Human Rights Monitoring Assessment for the BTC & SCP ... · PDF fileHuman Rights Monitoring Assessment for the ... 2.4.13 Labor Grievance Procedures ... This Human Rights Monitoring

Human Rights Monitoring Assessment

for the

BTC & SCP Projects

in Georgia

January 31, 2006

______________________________________________________________________________ Prepared by:

Gare A. Smith Daniel Feldman

Jonas Monast

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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

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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

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TABLE OF CONTENTS

I. EXECUTIVE SUMMARY .............................................................................................. 1 1.1 Overview..................................................................................................................1 1.2 Summary of Findings and Recommendations .........................................................1

1.2.1 Level 1 -- High Risk: Potential Breach of AGT’s Human Rights Commitments...............................................................................................2

1.2.2 Level 2 -- Medium Risk: Areas of Concern that Could Lead to a Breach of AGT’s Human Rights Commitments if Left Unaddressed. ........2

1.2.3 Level 3 - Low Risk: Unlikely to Lead to Breach of AGT’s Human Rights Commitments ...................................................................................5

1.2.4 No Action Necessary – AGT Project in Apparent Compliance ..................6 1.3 Notable Progress and Leadership Highlights...........................................................6

II. MONITORING AS A MEANS OF MANAGING LEGAL AND REPUTATIONAL RISKS ............................................................................................... 8 2.1 Background..............................................................................................................8 2.2 Human Rights Monitoring Assessment ...................................................................9 2.3 Scope of Monitoring Visit and Assessment.............................................................9 2.4 AGT Human Rights Commitments .......................................................................10

2.4.1 Non-Discrimination ...................................................................................11 2.4.2 Freedom of Association .............................................................................11 2.4.3 Working Conditions and Remuneration ....................................................11 2.4.4 Forced Labor..............................................................................................11 2.4.5 Child Labor ................................................................................................11 2.4.6 Migrant and Temporary Labor...................................................................12 2.4.7 Occupational Health and Safety.................................................................12 2.4.8 Freedom of Opinion and Expression .........................................................12 2.4.9 Minority/Ethnic Rights ..............................................................................12 2.4.10 Freedom from Torture................................................................................12 2.4.11 Freedom of Movement...............................................................................12 2.4.12 Anti-Corruption..........................................................................................13 2.4.13 Labor Grievance Procedures......................................................................13 2.4.14 Temporary and Voluntary Resettlement....................................................13

2.5 Methodology Employed for Monitoring Visit and this Assessment .....................13 2.6 Structure of the Monitoring Assessment................................................................15

III. ASSESSMENT ................................................................................................................ 16 3.1 Introduction............................................................................................................16 3.2 Framework for Implementation of Human Rights Commitments.........................17 3.3 Human and Labor Rights Findings in Georgia ......................................................18

3.3.1 Non-Discrimination ...................................................................................19 3.3.2 Freedom of Association .............................................................................21 3.3.3 Working Conditions and Remuneration ....................................................22 3.3.4 Forced Labor..............................................................................................23

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3.3.5 Child Labor ................................................................................................24 3.3.6 Migrant or Temporary Labor .....................................................................24 3.3.7 Occupational Health and Safety.................................................................24 3.3.8 Freedom of Opinion and Expression .........................................................25 3.3.9 Minority/Ethnic Rights ..............................................................................25 3.3.10 Freedom from Torture................................................................................25 3.3.11 Freedom of Movement...............................................................................25 3.3.12 Anti-Corruption..........................................................................................25 3.3.13 Labor Grievance Procedures......................................................................26 3.3.14 Temporary or Voluntary Resettlement ......................................................28

IV. RECOMMENDATIONS................................................................................................ 32 4.1 Introduction............................................................................................................32 4.2 Recommendations Regarding Implementation of Human Rights

Commitments.........................................................................................................32 4.2.1 Non-Discrimination ...................................................................................32 4.2.2 Freedom of Association .............................................................................35 4.2.3 Working Conditions and Remuneration ....................................................35 4.2.4 Forced Labor..............................................................................................37 4.2.5 Child Labor ................................................................................................37 4.2.6 Migrant or Temporary Labor .....................................................................37 4.2.7 Occupational Health and Safety.................................................................37 4.2.8 Freedom of Opinion and Expression .........................................................37 4.2.9 Minority/Ethnic Rights ..............................................................................38 4.2.10 Freedom from Torture................................................................................38 4.2.11 Freedom of Movement...............................................................................38 4.2.12 Anti-Corruption..........................................................................................38 4.2.13 Labor Grievance Procedures......................................................................39 4.2.14 Temporary or Voluntary Resettlement ......................................................40

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, 2005.

