By Probe International

Government Secrecy Threatens Canadian Democracy

Patricia Adams and Grainne Ryder

June 1, 2001

Probe International argues that the Canadian government’s growing predilection for secrecy is alarming. Probe recommends to the Access to Information Review Task Force in 2001 that the disclosure of information on public interest grounds should prevail over corporate interests. 

Probe International’s Interest
Probe International has submitted approximately 100 Access to Information requests to almost a dozen different departments of the Canadian Government over the past 15 years. We seek information we believe will inform Canadian citizens of the environmental, social, and financial implications of the Canadian Government’s activities abroad. As such, we believe review of this information is in the public interest, and that this information ought to be in the public domain. The records obtained as a result of our Access to Information requests are available to any member of the public for their review.

At this time, we would like to submit comments to the Access to Information Task Force regarding the application of the Access to Information Act to the Canadian International Development Agency (CIDA) and to the Export Development Corporation (EDC).

Recommendations and Conclusions
Probe International has observed over the past 15 years that agencies of the Canadian government have become more secretive. For example, one institution that is not subject to the Access to Information Act, EDC, recently agreed to release bare-bones details of its operations that were, prior to 1984, routinely published in its Annual Report. Another institution that is subject to the Act, CIDA, is more and more inclined to withhold information on the grounds that its release would threaten third party (usually corporate) confidences, contractual details, or cause financial losses or gains, superceding that clause in the Access to Information Act that permits the government to overrule these considerations “in the public interest.”

Probe International argues that the government makes excessive and unreasonable use of the Access to Information Act (and agencies’ exclusion from it) to withhold information, the disclosure of which would help save taxpayers’ money, inform the public of government actions in their name, stop environmental destruction, protect the human rights of innocent citizens abroad, and save lives.

The Access to Information Act is one of the few effective tools available to Canadian citizens that allow them to find out what they want to know about government actions, rather than what the government wants them to know. We were, therefore, distressed to read the Information Commissioner’s “Mayday — Mayday” plea last October in his 1999-2000 Annual Report to Parliament. In that report, the Honourable John M. Reid, lays out how the Access to Information Act is under siege from governmental institutions. This is consistent with Probe International’s experience, described in this submission.

Our recommendations with respect to CIDA and EDC, at this time, are few:
1) much of the detail about EDC and CIDA projects should be readily available, online, automatically, thereby eliminating the need for citizens to use the Access to Information Act to inform themselves;
2) the disclosure of information on public interest grounds should prevail over corporate interests. Companies always have the option of seeking private sector financing if they don’t like the terms of disclosure of public agencies;
3) EDC must immediately be made subject to the Access to Information Act.

The Canadian government’s growing predilection for secrecy is alarming. Governmental secrecy, says noted American columnist, George F. Will, breeds stupidity. But it breeds more than that. It breeds cronyism, corruption, and badly informed decisions.

The U.S. Commission on Protecting and Reducing Government Secrecy, headed by United States Senator Daniel Patrick Moynihan, said in its 1997 report “secrecy has significant consequences for the national interest when, as a result, policy-makers are not fully informed, government is not held accountable for its actions, and the public cannot engage in informed debate.” (1)

Greater openness, the Commission said, permits more public understanding of the government’s actions. “It makes free exchange of scientific information possible and encourages discoveries that foster economic growth.” Moreover, by allowing for a fuller understanding of the past, openness “provides opportunities to learn lessons from what has gone before…helping to prepare for the future.”

“Secrecy,” concludes Senator Moynihan “is for losers.”(2)

As the Former Supreme Court of Canada Justice Gerard LaForest said so eloquently (in Dagg v. Canada (Minister of Finance), [1997] 2 S.C.R. 403 at 432) the overarching purpose of Canada’s access to information legislation, “is to facilitate democracy. It does so in two related ways. It helps to ensure first, that citizens have the information required to participate meaningfully in the democratic process, and secondly, that politicians and bureaucrats remain accountable to the citizenry.”

Part 1 – EDC
The Export Development Corporation is a Crown corporation which subsidizes the exports and foreign investments of Canadian companies. In 2000, it supported roughly $45 billion in exports and foreign investments and carries liabilities of nearly $18 billion on the good faith and credit of the Canadian taxpayer. EDC has committed funds to such notorious projects as the Three Gorges dam in China, gold and copper mines in South America, and the export of old growth forests from British Columbia. Yet EDC is exempt from the Access to Information Act. EDC has the power to exercise an extraordinary level of secrecy, and it does so with impunity. Probe International argues that EDC’s exemption from the Act shelters EDC’s damaging and costly activities from public view. The absence of public sector oversight and market discipline make EDC’s activities a breeding ground for corruption and cronyism. EDC’s secrecy also spawns a recklessness that creates unacceptable environmental, financial, and social costs. Perhaps most importantly, EDC secrecy puts lives at risk.

