legal standards regarding human and labor rights, as they are defined by the Prevailing Legal Regime. 8 During the Monitoring Visit, the Monitoring Team made all critical decisions on whom to interview, what questions to ask, and which issues to pursue in its investigation. AGT personnel provided the Monitors with access to all requested documents, AGT executives, contractor management, pipeline construction workers and work camp employees, and representatives of NGOs. This access, and the interviews conducted, produced a snapshot of the state of AGT s compliance with the applicable human rights standards in Georgia. BTC Co. and SCP Co. efforts to address human rights-related issues follow the best practices for the industry and, in some instances, set new standards. Although a number of activities for BTC Co. and SCP Co. are joint (e.g., land acquisition, the required ESIAs, and construction contracting), some BTC rights-related components have not yet been incorporated into SCP, these include the Joint Statement and Human Rights Undertaking. According to AGT it is currently seeking to have the Joint Statement signed by the respective Governments and the unilateral SCP Human Rights Undertaking will become effective on signing of the Joint Statement. When this occurs both documents will be published on the Caspian development website AGT Human Rights Commitments The AGT Companies are committed, under the Prevailing Legal Regime, to respecting the highest applicable internationally-recognized human rights standards. These standards are set forth within, among other central documents, the United Nations Universal Declaration of Human Rights ( UDHR ), the Core Conventions of the ILO, the Guidelines for Multinational Enterprises promulgated by the Organization for Economic Cooperation and Development ( OECD ), the European Convention on Human Rights, and the Voluntary Principles on Security and Human Rights ( Voluntary Principles ). The Prevailing Legal Regime, therefore, contains protections for the internationallyrecognized human rights of all Project workers and the residents of the communities in which they operate. The aim of the regime is to create a business environment in which the inherent dignity and worth of each person and the equal rights of all men and women are affirmed, and prohibit participation in any activities that could lead to violations of those rights. their shareholders, or retained directly by BP or the Companies as contractors and the staff of the engineering procurement management company, Bechtel. 8 Monitors are not, and do not purport to be, experts on local Georgian law

16 The AGT Companies have made the following commitments (hereinafter, the Human Rights Commitments ), with respect to these standards Non-Discrimination The AGT Companies, including their Contractors and Subcontractors, have policies and procedures in place to ensure that all persons are treated as equals, without regard to race, color, sex, language, religion, political or other opinion, national or social origin, property, birth or other status, subject to internationally accepted national exceptions designed to promote the rights of women and minorities Freedom of Association The AGT Companies, including their Contractors and Subcontractors, shall respect the right of workers to collective representation. The AGT Companies shall not interfere with workers right to freedom of association with others, including the right to form and join trade unions for the protection of their interests Working Conditions and Remuneration The AGT Companies, including their Contractors and Subcontractors, shall respect the rights of workers to rest and leisure, fair wages, and equal remuneration of work, including reasonable limitation of working hours and periodic holidays with pay Forced Labor The AGT Companies, including their Contractors and Subcontractors, shall not engage in, and should contribute to the abolition of, forced labor. Forced labor consists of all work or service, not voluntarily performed, that is exacted from an individual under threat of force or penalty Child Labor The AGT Companies, including their Contractors and Subcontractors, shall not engage in, and should contribute to the abolition of, harmful child labor. In the event that children under the age of 18 are employed by the AGT Projects, the children should be protected from economic exploitation, and from performing work that is likely to be harmful, hazardous, or to interfere with a child s education or development. Harmful child labor consists of the employment of children that is economically exploitative, or is likely to be hazardous to, or interfere with, a child s education, or to be harmful to a child s health, or physical, mental, spiritual, moral, or social development. 9 Not all the rights articulated within the international human rights agreements referenced in the Prevailing Legal Regime are relevant to the activities of multinational enterprises or the BTC Project