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 project-affected 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

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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.

1.2.1 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.

1.2.2 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.

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• 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.

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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 18.2.

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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.

1.2.3 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.

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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 right-of-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 2003. As an urban community, however, the relevant micro-districts were targeted for assistance under the Improved Schools Program which was launched in mid-2004. Residents of the relevant micro-districts filed a complaint with the IFC Ombudsman in March 2004. 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

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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.

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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 Regime4, 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.

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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, 2005. (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 in-country along the pipeline right-of-way to meet with and interview additional AGT personnel7,

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

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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 www.Caspiandevelopmentandexport.com.

2.4 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 internationally-recognized 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.

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The AGT Companies have made the following commitments (hereinafter, the “Human Rights Commitments”), with respect to these standards.9

2.4.1 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.

2.4.2 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.

2.4.3 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.

2.4.4 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.

2.4.5 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.

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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.

2.4.7 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.

2.4.8 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.

2.4.9 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.

2.4.10 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.

2.4.11 Freedom of Movement

The AGT Companies, including their Contractors and Subcontractors, shall not interfere with any person’s right to liberty of movement.

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2.4.12 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.

2.4.13 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.

2.4.14 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

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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

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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.

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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-of-way, 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

AGT Offices, Tbilisi • Meetings with AGT management • Document collection • Meeting with representatives from the Association for Protection of Landowners Rights (“APLR”)

July 18

Courtyard Marriott, Tbilisi • Meetings with NGO monitoring group and Georgian Young Lawyers’ Association

AGT Offices, Tbilisi

• Meetings with AGT management • Document collection

SPJV Offices, Tbilisi • Meeting with SPJV management • Document collection

Area 80 • Worker interviews

July 19

Naokhrebi • Community meeting Akhaltsikhe Camp • Meetings with camp management

• Worker interviews • Interview with local APLR representatives • Interview SPJV CLOs

Minadze • Community meeting

Akhaltsikhe • Meeting with local NGO

Right-of-way between Akhaltsikhe and Bakuriani

• Worker interviews

July 20

Bakuriani • Worker interviews • Interviews with SPJV and AGT CLOs • Interviews with SPJV management

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Date Location Activity Conducted

Right-of-way between Bakuriani and Tsalka


Tsinskaro • Community meeting

Tsalka Camp • Meetings with camp management • Worker interviews • Interview SPJV CLOs

July 21

Right-of-way between Tsalka and Tbilisi


Chivchavi • Community meeting

Pump Station Georgia 2 (“PSG2”)

• Meetings with PSG2 Management • Worker interviews

PSG2 Camp • Worker interviews

July 22

AGT Offices, Tbilisi • Debrief with AGT management

July 23 AGT Offices, Tbilisi • Debrief with AGT management • Meetings with SPJV management • Meeting with Georgia Supply Solutions (“GSS”) management

3.2 Framework for Implementation of Human Rights Commitments

The framework of the AGT Companies’ Human Rights Commitments is composed of three levels. First, the documents through which the AGT Companies bind themselves to comply with their commitments to lenders, Host Governments, and the community of local and international stakeholders. Second, the documents through which the AGT Companies bind their Contractors to comply with those commitments, and documents in which the AGT Companies set forth procedures for implementing commitments through their own staffs. Third, the documents through which the Contractors set forth procedures to implement those commitments through their staffs and Subcontractors.

The AGT Companies’ Human Rights Commitments are distilled from the Project documents (e.g., the Host Government Agreements, the Joint Statement, and other documents entered into by the Companies as described in section 2.4, above.) These documents constitute the highest level of the human rights implementation framework. This Monitoring Assessment examines the latter two levels of the implementation framework, through which the AGT Companies operationalize their human rights commitments.