EDC claims that it must uphold this secrecy because the majority of the business that it conducts is commercial. Probe International unequivocally rejects this claim, as do many other independent financial experts and industry groups.(3) For an explanation of why this claim is a myth spun by EDC and how EDC maintains this myth by virtue of its exemption from the Access to Information Act, please see the referenced articles by Patricia Adams, Executive Director of Probe International.(4) The Task Force should also note that the World Trade Organization has been frustrated by EDC’s refusal to disclose information to substantiate its “commercial” claim and other OECD members have suspected that EDC is breaking an OECD trade agreement by extending prohibited subsidies and hiding the evidence behind a wall of secrecy.(5)

Under public pressure to be more transparent, EDC recently released its Draft Disclosure Policy for public comment. The Chairman of EDC, Patrick Lavelle, lauded EDC’s newfound transparency. “I think it allows the sun to shine on the EDC and the projects that it is financing which are supportive of Canadian exporters . . . And I think it is a way to provide accountability for the agency to the taxpayer,” said Mr. Lavelle.(6)

Probe International has reviewed EDC’s Draft Disclosure Policy and concluded that it will do neither. EDC’s Draft Disclosure Policy is a legally unenforceable guideline that relies on the discretion of EDC and its clients to release what they choose and when. The vast majority of the draft policy simply codifies the status quo. While EDC says it will require proponents of projects to release environmental and related social information at least 45 days prior to signing by EDC, given the conflict of interest of proponents and the discretionary nature of EDC’s Environmental Review Framework, this disclosure requirement will have little effect in changing the constellation of damaging and costly projects that EDC supports.

Probe International has requested information from EDC for nearly 20 years. Based on this experience, as well as our extensive experience using the Canadian Access to Information Act and the U.S. Freedom of Information Act, we believe EDC’s Draft Disclosure Policy, which is arbitrary and unenforceable, is fatally flawed. It should be scrapped and EDC subjected to the Access to Information Act in the interest of making this institution, which derives its wherewithal from Canadian taxpayers, more accountable to them.

Our reasons are as follows:

EDC Assesses Itself
EDC commits itself to disclosure if, in its own assessment, “accountability is relevant,” if there isn’t “a compelling reason for confidentiality,” and if disclosure does “not jeopardize its pursuit of its legislative mandate,” which according to the Export Development Act is to support Canadian capacity to engage in export trade and respond to international business opportunities.

Any information, EDC says, that relates to commercial competitiveness or is “unrelated to public accountability” will be deemed confidential and withheld.

If a requestor is able to ascertain the reasons why EDC is withholding information, and wishes to challenge EDC’s self-assessment, he would have the option, under EDC’s proposal, to appeal to an EDC-designated Compliance Officer. This Compliance Officer would be paid by EDC and accountable to EDC’s Director of Internal Audit who will keep the Audit Committee of the Board of Directors informed. The decisions of this Compliance Officer would not be subject to judicial review.

This process has no credibility. Self-assessment, without independent oversight, and recourse to judicial review, as provided for under the Access to Information Act, means that EDC will have unrestrained powers to hide mistakes, losses, improprieties, and unacceptable risks behind closed doors.

EDC’s Freedom From Legally Binding Information Disclosure Laws, and the Auditor General Act, Handicaps the Auditor General’s Ability to Inform the Canadian Public of EDC’s Internal Workings
As long as EDC is exempt from the Access to Information Act, even the Auditor General, EDC’s auditor, is unable to inform the public of the details of his evaluations, as he would for other government departments. For example, this month the Auditor General released his review of EDC’s compliance with its new Environmental Review Framework and declared that in most cases “the Framework was not operating effectively.”(7) The Auditor based this on a review of more than 30 EDC projects. When we asked the Auditor General for a list of those projects, we were informed by the OAG that “when doing an audit the Office of the Auditor General must respect the confidentiality policy of the organization being audited” (Auditor General Act section 13(3)). This bound the OAG to EDC’s policy, which is, “consistent with commercial practice, EDC considers any transaction information that is not known to the public as confidential and will not disclose such information without the permission of the relevant party or parties, as the case may be.” Richard Smith, Special Advisor in the Audit Operations at the OAG said in a May 30, 2001 letter to Probe International, “We believe strongly that the Corporation should be more open with the public.”

Furthermore, EDC makes the empty promise that perhaps the Auditor General, in his special examination of the EDC every five years will review “the appropriateness of this [Disclosure] policy, and EDC’s adherence to it.” Yet the Auditor General’s special examination of EDC is not disclosed to the public. Probe International asked for the OAG’s special examination reports from 1994 and 1999, and was refused both times. As EDC spokesman Rod Giles explained to Probe International in a December 24, 1998 e-mail message, “The AG special examination of EDC sent to our Board of Directors is private and, therefore, not available to the public.”

While the Auditor General carries out an annual financial audit of EDC’s books, his conclusions are limited to a single-page letter reprinted in EDC’s Annual Report. Last year, when Probe International attempted to get more detailed financial information and an explanation of how the books are prepared, in order to understand how EDC losses, liabilities, and cross-subsidies are handled, the Office of the Auditor General told us in a June 27, 2000 letter from Stuart Barr, Director, Crown Corporations Group, that “questions pertaining to the financial statements would be more appropriately directed to EDC management as EDC management is responsible for the financial statements. I would kindly ask you to direct further questions pertaining to EDC financial statements to EDC management.” Needless to say, Probe International regularly asks EDC for financial information, but rarely gets the level of detail we need to effectively evaluate EDC’s published financial statements.

EDC Lets Canadian Corporations Set Its Rules of Disclosure
Throughout the Draft Disclosure Policy, EDC states over and over that its client corporations compel it to secrecy: “EDC’s disclosure practices must reflect its legal obligations and concerns for protecting confidential information entrusted to EDC by its customers in the normal course of conducting its business.”

