RBS buries corporate responsibility head in the sand

PRESS RELEASE: "RBS BURIES CORPORATE RESPONSIBILITY HEAD IN THE SAND"

Contact: Mika Minio-Paluello at 07766175641 or 020 7403 3738

The Royal Bank of Scotland’s 2005 Corporate Responsibility Report, released yesterday [1], has been condemned by PLATFORM as clever PR that obscures RBS’ real social and environmental impacts.

The report focuses on donations to charity, combating fraud and small business lending in the UK. Yet RBS is a global bank with global investments and thus global impacts. There is no mention in the report of the many controversial projects funded by RBS in the Caucasus, in Chile, in Angola and Wales. [2]

Mika Minio of PLATFORM commented, “Still reeling from the Natwest Three, RBS hope to avoid negative publicity by avoiding any discussion of negative social and environmental impacts of their projects. This is a public relations report, not a corporate responsibility report.”

The Corporate Responsibility report includes no mention of RBS’ bid to finance Shell’s disastrous Sakhalin II project in the Far East of Russia. While most large banks have opted not to finance it, RBS are one of only six banks bidding to arrange the project’s finance.
Criticised by over a hundred NGOs and civil society organisations for its social and environmental impacts, Sakhalin II has faced intense scrutiny. The project threatens the critically endangered Western Grey Whale with extinction, with construction work continuing adjacent to the whales’ only known summer feeding ground. Habitats of endangered bird and fish species have been damaged. Experts have reported that the projects’ risk assessments are inadequate, risking a catastrophic oil spill. [3]

Mika Minio-Paluello questions, “I cannot understand why RBS would not mention this in the Corporate Responsibility Report. Maybe Fred Goodwin doesn’t consider a $22 billion project that could lead to extinction for a whale species a matter of corporate responsibility? Or maybe Sakhalin Island is just too far from Edinburgh?”

In 2005, the Corporate Markets division delivered a higher proportion of total income (33%) than Retail Markets (31%). Yet the social and environmental impacts of corporate lending and investment are barely touched on in RBS' glossy Corporate Responsibility report. Out of 36 pages, only 3 bland paragraphs are devoted to Corporate Markets. Even these three paragraphs focus solely on project finance - only one particular form of corporate finance.

Mika Minio-Paluello, “Tom McKillop is very proud of the £56.2m RBS invested in the community. Yet this is peanuts compared to the sums RBS invests in community-disrupting projects such as the BTC pipeline.”

RBS was the only UK bank to finance the contentious Baku-Tbilisi-Ceyhan pipeline, shipping Caspian oil from Azerbaijan to the Turkish Mediterranean coast. Finally launched only last week [4] after 18 months of delays, BTC has rendered Georgian villagers homeless, contributed to economic instability in Azerbaijan and seen pipeline critics in Turkey intimidated, detained and tortured. The Turkish fishermen in Ceyhan are suing the pipeline operator BP for destroying their livelihoods. RBS itself has been warned that it could be legally liable if the pipeline ever leaks, due to its knowledge of faulty construction materials utilised. [5]

Mika Minio added “The problem is not only that RBS profit from projects that destroy people’s livelihoods – without RBS’s finance, these projects wouldn’t happen. Some responsibility needs to be taken. If they’re not doing this in their corporate responsibility report, then where?”

RBS corporate finance is having long-term impacts. RBS is increasing Angola’s debt burden and undermining World Bank/IMF transparency standards through oil-backed loans. RBS was already involved in $5 billion worth of controversial loans to Sonangol, the Angolan state oil company, condemned by Global Witness for perpetuating chronic corruption and poverty.
In April 2006 RBS made a bid to provide a third megaloan to Sonangol. The World Bank have criticized such loans as the core obstacle to Angola’s development, as they allow the government to bypass World Bank transparency standards. [6]

“RBS admit in their report that ‘Lending more than a customer can afford to borrow hurts both the customer and our business.’ Does this principle not apply when the customer is Angola?” commented Mika Minio.

[1] http://www.rbs.com/corporate01.asp?id=CORPORATE_RESPONSIBILITY
[2] Barrick Gold Mine, Chile: http://www.corpwatch.org/article.php?id=13680
South Hook LNG Terminal, Wales: http://www.foe.co.uk/cymru/english/press_releases/2004/hazards_milford_haven.html
[3] http://www.carbonweb.org/showitem.asp?article=6&parent=66&link=Y&gp=3
[4] The BTC pipeline was launched on Thursday 13 July in Ceyhan, Turkey.
[5] http://www.carbonweb.org/showitem.asp?article=167&parent=39
[6] Angola is ranked 151 out of 159 countries for corruption by Transparency International. Despite its vast oil and diamond wealth, Angola remains one of the world’s poorest countries, ranked 160 out of 177, with most citizens living on less than $2 a day. At the heart of the problems lies Angola’s $9.5 billion debt.

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