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The AGT Companies’ implementation of some human rights commitments, such as Temporary and Voluntary Resettlement and Occupational Health and Safety, through the SRAP and the ESIA, have been examined by other internal and external audits, and this Monitoring Assessment does not seek to duplicate those efforts. Rather, this Monitoring Assessment highlights human rights issues emanating from these commitments that could present a reputational or legal risk for the AGT Companies.

A detailed description of the contractual framework for implementing AGT’s and SPJV’s human rights commitments, as well as the way in which both AGT and SPJV have conducted the organization, staffing, and auditing of these implementations, is provided in Appendix A.

3.3 Human and Labor Rights Findings in Georgia

Findings for Georgia are based on individual and group interviews with a spectrum of representatives from AGT, SPJV, Contractor and principal Subcontractor management, workers (51 individual interviews of workers from SPJV, Contractors and Subcontractors), community members, and local NGOs. The interviews were conducted in Tbilisi, Akhaltsikhe, Naokhrebi, Minadze, Bakuriani, Tsalka, Tsinskaro, Chivchavi, various worksites in and around these locales, and along the right-of-way between these sites.

Monitors did not find evidence of systemic or significant violations of Human Rights Commitments related to pipeline activities in Georgia. There were, however, a number of problematic labor and community relations issues that AGT should seek to address in the remaining portion of the Construction Phase of the Projects. If some of these issues are still relevant to the forthcoming Operations Phase, then AGT should make a particular effort to remedy them; if not, BP should bear these concerns in mind with respect to future extractive industry projects.

It is noteworthy that in several areas -- particularly with respect to occupational health and safety and inter-ethnic relations -- there is widespread recognition among workers that the Project sets and meets exemplary standards.

There are two overarching factors, however, that impacted the responses of many workers regarding issues related to Human Rights Commitments, and which made assessing violations of these commitments difficult for the Monitors. The first factor was the widespread use of month-to-month contracts by SPJV and the principal Subcontractors with most, if not all, of their unskilled labor force. Monitors do not question the business rationale for using such contracts, since the temporary nature of the construction process forces SPJV and its subcontractors to constantly calibrate the size of their workforce according to construction needs.

It is important for the AGT Companies to recognize, however, that such widespread use of monthly contracts may create a significant disincentive for workers to raise legitimate concerns about their working conditions, since a worker who is perceived as troublesome may risk having his or her contract renewed. In the absence of job security, many workers were understandably concerned about raising complaints regarding the terms of their employment. If such monthly contracts are used in the future, AGT should seek to compensate for the potential negative effects by ensuring that workers have the ability to raise legitimate concerns about their

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working conditions without fearing retribution -- particularly the termination of their employment. This could perhaps be achieved through the widespread use of non-retaliation provisions in AGT, Contractor, and Subcontractor employment policies. In contrast to the short-term needs of the Construction Phase of the Projects, employees hired for the Operations Phase are subject to longer-term contacts. It is also important to note that at least one national NGO questions the legality of month-to-month contracts under Georgian labor law. According to the NGO, such contracts are only to be used when work can be completed within one month. No documentation was provided to support this view, however. While AGT is confident that such contracts comply with Georgian law, Monitors suggest that if it has not already been done, that AGT clarify worker rights under monthly contracts. For example, AGT should address how often workers should receive copies of the contracts (e.g., whether employees should receive a copy of the contracts each month or whether providing a copy at the outset of employment is sufficient) and proper notification prior to dismissal.

In contrast to the short-term needs of the Construction Phase of the Projects, employees hired for the Operations Phase are subject to indefinite or longer-term contracts, which generally require a minimum of one month’s notice. The majority of staff employed during the Operations Phase will be employed directly by BP Exploration Caspian Sea Limited. There will be a small number of Contractor employees, such as GSS, the contractor that will provide catering for PSG1 and PSG2 once the facilities are fully operational. GSS will utilize six-month contracts, after employees have passed a three month probationary period.