Probe International believes that EDC has its lines of responsibility and accountability exactly backwards. EDC is a Crown corporation that would not exist were it not for its ability to operate on, what Michael Mackenzie, former director of the Office of the Superintendent of Financial Institutions described as “Her Majesty’s credit card.”(8) Without taxpayers backing it, there would be no EDC. EDC’s first responsibility, therefore, is to Canadian taxpayers. EDC should, accordingly, inform its corporate customers that since it is a public institution, those corporations will have to accept a level of public disclosure that they might not have to accept if they were seeking financial support from a private sector financial institution. If those corporations do not want to accept that amount of disclosure, they are free to seek financing elsewhere. This is the approach used by the Export-Import Bank of the United States, the American EDC-equivalent, which is also subject to the U.S. Freedom of Information Act.

EDC maintains that it is no different than a private sector financial institution and therefore should not be subject to the disclosure rules of a public agency. As mentioned earlier, this is a myth that few outside of EDC believe. EDC also argues in its Draft Disclosure Policy that EDC “is one of the only real options for Canadian companies seeking trade finance solutions.” Probe International urges the Task Force to review the positions of the insurance and banking industry which have made repeated representations to Parliament over the past decade arguing that EDC keeps them out of the international trade and investment market by using its government-granted preferential finances. EDC pays no taxes or dividends to the government, it borrows at the preferential government rate, and gets compensation for its written-off loans from the consolidated revenue fund.

EDC’s Wide Net of Exemptions Threatens Economic Development, Good Governance, and Public Health and Safety
EDC has a long record of financing projects that destroy the environment (the Omai gold mine in Guyana, the Kumtor gold mine in Kyrgyzstan, the Mae Moh lignite power plant in Thailand, etc.), are economically unsound (the Three Gorges dam will produce power at 2-3 times the price of competitors, the Guavio dam in Colombia, the Chamera dam in India, etc.), contribute to the violation of human rights (Three Gorges evacuees are being detained and allegedly tortured for appealing for funds to help them resettle after the dam floods their farms, the Ralco dam in Chile is violating indigenous rights, and the Colombian Urra dam has lead to extra-paramilitary executions of indigenous people protesting their forced dislocation), and are plagued by corruption (in Argentina, former President Menem called the EDC-supported Yacyretá dam “a monument to corruption,” and the Candu nuclear reactor sale involved payments that a former Auditor General of Canada discovered had all the characteristics of a bribe). EDC secrecy also threatens public safety in other countries. The most graphic and current example is provided by the two Chamera dam projects in India.

In 1998, Probe International filed an Access to Information request to CIDA for details of the Chamera I dam project on India’s Ravi river. A Canadian consortium of companies – including SNC and Acres International, Marine Industries of Montreal, and Canadian General Electric had won the contract in 1984 to build this $1.3 billion hydrodam. They won the contract thanks to $645 million in loans from CIDA and EDC – their largest joint loan ever.

By the year 2000, after an appeal to the Access to Information Commissioner, Probe International received more than 1,600 pages of documents including correspondence, internal memos and e-mails, reports by the client (the National Hydro Power Corporation of India or NHPC), and performance and safety reports about this troubled project that were prepared by an independent monitor hired by CIDA.

This case is important with respect to EDC, for several reasons:
1) The released documents contain information about a project that received a large EDC loan and that is clearly and irrefutably important to Canadian foreign and economic policy. But this information is especially important to the health and safety of thousands of Indian citizens. This information – a few of the troubling details are listed below – is vitally important to those living downstream of this dam. This information is now public, for the first time.
2) Probe International secured this information only because funds from CIDA, which is subject to the Access to Information Act, were involved. Under EDC’s Draft Disclosure Policy, none of the documents containing this information, which is clearly in the public interest, would have been released.
3) The Chamera II project, a second dam project which is a mere 30 kilometres upstream of the troubled Chamera I dam, is now under construction. CIDA and EDC intended to jointly fund this dam as well, but CIDA withdrew. In 1999, EDC decided to award a $175 million loan to the project. Given EDC’s exemption from the Access to Information Act, Canadian citizens will be unable to inform themselves of the financial risks EDC is taking in supporting Chamera II and Indian citizens may be kept in the dark about the risks to their lives posed by the Chamera II project.

Probe International is carefully reviewing the more than 1,600 pages of documents received. The following is a preliminary review of the problems those documents reveal with the Chamera I dam:

  • As early as 1992 and 1993 Rousseau Sauvé Warren Inc (RSW), hired by CIDA to be the Project Monitor, warned that the integrity of the dam structure is jeopardized by the inherent weakness of rock at right abutment of the dam near the power tunnel intake. RSW said, “the power tunnel intake structure is founded on and surrounded by rock which had demonstrated several weaknesses and, therefore, may not be competent to support this very important structure without further treatment.”
  • In 1987, CIDA describes Chamera as “the most cost effective hydro project in India.” By 1994, a memo from the Canadian High Commission in New Delhi to CIDA headquarters in Hull, reports that NHPC has indicated that the “cost of producing hydroelectric power at Chamera will be more costly than any other hydroelectric plant in India.”
  • In July 1994, RSW reports to CIDA that problems with the dam remain. The spillway gates cannot be operated safely due to continuing failure of post tensioned anchors; the eight radial gates display significant leakage; the four sluice gates are not watertight due to damaged seals; significant leakages exist from the power tunnel; water from the pressure shaft infiltrates the valve gallery of the powerhouse; and operations and maintenance manuals have yet to be prepared. A year later, RSW is still not presented with the manual and warns again “without a comprehensive manual, which is available at all times to operating staff, there is a distinct risk that the safety of the project may be jeopardized some time in the future.”
  • In 1994, CIDA agrees to pay for millions of dollars worth of remedial work.
  • In September 1994, CIDA and EDC are concerned about the integrity of the project given the problems now being encountered in operating the spillway gates safely.
  • In June 1995, RSW warns that data collected about dam behavior is not being interpreted. Failure to do so “may prove to be catastrophic.” RSW notes an unusual vibration when the emergency gate was opened concurrently with the service gate, and unexpectedly rapid sediment accumulation.
  • In May 24, 1996, a major landslide occurs. The landslide reveals, in RSW’s words, that the “depth of the overburden immediately downstream from the dam is much greater than generally reported.””In view of the foregoing, the Monitor considers the signs of instability extremely serious.” Any further signs of structural unsoundness, slides, increasing seepages into the dam and downstream of the dam, vortices on the reservoir “must be considered as being potentially catastrophic requiring the immediate, controlled lowering of the reservoir and, eventually, the shutting down of the power plant and the notification of NHPC Management, Government of India and all concerned administrative authorities in the area.” The Project Monitor reminds CIDA that it warned of this geological instability in 1993 and feels “it is regrettable that the opinion expressed in this report had received so little attention at that time.” RSW alerts CIDA to “serious symptoms of instability” and warns: “Degradation of the already precarious situation could lead to a catastrophic event involving not only a major shortage in power production but, more important than all, potential losses of lives in the communities installed downstream of the dam.”
  • As of June 1996, the operation and maintenance manual is still not available.
  • At an October 1996 meeting of RSW experts, Indian experts and others it is recommended that an elaborate program of instrumentation, monitoring and geologic mapping of the abutment and slide area be carried out “religiously and thoroughly” for “the life of the project.”
  • In October 1996, stator cap fails and bottom end caps of all three units overheat.
  • In November 1996, turbine-generator Unit #2 is shut down.
  • In May 1997, Unit #2 is affected by obstruction upstream – possibly a chunk of concrete.
  • In June 1997, Unit #1 experiences problems similar to Unit #2.
  • Sometime in 1997 (date illegible), a memo from CIDA headquarters to the Canadian High Commission in New Delhi explains “We wanted to bring closure to our involvement in this project. We did not want to be continually funding on going [sic] repairs at Chamera. Hence, with the completion of repairs at Chamera, now should be the time to end our involvement…Could I please have the views of the post. Does the potential for Chamera II alter our position.” On July 4, 1997, the post then recommends that “we continue to support the current repair process (within reasonable time and cost parameters) in order that we maintain a positive front for Canadian business interests at this critical stage.” This same message is repeated on July 11, 1997 from the post to CIDA headquarters as Canadian engineers struggle with problems with the generating units.
  • On July 17, 1997, RSW warns CIDA of the potential risk of powerhouse flooding caused by failure of concrete lining in the hydraulic passage. If left untreated, RSW warns “the failed lining may result in a sudden and potentially catastrophic collapse with every possibility to not only damage the turbines but, by the debris accumulating in the inlet valves, prohibit the isolation of the powerhouse in case of emergency and flood it with fatal consequences to the operating personnel.” One such incident in the life of a hydroelectric project, RSW explains may be dismissed as a highly unusual event. “The second incident brought us considerable cause for concern and now the third similar incident has increased that level of concern to the point where we believe that CIDA should be advised in writing of the potential dangers.” “We, as Project Monitor, are of the opinion that the continued operation of this power plant by subjecting the units to such abuse amounts to dereliction of duty by NHPC towards the public that entrusted the operation and maintenance of this facility to it.”
  • In September 1997 a letter from the Chairman and Managing Director of the NHPC to a Canadian High Commission official lists “the maladies afflicting the operation” of Chamera I. Unit #2 suffered damage and has been out of operation for over a year; Unit #3 sustained damage to its stator and overheating; the Siemens supplied GIS of Unit #2 failed in February 1996; SNC/Acres, “who were the principal consultants for the project with a moral obligation to ensure satisfactory operation” have shown a lack of interest and been inactive.
  • By January 1998, operation and maintenance manual is still not available.
  • By April 1998, Unit #2 is not operational and Unit #1 is running in an erratic fashion. Project documents end soon after.

EDC Can Misuse Cost Recovery Principle as a Deterrent to Requestors
EDC intends to charge requestors of information for expenses incurred by EDC in fulfilling those requests under its own Disclosure Policy. This, EDC says, is consistent with Treasury Board’s Cost Recovery and Charging Policy. Probe International generally supports the concept of cost recovery. But in the absence of an independent reviewer, such as the Information Commissioner, and recourse to a judicial procedure, Probe International is not confident EDC won’t abuse the principle and levy fees against those it wishes to deter, waiving others it considers more sympathetic.

But EDC’s proposal seems especially unjustified in light of the costly TV and magazine ads, and news program sponsorships that it pays for to promote itself to the Canadian public. When Probe International asked EDC spokesman Rod Giles for EDC’s advertising budget with breakouts for radio, print, and TV ads and program sponsorship, he responded on May 17, 2000, “Unfortunately, EDC does not disclose specific details of its administrative expenses which, as you know, are derived from general revenues and not from tax dollars.”

Probe International believes that, given EDC’s apparently ample advertising budget, any expenses incurred by EDC in processing public information requests should be paid out of this budget. Review of the numbers, we believe, would show that the costs of filling these requests are a mere fraction of the advertising budget.

Part 2 – Canadian International Development Agency
The Canadian International Development Agency (CIDA) makes excessive and unreasonable use of the Access to Information Act Sections 20(1) third party information, 20(1)(a) trade secrets of a third party, 20(1)(b) financial, commercial, scientific or technical information given in confidence to the government and treated consistently in a confidential manner by the third party, 20(1)(c) information that could result in a financial loss or gain, and 20(1)(d) contractual details or negotiations, that thwarts and contravenes Section 20(6).