17 2.4.6 Migrant and Temporary Labor Migrant workers employed by the AGT Companies, including their Contractors, or their Subcontractors, shall enjoy treatment not less favorable than that which applies to nationals of the country of employment in respect of remuneration and other terms and benefits of employment. Migrant workers have the right to liberty and security of their persons, including the right to be free of forced labor, and to depart freely from any country subject to restrictions consistent with international law. Migrant workers shall not have their identity and travel documents destroyed by anyone other than a public official authorized by law Occupational Health and Safety The AGT Companies, including their Contractors and Subcontractors, shall take all appropriate steps to ensure the health and safety of workers. The AGT Projects shall be developed and executed in material compliance with BP Health, Safety and Environment ( HSE ) policies. The Projects shall comply with or exceed the requirements of national laws of the host countries regarding environmental, health, and safety standards, including those that protect core labor standards and related treaties ratified by host countries Freedom of Opinion and Expression The AGT Companies, including their Contractors and Subcontractors, shall respect the rights of workers to freely express opinions, ideas, and beliefs. This freedom of expression shall include the freedom to seek, receive, and impart information and ideas of all kinds, either orally, in writing, or in print, in the form of art, or through any other media of an individual s choice. The right of peaceful assembly is also to be recognized Minority/Ethnic Rights The AGT Companies, including their Contractors and Subcontractors, shall respect the ethnic, cultural, linguistic, and religious identity of each person, and contribute insofar as practical to promoting conditions for the maintenance of their cultural heritage. Members of cultural and ethnic minorities shall have the opportunity to participate in the benefits of AGT activities Freedom from Torture The AGT Companies, including their Contractors and Subcontractors, shall strictly prohibit the use of any form of physical or psychological coercion by any person employed by or associated with the Project Freedom of Movement The AGT Companies, including their Contractors and Subcontractors, shall not interfere with any person s right to liberty of movement

18 Anti-Corruption The AGT Companies, including their Contractors and Subcontractors, shall refrain from engaging in corrupt practices. They shall comply with the laws of each of the Host Governments, in conformity with the Prevailing Legal Regime Labor Grievance Procedures The AGT Companies, including their Contractors and Subcontractors, shall ensure that workers and third parties are able to raise grievances about Project-related activities, and that such grievances are acted upon in an appropriate manner Temporary and Voluntary Resettlement The AGT Companies, including their Contractors and Subcontractors, shall avoid the permanent and involuntary resettlement of affected individuals. In the event that temporary resettlement is necessary, AGT shall seek the consent of affected individuals, minimize the amount of time required for resettlement, assist these individuals in returning to their land, and provide adequate compensation. 2.5 Methodology Employed for Monitoring Visit and this Assessment Although the number of laborers working on the pipelines was highest during the peak construction phases of the BTC and SCP Projects from late 2003 through early 2005, at the time of the Monitoring Visit there were still hundreds of individuals working on the Projects, and tens of thousands of local citizens impacted by it. Inasmuch as the Monitors spent only 5 days in the field, the Monitoring Visit was not designed to gather a statistically significant data sample. Nor did the Monitors have the capacity to investigate the allegations recorded during worker interviews, and therefore these allegations cannot be substantiated. Instead, this Assessment was conceived to produce a snapshot regarding the status of the AGT Companies implementation of their Human Rights Commitments, with a focus on some of the thematic and geographic areas that have been the source of concern. Rather than visiting model areas where there were least likely to be human rights issues, or even a random cross-sampling of areas, the Monitoring Team sought to ensure that its visit included areas along the pipeline where there have been labor and human rights concerns. Prior to the Monitoring Visit, the Monitors reviewed the Prevailing Legal Regime and the international human rights standards to which it commits the AGT Companies in order to distill applicable human rights commitments. The Monitors also studied other external reviews of the Project, including those produced by the CDAP and the SRAP processes, local and international NGOs, and multilateral institutions including the International Financial Corporation ( IFC ). In Georgia, the monitoring process consisted of interviews with BTC Co., SCP Co., and SPJV senior management, as well as members of civil society, in Tbilisi; visits to construction camps and field offices; meetings and confidential interviews with SPJV management and supervisors; confidential interviews with workers at work sites; meetings in affected communities; visits to SPJV Project Information Centers; and confidential interviews with SPJV