The second factor that affected workers’ ability to raise legitimate concerns about workplace conditions is that very few employees were informed about SPJV’s labor grievance procedures. With no training about this procedure, most workers believed that grievances could only be brought before their immediate supervisors. Moreover, in the absence of widely communicating a non-retaliation policy, most feared raising concerns with management. Employees of Subcontractors were particularly vulnerable, because it did not appear that the Subcontractors had any labor grievance procedure in place, and workers were wholly ignorant of any such grievance procedures that SPJV or AGT may have had that could have been applicable to them.

Although these two factors do not in themselves indicate that worker rights have been violated, they complicate efforts by the AGT Companies to identify and address concerns in a proactive and timely manner.


Monitors did not find any indication of widespread or systemic discrimination on the basis of invidious characteristics such as race, religion, ethnicity, gender, sexuality, and age. Indeed, many workers interviewed spoke positively about their sense of inter-ethnic teamwork on the Project, particularly given the multitude of diverse backgrounds.

Monitors heard at least one allegation of disparate treatment among employees in like positions along the pipeline. A Colombian supervisor claimed that for expatriate laborers, working conditions and benefits varied not by professional status, but by nationality. He stated that many of the non-European expatriates (e.g., including Argentine, Syrian, Peruvian, and

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Turkish workers) worked considerably longer rotations than European expatriates. Similarly, non-European expatriates ate in different canteens compared to European expatriates in like positions, and had worse accommodations (e.g., at least two persons to a room, as opposed to European expatriates with similar skills, who all had their own rooms). Although he raised this issue with SPJV senior management at one point, he never received a response.

When queried, SPJV senior management confirmed that employment contracts varied among expatriate employees with like positions, and were based on the market conditions of the employees’ home country. Pursuant to this system, European expatriates received more generous compensation and rotation schedules than non-European expatriate workers. SPJV also confirmed that accommodations and access to canteens are based on an employee’s position, and not nationality. An SPJV CLO said that the expatriate employees “needed to deal with their grievances on their own, since that is not an issue for us.”

Monitors recognize that under the Contracts, Contractors and Subcontractors are largely responsible for their own arrangements with regard to food service and accommodation, as long as they comply with AGT’s HSE policies.

Monitors also heard allegations of disparate treatment of local Georgians and expatriate employees. Some workers alleged that local employees who held skilled positions were paid several times less than expatriates in like positions. Monitors understand that AGT and Contractors are already aware of this issue, and are seeking to address concerns by developing Employment and Training Plans which set targets for nationalization of the workforce.

Monitors also received complaints from workers who perceived discriminatory treatment on the basis of nationality. Some Georgian workers indicated that expatriate managers were disrespectful of them due to their nationality. They acknowledged, however, that misunderstandings may have arisen as a consequence of language barriers.

While not a breach of a fundamental human right, the perception of disparate treatment in food service at the camps also generated some ill feeling among workers, which may be of reputational concern to AGT. Although there are separate canteen facilities for “senior” staff, “junior” staff, and laborers project-wide, some workers expressed their preference for the more egalitarian culture exhibited by AGT in its head office. In the Monitors’ view, the segregation of facilities frequently led to the perception that Georgian workers were provided with inferior quality food, since it was noted that “expatriate-style” food was served in the “senior” staff canteen, Indian food was commonly served in the “junior” staff canteen, and local Georgian food was served in the laborer canteen. While separate dining facilities may be necessary for logistical purposes, and also allows Contractors to provide different menus in canteens to cater for different food preferences, assigning workers to eat in particular canteens may create the appearance of disparate treatment and has fostered some discontent, particularly among Georgian employees.

Monitors heard non-specific allegations of sexual harassment in AGT work camps. The NGOs raising the issue did not provide substantive details regarding the allegation or first-hand accounts, and therefore Monitors were unable to verify these allegations. Monitors sought unsuccessfully to obtain further information by asking direct questions regarding sexual

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harassment to all women interviewed in the camps. Only one worker claimed that she had experienced sexual harassment, but refused to share details of this. Upon completion of the interview with this worker, Monitors attempted to follow-up on the allegation by interviewing several other female employees of the same subcontractor, none of whom indicated awareness of such harassment. Beyond this one general allegation by an interviewee, Monitors’ questions yielded no information regarding any such sexual harassment incidents, and, indeed, many of the women interviewed vociferously denied the veracity of the allegation. Monitors have been advised that since the Monitoring Visit, AGT has taken this allegation seriously, and launched a robust effort to determine the facts underlying this issue.