According to Section 20(6):

The head of a government institution may disclose any record requested under this Act, or any part thereof, that contains information described in paragraph (1)(b), (c) or (d) if that disclosure would be in the public interest as it relates to public health, public safety or protection of the environment and, if the public interest in disclosure clearly outweighs in importance any financial loss or gain to, prejudice to the competitive position of or interference with contractual or other negotiations of a third party.The consequences of CIDA’s failure to uphold Section 20(6) of the Access to Information Act are that public health and safety is compromised, environments are threatened and degraded, economic development is undermined, CIDA’s mandate to alleviate Third World poverty is defeated, and, ultimately, that Canadians contribute to the impoverishment of Third World citizens.

In this section, we illustrate how CIDA uses the Access to Information Act to stifle public access to information and protect its corporate clients from public scrutiny. Most of the examples relate to CIDA-financed hydro dam studies and projects because this is an area of foreign aid that Probe International has monitored and specialized in for the last 20 years. During this time, citizens’ groups, rural and indigenous communities, scientists, engineers, sociologists, engineers, and journalists have been carefully and systematically collecting evidence of the disastrous effects of large dams. Finally, after 50 years of large dam-building, this evidence was presented to a global commission set up by the World Bank, and partly financed by CIDA. With a mandate to review the “development effectiveness” of large dams world-wide, the World Commission on Dams published its final report last year, confirming what citizens have long argued. Large dams have forced an estimated 40-80 million people from their homes, caused widespread impoverishment and suffering as well as extensive and often irreversible damage to rivers, watersheds, and aquatic ecosystems. The commission also found that the social and environmental costs of large dams are “disproportionately borne by poor people, indigenous peoples and other vulnerable groups” and that those costs “have been poorly accounted for in economic terms.”

Notably, the World Commission on Dams pointed to secrecy on the part of dam proponents, governments, and financing agencies, to explain why large dams continue to be built even when the record clearly demonstrates that large dams have often been a waste of public funds, failing to deliver the promised public benefits and services. The WCD reported a “pervasive and systematic failure” on the part of dam proponents to assess potential impacts and account for the consequences of large dams on downstream communities and livelihoods. Because dam builders and their financiers have not had to account to the people most threatened or affected by dams, or to the citizens whose tax dollars were used to finance dams, dam builders were able to hide the real costs and risks of their schemes, often shifting costs onto those least able to accept them. In cases where citizens have had access to project information, it usually came too late in the decision-making process, the WCD reported, after a decision to build had been taken, leaving citizens little or no opportunity to influence project outcomes or implementation.

One of the WCD’s key recommendations was for greater transparency and disclosure of information about hydro dam projects and plans so that citizens can participate in decisions that affect them. Probe International recommends that CIDA end its secrecy and make disclosure of project documents (i.e., project feasibility studies, environmental impact assessments, project appraisal and evaluation reports) automatic and without delays, given that such information is essential for ensuring that citizens are fully informed about development plans and decisions that affect them. All other project-related details, such as official correspondence or contractual agreements between CIDA and project consultants, should be made available by CIDA in accordance with Section 20(6) of the Access to Information Act.

Examples of CIDA’s Abuse of the Access to Information Act

Power Project Studies (Vietnam) Between 1993 and 2000, CIDA paid Canadian energy companies almost C$4 million to conduct studies related to the development of Vietnam’s hydro, electricity, oil, and gas sectors: Acres International ($268,000), ADS Groupe-Conseil ($150,000) Agrodev Canada ($499,000) Consortium Experco-SNC-Lavalin ($237,000), Endeco International ($130,000), Experco International ($388,000), Experco International ($402,000), GE Canada ($277,000), Hydro Québec International ($301,000), International Environmental Management ($317,000), SNC-Liquigaz ($92,000), SNC Lavalin International ($296,000), SNC Lavalin International ($652,078), and Vietcan Consulting Group ($350,000).

Probe International initially requested details about these studies from CIDA’s communications branch which advised us to use the Access to Information Act. In July 2000, we submitted our Access to Information Act request: nine months later, CIDA released only six of a total of 11 reports that we had requested, pursuant to the following sections of the Access to Information Act:

20(1) third party information, 20(1)(a) trade secrets of a third party, 20(1)(b) financial, commercial, scientific or technical information given in confidence to the government and treated consistently in a confidential manner by the third party, 20(1)(c) information that could result in a financial loss or gain, 20(1)(d) contractual details or negotiations. Probe International intends to bring a complaint regarding the withholding of these reports to the Information Commissioner. Two of the reports not released by CIDA were conducted by SNC Lavalin for the Dai Ninh hydro dam in Vietnam.

Dai Ninh Hydro Project (Vietnam)
In 1994, CIDA paid SNC Lavalin International $300,000 to conduct a feasibility study for the Dai Ninh hydro project and another $652,000 to design the dam in 1996. Earlier this year, the Vietnamese government announced its decision to go ahead with this US$300 million hydro dam while the two reports conducted by SNC-Lavalin for Dai Ninh remain secret.

If completed, Dai Ninh would forcibly displace up to 14,000 people and directly affect the livelihoods of tens of thousands of rural Vietnamese who are already very poor. None of the project plans are available for public review in Vietnam nor have the people whose resources and livelihoods would be directly affected by Dai Ninh been adequately informed or consulted. The World Bank declined support for Dai Ninh in 1998, citing inadequate resettlement planning.