19 and AGT CLOs. Because the pipelines are nearing completion, Monitors made a special effort to interview not only construction workers, but also workers likely to remain employed by the Projects after completion of the Construction Phase, and upon commencement of the Operations Phase -- including those providing security and catering services. One and a half days were devoted to initial meetings in Tbilisi, and three and a half days were devoted to interviews and meetings along the right-of-way. Documentation regarding the Project was obtained and reviewed by the Monitors prior to and during the course of in-country visits. Information and feedback was also provided by AGT subsequent to the Monitoring Visit. To strengthen the integrity of the monitoring process, the Monitors made random stops at worksites and randomly selected workers to be interviewed. Prior to conducting interviews with community members or employees, Monitors explained the purpose of their visit and noted that they were not empowered to answer specific questions or address individual concerns. They also emphasized that they would not request interviewees names or otherwise identify interviewees to AGT. The Monitors conducted interviews in Georgian through freelance translators or, as appropriate, one-on-one with interviewees who speak English. Initially, Monitors asked general background questions of interviewees, including age, educational background, and employer. Subsequently, Monitors asked employees questions regarding their experience working for the Projects, from the time they were hired to the present, and with respect to the fourteen categories of Human Rights Commitments. When a response was ambiguous or indicated a potential breach, Monitors asked follow-up and clarifying questions. When Monitors heard allegations about incidents that may have violated the Human Rights Commitments, they questioned subsequent interviewees about the same issue, to seek to determine the accuracy of the claim, and whether the alleged action may have been widespread or discrete. Monitors met with four of the 72 affected communities. The community meetings were typically arranged by an AGT CLO, who would notify community leaders that the Monitors intended to visit the community and would ask interested individuals to gather at a certain time. Monitors explained that they were undertaking a monitoring project for the AGT Companies, but were not empowered to address, or report on, individual concerns -- as opposed to problems that affected a number of individuals or communities along the entire pipeline. Monitors also gathered basic information regarding the community interviewees, such as their professions and relationship, if any, to AGT (e.g., relative of employee, compensated landowner, etc.). Subsequent to the Monitoring Visit, Monitors compiled their findings and requested additional information from AGT when questions about company policies and activities remained outstanding. The description of the findings in Section 3.3 below, as well as the analysis of the framework for implementation of human rights commitments found in Appendix A, reflect the Monitors independent findings and conclusions. Although AGT management reviewed the full report, including the findings section, and suggested some edits to it, these were non-substantive in nature, and did not affect the independence of the findings. Monitors then engaged in a collaborative process with AGT management to develop recommendations which would best address these findings. Monitors initially drafted each of the

20 recommendations contained herein, but then worked with AGT management to hone the recommendations, and ensure that all of the final ones were feasible and could potentially be implemented during the remaining time left of the Construction Phase of the Projects, during the forthcoming Operations Phase, or would be relevant for any similar project that may transpire in Georgia at a future date. Lastly, AGT then provided its own comments regarding each recommendation, which are included in a clearly-distinguishable manner after each of Monitors recommendations, in Section 4.2 below. 2.6 Structure of the Monitoring Assessment The first section of the Assessment is an Executive Summary of the Monitors findings. The second section provides an overview of the rationale behind, and methodology of, this Assessment. The third section addresses country-specific issues, and the framework employed by BTC Co., SCP Co., and SPJV for implementing the Human Rights Commitments. In addition, it summarizes the Monitors findings with regard to implementation of the Human Rights Commitments vis-à-vis Project workers and affected communities. The final section of the human rights Assessment presents recommendations arising from the findings, and analyzes the Projects implementation framework

21 III. ASSESSMENT 3.1 Introduction Scope of Monitoring Visit: The Monitoring Visit in Georgia began with one and a half days of meetings in Tbilisi with BTC Co., SCP Co., and SPJV senior management, and with local and international NGOs. Monitors spent July 19 through 22 in the field along the right-ofway, visiting active camps, SPJV worksites, and affected communities, interviewing a broad array of workers, managers, and AGT and SPJV CLOs. In total, Monitors conducted 51 worker interviews, not including those of managers or CLOs, and met with four affected communities. Date Location Activity Conducted July 18 AGT Offices, Tbilisi Meetings with AGT management Document collection Meeting with representatives from the Association for Protection of Landowners Rights ( APLR ) Courtyard Marriott, Tbilisi Meetings with NGO monitoring group and Georgian Young Lawyers Association July 19 AGT Offices, Meetings with AGT management Tbilisi Document collection SPJV Offices, Tbilisi Meeting with SPJV management Document collection Area 80 Worker interviews Naokhrebi Community meeting July 20 Akhaltsikhe Camp Meetings with camp management Worker interviews Interview with local APLR representatives Interview SPJV CLOs Minadze Community meeting Akhaltsikhe Right-of-way between Akhaltsikhe and Bakuriani Bakuriani Meeting with local NGO Worker interviews Worker interviews Interviews with SPJV and AGT CLOs Interviews with SPJV management