Monitors found no instances in which persons related to the Project illegally interfered with the right to freedom of association. Indeed, there were positive indications that SPJV was actively seeking to demonstrate respect for freedom of association.

Monitors met with a representative of a branch of the national Trade Union of Oil and Gas Industrial Workers of Georgia. This union has been active within SPJV since 2003 and the union representative with whom the Monitors spoke reported that he was able to work with SPJV management to resolve members’ issues.

In fact, the main impediment to workers joining this or other unions seemed to be that few workers understood the concept of a labor union, or were aware of union activity within SPJV. Most workers did not know about their right to join a union or engage in collective bargaining, nor did they understand how a union operated. Employees of principal Subcontractors appeared particularly ignorant about freedom of association. The interviews led Monitors to conclude that worker induction and training was limited to HSE issues and did not cover AGT policies regarding labor rights or broader human rights.

Monitors discovered a potential problem with what may amount to retaliation against a Subcontractor’s employees in the Akhaltsikhe camp who participated in a brief strike. The strike, during which staff demanded higher wages, lasted only a few hours. The Subcontractor’s on-site manager reported that, although participants did not receive wages for the time they were on strike, all participants were able to return to work. In contrast, staff reported that some participants had been fired, and workers perceived that the dismissals were connected to the strike. Because of the lack of transparency in the demobilization process (see discussion in section 4.2.12 below), Monitors could not verify whether the dismissals were due to the regular downsizing of the work camp (construction efforts were moving from Akhaltsikhe camp to Bakuriani during the Monitoring visit), or were related to participation in the strike.

As noted in the discussion of other fundamental human rights and labor rights commitments, the widespread use of one-month renewable contracts also impacts freedom of association. Many of the workers interviewed indicated that any desire to join a union was kept in check by fear that their contracts would not be renewed. Monitors understand the legal and practical reasons that exist under the Georgian Labor Code for engaging non-permanent employees on one-month contracts, but suggest that an effective non-retaliation policy and labor grievance procedure would be all the more useful in such a scenario.

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Many workers indicated that work conditions, although difficult, were fair. Workers gave high marks to the SPJV and to Subcontractors for paying wages promptly, providing pay slips that detailed deductions, paying overtime, and giving workers written contracts. These findings are significant because they indicate positive steps the SPJV has taken to address problems that reportedly occurred earlier in the Construction Phase of the Project -- most notably, when former Subcontractors were accused of consistent late payments of wages.

There also appeared to be relative consistency, particularly among Georgian unskilled laborers hired directly by SPJV, with respect to wages and benefits received. Accordingly, there were very few allegations of pay discrepancies between Georgian workers. This, too, reflects an apparent improvement, as some workers told Monitors that there had been pay discrepancies earlier in the Construction Process.

Despite these positive findings, there still were repeated concerns about working conditions. Most of these revolved around aspects of timekeeping policy and practice. For example, some Subcontractor employees alleged that timekeepers deliberately recorded fewer hours on time sheets than they worked, that there was no recourse to a labor grievance procedure because their supervisor would not have supported their claims, and they feared they would be fired if they raised concerns.

Similarly, a Subcontractor allegedly refused to pay overtime to its staff at Akhaltsikhe camp after the company took over operations from another company, suggesting that staff should not need more than the regular hours allotted to fulfill their duties. Staff were upset by this announcement because the previous company provided overtime wages. The Subcontractor also cut salaries from one and a half lari per hour to one lari per hour after it assumed management of the facility. Although this reduction of wages was legal, it demoralized workers, and was one of the factors that led to the strike at Akhaltsikhe camp. Another alleged factor was that the Subcontractor management, unlike its predecessor, refused to provide uniforms for its staff. The strike had no impact on the Subcontractor’s wages and benefits.