Probe International submitted an Access to Information request for the Dai Ninh feasibility study in 1996 but CIDA replied that it was “not in a position to release the documents relating to [our] request as the records are protected under Section 20 (1) (b) of the Act.” When we phoned CIDA for an explanation, CIDA informed us that SNC-Lavalin had objected to CIDA’s disclosure of the study, citing this section of the Access to Information Act.

Yali Hydro Project (Vietnam)
In 1993, CIDA paid Vietcan Consulting Group $350,000 to conduct a technical, economic, and environmental review of the proposed Yali hydro project in Vietnam’s central highlands.

Construction of the 700-MW Yali dam, Vietnam’s second-largest hydro project, got underway in 1993 before Vietcan had completed its review, and without any assessment of downstream impacts and hazards. When the dam started operating last year, its erratic releases of water to downstream Cambodia caused at least 32 drownings and swept away livestock, crops and fishing gear, causing food shortages and destitution for thousands of people. Downstream communities have suffered a dramatic decline in their fish catches since the river was dammed, as well as illnesses caused by toxic algae that blooms in the Yali reservoir and gets flushed into water sources downstream. Upstream the Yali reservoir flooded the traditional lands and villages of 7,400 indigenous Jarai and Bahnar people who now languish in resettlement camps without adequate land, housing or means of livelihood.

CIDA released the Vietcan report to us on April 24, 2001 (See Power Sector Studies, Vietnam), far too late for the people drowned by the Yali dam’s operation. We have since reviewed Vietcan’s report and found that the group failed to assess the impacts and hazards posed to downstream communities by the Yali dam’s operation. In fact, Vietcan makes no mention of the potential for dangerous fluctuations in water levels downstream of the dam nor did it assess the potential for increased flooding in the rainy season, the destruction of migratory fisheries, and problems with water quality, all of which are problems well known to dam builders. On the potential for reservoir-induced earthquakes, Vietcan casually notes the “possibility” of such an event but fails to make any safety or emergency planning recommendations.

Had CIDA released Vietcan’s report in 1994, citizens’ groups monitoring the Yali project could have, at a minimum, alerted Vietnamese and Cambodian authorities and citizens to the fact that Yali proponents had failed to assess the public health, safety, and environmental hazards posed by the dam, and had no plans to warn downstream communities of routine or emergency releases of water from the dam. Had CIDA opted for disclosure rather than secrecy, citizens groups would have known about the proponents’ omissions before the Yali dam started operating, and lives could have been saved.

Manantali Power Project (Senegal River Basin, West Africa)
CIDA provided at least $46 million to help build the Manantali dam project, which is owned by the West African countries of Mali, Mauritania and Senegal, and was completed in 1988. Ten years later, CIDA contributed another $30 million for Manantali’s second phase, which includes the installation of a 200-MW hydro station and 1,500 kilometres of transmission lines to send Manantali hydropower to the capitals of the three countries involved. CIDA’s latest contribution includes the following:

  • $4.9 million to Hydro-Québec International, DESSAU, and SNC-Shawinigan to supervise construction of the transmission lines;
  • almost $20 million to Sulzer Canada for turbines and alternators;
  • $6,850,000 to Tecsult International to oversee the installation of the turbines; and
  • an undisclosed amount for a three-year fisheries study by Roche International.

CIDA and other Manantali donors are well aware that the first phase of the Manantali dam project has been nothing short of a disaster for the Senegal River valley. In its 1997 appraisal report, the African Development Bank wrote that the dam “had seriously upset the basin’s ecosystems and destabilized traditional economic activities, with the result that the region has become the poorest in all three countries. Increased social inequalities and malnutrition have caused a mass exodus of workers from the river basin . . . the development of irrigated agriculture and the fact that salt water is now prevented from entering the delta have caused a proliferation of carriers of endemic diseases such as bilharziasis. The incidence of malaria has also increased, and resistant strains of the disease have appeared.” According to the World Commission on Dams, between 500,000 and 800,000 people living downstream lost all or part of their means of survival due to the elimination of the river’s annual floods.

Donors are also aware that as a power project, Manantali is costly and uncompetitive. According to the World Bank, the dam’s revival as a power scheme will cost US$445 million. For a fraction of that cost, a string of high-efficiency gas-fired turbines could have been privately financed and quickly installed wherever power is needed, without adding to the massive public debt burden of the three countries involved.

A few months after CIDA agreed to pay for Manantali’s turbines, Hydro-Québec International and the French company, Elyo, a subsidiary of the French water giant, Suez Lyonnaise des Eaux, bought a 34 percent stake of Senelec, Senegal’s national electric utility. Senelec will receive one-third of the project’s output. But in March 2000, HQI and Elyo lost their interest in Senelec when Senegal’s newly-elected president, Abdoulaye Wade terminated the privatization deal. Although the reasons for the termination remain unclear, Senegal’s energy minister, Abdoulaye Bathily, was quoted in the Financial Times saying that “the results [of the deal with HQI and Elyo] were disastrous.”

In July 2000, Probe International submitted an Access to Information request to CIDA for all documentation related to the Manantali power project, including project reports, studies, internal memoranda, correspondence, e-mails, faxes, and contracts, dating from 1997, when donors decided to revive Manantali, to the present. Ten months later, CIDA informed us that the records we requested “are ready for disclosure” but that portions of the records have been severed pursuant to the following sections of the Act:

15(1)international affairs and defence, 19(1)personal information, 20(1)(b) financial, commercial, scientific or technical information given in confidence to the government and treated consistently in a confidential manner by the third party, 20(1)(c) information that could result in a financial loss or gain, 20(1)(d) contractual details or negotiations, 21(1)(a) advice or recommendations, 21(1)(b) consultations or deliberations, 23 solicitor-client privilege information.”