Many employees reported working ten to twelve hours per day and only infrequently taking days off. No workers, however, alleged that they were forced to work on Sundays or days off; rather, they did so voluntarily to earn extra money. Workers expressed some disagreement and confusion regarding the proper wage multiplier for overtime hours -- if it was counted as regular time, time and a half, or double time.10 Monitors similarly heard several complaints by SPJV workers, echoed by the NGO monitoring group and a separate national NGO, that work on public holidays was paid below the legal overtime rates. When questioned about this, SPJV management stated that all public holidays were paid as required by law. Representatives from an additional NGO raised the concern that short-term workers were not receiving the benefits to which they were entitled. This NGO representative alleged that workers on one-month contracts who had been employed, for example, three months or more, were entitled to the same benefits 10 The SPJV Community Relations Manager reported that regular overtime is compensated at 1.5 times the regular salaries for the first two hours and double time thereafter. Workers also receive double time for work on days off and holidays.

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as those with indefinite or long term contracts. No documentation was provided to support this view, however. There were also isolated complaints about discrepancies in travel time, and whether time was deducted for lunch even if work continued during that period.

Although most employees were given copies of their contracts, and could therefore refer to them with respect to questions about terms of employment, Monitors interviewed an employee of one of the AGT Contractors, who reported that he had not received a contract, nor signed any documentation for his job. Although he was aware of his salary, he reported that he didn’t know the specific terms of his employment. Since this Contractor will be engaged throughout the Operations Phase of the Project, this situation needs be confirmed and if it is correct, rectified.

Some of the aforementioned complaints may pose reputational, if not legal, risks to the Project. If the remuneration concerns continue in the Operations Phase of the Project, Monitors suggest that appropriate audits be undertaken by AGT to evaluate timekeeping practices.

Worker interviews about workplace conditions reinforced that worker induction and training are limited to HSE issues and do not cover the AGT Companies’ policies regarding labor rights or broader human rights.

Some security workers also questioned the efficacy of working 24-hour shifts. During these shifts, several officers are all “on duty,” during the entire 24-hour period, but may take periods of time to sleep, if they are covered by others also on duty. This is not a labor violation, since it is seemingly consistent with the officers’ employment contracts. Nonetheless, Monitors raise the concern that AGT may suffer adverse consequences due to the officers’ acknowledged exhaustion and lack of attentiveness by the end of these 24-hour shifts. The same security officers also complained about the lack of potable drinking water.

The extensive use of mandatory overtime remains problematic as long as Georgia’s Soviet-era Labor Code remains on the books, inasmuch as the Labor Code limits workers to a 41-hour work week and 120 hours of annual overtime. Several NGOs with which the Monitors met raised this criticism. Although there was agreement among civil society and management that the current law was outdated and will likely be changed soon, the hours worked by many Contractor and Subcontractor employees appear to be in excess of the Labor Code. Monitors are of the belief, however, that the Prevailing Legal Regime requires Contractors to abide only by prevailing standards in the international petroleum industry, rather than the exceedingly restrictive provisions of the Georgian Labor Code. As long as working hours are consistent with international labor standards applicable under the Prevailing Legal Regime, which they appear to be, then there is not a violation of AGT’s Human Rights Commitments.

Georgia’s relatively dire economic situation permeated virtually all interviews conducted by Monitors. Although workers acknowledged that wages paid on the Project are above the minimum wage, virtually all workers indicated they wanted to earn much more.

3.3.4 Forced Labor

Monitors found no evidence indicating the use of forced labor during the course of the Project.

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3.3.5 Child Labor

Monitors found no evidence indicating the use of child labor during the course of the Project.

3.3.6 Migrant or Temporary Labor

Monitors found no evidence of human rights problems related to temporary or migrant labor except, as noted repeatedly, that most such workers appear to be on one-month contracts which, although legal, heighten the possibility that fundamental worker rights could be violated without recourse.