CIDA also informed us that either we would have to pay $1,660.20 for photocopying the documents requested or travel at our own expense to CIDA’s office in Hull to review the documents and then decide which records we want photocopied.

Probe International intends to ask CIDA to waive these charges given the public interest in obtaining this information and the unreasonable length of time it has taken CIDA to process our request.

West African farmers and citizens’ groups, meanwhile, continue to argue that operating Manantali for power production will only make the situation worse for downstream farmers and that the dam should be operated to try and reestablish the river’s floods that are so essential for downstream flood-recession agriculture, herding, and fisheries.

Xiaolangdi Multipurpose Dam (China)
In the 1980s, CIDA financed a feasibility study (which we believe was conducted by SNC-Lavalin although we have been unable to verify this). The study recommended that the Xiaolangdi hydro dam, China’s second largest after the Three Gorges dam, be built on the Yellow river. Since that time, SNC-Lavalin and Hydro-Quebec International have won contracts as advisors to the 1800-MW project.

By the time Xiaolangdi is completed in 2002, the project will have displaced 200,000 of China’s rural poor. Backed with US$1-billion in World Bank loans, Xiaolangdi was originally justified as a flood-control dam but Chinese sources report that it was unable to prevent serious flooding along the Yellow river’s lower and middle reaches last year. Chinese critics say Xiaolangdi’s design is so seriously flawed that the dam itself may cause flooding upstream once its reservoir fills up with silt and gravel. Though not yet completed, the project is plagued by operational problems, according to Chinese sources, and has been unable to secure customers for its output due to its high price and an electricity glut in Henan province. Mismanagement of Xiaolangdi resettlement funds was also reported by the Chinese press last year.

In June 2000, Probe International submitted an Access to Information request for all documentation pertaining to Canadian involvement in the Xiaolangdi project, including the project feasibility study financed by CIDA more than ten years ago. In March 2001, CIDA informed us by telephone that our request could not be processed because SNC-Lavalin had refused to allow disclosure of the documents requested and that the company was preparing to file for a review of our request by the Federal Court, pursuant to Section 44 of the Access to Information Act. CIDA also told us that this review could take anywhere from six months to a year. On March 30, 2001, CIDA confirmed this in writing, adding that we have a right to appear as a party to the review, pursuant to Section 44(3).

Probe International intends to appeal to the Information Commissioner for assistance with this case because to date neither CIDA nor the Justice Department have been able or willing to explain specifically how this process works and what our rights are as a party to this Federal Court review. Furthermore, we believe there can be no more compelling case illustrating the public interest in disclosing project documents.

Chalillo Dam (Belize)
In June 2000, CIDA agreed to pay the world’s third-largest engineering consultancy, Toronto-based AMEC (formerly AGRA) almost $250,000 to prepare a “project justification report” and an environmental assessment for a dam on Belize’s Macal River. Fortis, Inc., a billion-dollar Canadian corporation and majority owner of Belize’s national electric utility, claims it will base its final decision whether or not to proceed with the dam on AMEC’s findings.

The proposed 35-metre high dam would flood almost 1,000 hectares of lush rainforest in Belize’s Macal River valley. According to Sharon Matola, Director of the Belize Zoo and Tropical Education Center, the Chalillo dam would wipe out the only known nesting grounds for the largest species of scarlet macaw, and destroy some of the last remaining riverine habitat for endangered Central American wildlife, including the jaguar, tapir, spider monkey, and Morelet’s crocodile.

In August 2000, Probe International submitted an Access to Information request for the CIDA-AMEC studies, which includes: 1) project justification report, 2) water quality report, 3) social gender analysis, 4) wildlife study preliminary report, 5) auxiliary infrastructure report, 6) risk assessment and preliminary project management plan, 7) environmental impact assessment report, and 8) financial meetings report. In March 2001, CIDA informed us that “some of the requested reports are available” but “pursuant to Section 9(1)(c) of the Access to Information Act, an extension is required beyond the statutory 30 day limit” to allow for third party consultations. Then in April 2001, CIDA minister Maria Minna informed us that the agency would not release any reports without first consulting with AMEC and that CIDA would not pay AMEC until it is satisfied that AMEC’s reports meet with CIDA’s requirements. The minister also said that AMEC’s environmental impact assessment, originally scheduled for completion by January 2001, had been delayed.

Had citizens known that CIDA was going to hire AMEC to conduct an environmental assessment for the Chalillo dam they would have advised CIDA against doing so because of AMEC’s long association with the Belize utility planning hydro development along the Macal River. In fact, AMEC conducted an environmental assessment for the Chalillo dam in 1999 which Belize environment authorities and conservation groups rejected as biased and inadequate. At that time, conservation groups familiar with the project area complained that AMEC (formerly AGRA) had glossed over major environmental concerns and failed to properly consult downstream communities. Amazingly, CIDA is now re-negotiating its agreement with AMEC to provide additional support for public consultations in Belize.

Three Gorges Project (China)
Probe’s experience with the CIDA-financed Three Gorges project feasibility study is the best illustration of why project feasibility studies must be released to the public. In 1986, CIDA agreed to finance a $14-million feasibility study for China’s Three Gorges project, which was conducted by a Canadian consortium, including Acres International, British Columbia Hydro International, Hydro-Québec International, Lavalin International and SNC. A steering committee including CIDA, the World Bank and China’s Ministry of Water Resources and Electric Power, was formed to supervise the feasibility study. The World Bank also assembled an international panel of experts to ensure that the study “met very high standards of international practice.” CIDA announced completion of the Three Gorges study at a press conference in February 1989, which recommended that a 185-metre high dam with a reservoir level of 160 metres is technically, environmentally, and economically feasible and should be built. Shortly thereafter, the Chinese government completed its own feasibility study recommending that construction of a185-metre high dam with a reservoir level of 175 metres should begin in 1992.

Probe International submitted an Access to Information request for the CIDA-financed feasiblity study prior to its completion in 1988 but the Canadian consortium apparently threatened legal action against CIDA if the agency released the study to us. Behind closed doors, CIDA and the consortium eventually reached an agreement and the study was released to us in April 1989, albeit with many sections censored pursuant to clauses under Section 20 of the Access to Information Act, which deal with third party information and commercial confidentiality.

CIDA’s disclosure of the Three Gorges feasibility study was extremely important because it was the first time in the history of large-scale international development projects that citizens had the opportunity to review such a study – one that dam financiers, namely CIDA and the World Bank, claimed had been done to the highest international standards. When the study was released, Probe International invited nine engineering, economic, and environmental experts to review it and what they found was shocking: analytical errors, major omissions, flawed assumptions, exaggerated benefits and cost oversights. The flood control, seismic, dam safety, and sedimentation analysis was found inadequate, the feasibility of the spillway gates and shiplift design had not been verified, the study assumed that half a million people would be left living in the active flood storage area of the reservoir, the project budget failed to include compensation for as many as one-third of the affected urban residents; and the dam’s environmental and flooding effects impacting millions of people were grossly underestimated.

China went ahead with the Three Gorges project despite the inadequacies of its plans and the Canadian feasibility study, despite an unprecedented show of opposition from China’s National People’s Congress, and despite condemnation from concerned scientists, engineers, and citizens’ groups around the world. The World Bank, the United States Export-Import Bank and the United States Bureau of Reclamation, one of the world’s foremost dam-building agencies, refused to support Three Gorges on economic and environmental grounds. Canada, on the other hand, has backed Three Gorges with loans for Canadian turbines and computer systems channeled though the Export Development Corporation.

Now in its eighth year of construction, the Three Gorges dam is plagued by technical problems and corruption, as well as the impossible task of moving nearly two million people out of the reservoir area. According to the influential Beijing journal, Strategy and Management, Three Gorges is a crisis in the making. “The dam site threatens to become a hotbed for chaos throughout the first half of the 21st century,” it said last year. “If resettlement problems continue to accumulate and intensify, when the water begins to flow, those not peacefully settled could turn into an explosive social problem.” To make matters worse, Three Gorges power is expected to cost at least two to three times more than readily available alternatives and Chinese officials now openly doubt whether or not the project will be able to find enough customers for its power.

CIDA’s disclosure of the Canadian feasibility study did not stop the Chinese government from proceeding with Three Gorges but there can be no more compelling illustration of why such studies ought to be made public. The Three Gorges dam is proceeding, as sinologist Lawrence Sullivan explains, because of a “closed decision-making process that grossly distorts technical data and analyses to meet the political needs of a self-sustaining elite.” Secrecy, in other words, breeds poor decisions and disastrous projects like the Three Gorges dam.

Endnotes
1. Commission on Protecting and Reducing Government Secrecy, Secrecy: Report of the Commission on Protecting and Reducing Government Secrecy (Washington, D.C.: Government Printing Office, 1997).

2. Daniel Patrick Moynihan, Secrecy (New Haven, Yale University Press, 1998). p.1.

3. “‘Bottomless hypocrisy’demands scrutiny: Economist calls for royal commission,” The Ottawa Citizen, April 3, 2000. References to experts comparing EDC to private sector banks are made in “Secret of EDC’s ‘success’: Taxpayers’ money,” The Financial Post, May 25, 2000. “Crown agency cloaks deals in secrecy,” The Ottawa Citizen, May 9, 2000.

4. “Secret of EDC’s ‘success’: Taxpayers’ money,” The Financial Post, May 25, 2000. “EDC tempts a trade war,” The Financial Post, July 6, 2000.

5. “‘Bottomless hypocrisy’demands scrutiny: Economist calls for royal commission,” The Ottawa Citizen, April 3, 2000. “Secret of EDC’s ‘success’: Taxpayers’ money,” The Financial Post, May 25, 2000. “U.S. threat over ‘unfair’ exports: Canada’s EDC targeted,” The National Post, July 6, 2000. “EDC tempts a trade war,” The Financial Post, July 6, 2000. “U.S. assails Canada over secrecy: Urges WTO to force disclosure of subsidy and government support for aerospace firms,” The Globe and Mail, May 29, 1999.

6. “Secretive EDC agrees to be more transparent: Dramatic reversal in disclosure policy credits Citizen,” The Ottawa Citizen, May 22, 2001.

7. Report on the Export Development Corporation’s Environmental Review Framework, Office of the Auditor General of Canada, May 2001.

8.”Crown agency cloaks deals in secrecy,” The Ottawa Citizen, May 9, 2000.

Read the Response to the Report of the Access to Information Review Task Force, A Special Report to Parliament by The Honourable John M. Reid, P.C. Information Commissioner of Canada, Information Commissioner’s report to Parliament, September 2002.

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