Most workers praised the attention paid to HSE and stated that compliance with the rules is generally quite good. Workers noted that AGT personnel often verify HSE compliance. Safety managers use a “five star program” to monitor compliance with the HSE policies. If a worker is observed not following the policies, a star is removed from his hardhat. Repeated violations can lead to fines or even dismissal. Workers also generally praised the availability and quality of medical care.

Monitors did, however, witness a minor violation of HSE policies. At a stop along the right-of-way, Monitors encountered a small team of day laborers employed by one AGT Contractor. Although the group of roughly 15 workers was technically outside of the construction area, they were all excavating on ground within the right-of-way. None of the workers were wearing the required personal protective equipment (“PPE”).11 Soon after Monitors arrived at the site and started conducting interviews, the Contractor’s supervisor also arrived and began handing out PPE to workers. Since the Monitoring Visit, AGT has advised that distribution of PPE to this Contractor’s employees has been addressed.

Interviews of these workers revealed that none had received standard HSE training or written contracts. According to AGT, however, employees of this Contractor have received safety inductions and safety “toolbox talks” are held on-site during excavations. Workers of this Contractor also claimed they had no knowledge about the terms of their employment, including the number of hours they were expected to work, or even their salaries.

When Monitors questioned the Contractor’s supervisor at the site, he said the Contractor frequently hired “spontaneously” in areas that needed “emergency” excavation. As a result, local workers were typically recruited verbally, and employed for a few days to a fortnight. Hours of work and compensation varied according to skill. The supervisor stated that there was not enough PPE to give one to every short-term worker for the duration of their time. As a result, PPE items were brought to the worksite.

11 In this case, due to the relative distance from actual construction activities, only high visibility vests were required.

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3.3.8 Freedom of Opinion and Expression

Monitors did not find any indication that the AGT Companies, the Contractors, or the Subcontractors have sought to restrict the freedom of workers to express opinions, ideas, and beliefs. The widespread use of one-month contracts and the absence of widely communicating a non-retaliation policy, however, have created significant disincentives for workers to voice even legitimate concerns about the Project, or to report grievances. Several workers of a Subcontractor alleged specific instances in which an individual’s contract was not renewed in retaliation for voicing a complaint. As stated previously, however, Monitors were not able to verify whether the failure to renew the contract was due to the regular downsizing of the work camp (construction efforts were moving from Akhaltsikhe camp to Bakuriani during the Monitoring visit), or for voicing a complaint.


Monitors did not encounter any significant allegations in the area of minority rights or interethnic relations.


Monitors did not find any indication that physical or psychological coercion had been used by any person employed by or associated with the Project in Georgia.


Monitors did not find any indication that the AGT, Contractors, or Subcontractors in Georgia had interfered with any person’s right to liberty of movement.


SPJV and its Subcontractors utilize a random selection process for hiring employees from local communities, and CLOs oversee the selection process. Applicants are randomly selected from the pool of applicants for a particular position and their names are posted. The selected applicants then have the opportunity to formally accept the position. Although this process was generally regarded as fair, there was also a strong belief among some workers, as well as local AGT managers, that it was possible to circumvent this hiring process. Some workers allegedly avoided this process by applying directly at the work camps for their jobs. In addition, Monitors heard isolated rumors that workers selected through the random process sometimes must pay bribes before formally accepting the job. When questioned about these allegations, SPJV management stated that police were investigating rumors of bribery, and SPJV was waiting for an official report on this matter.

Some workers on the field joint coating teams reportedly paid 500 Lari to secure employment in the Akhaltsikhe/Bakuriani area. This allegation was made by an AGT manager in the field and by other employees of the AGT Companies. Further, less specific allegations were reported by two AGT CLOs. An SPJV senior manager acknowledged the likelihood that corruption takes place, but denied SPJV involvement: “People use the SPJV name to collect money. It is impossible for expatriates to get to the bottom of the issues. I don’t think it is

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widespread.” One interviewee suggested that there was potential corruption in BP’s own hiring process, which reportedly lacks transparency in hiring and promotion decisions. AGT advised Monitors that BP hiring and promotion is undertaken on a transparent basis involving advertisement, interview, and appointments on merit.

There were no allegations that corruption was sponsored by the AGT Companies or the Contractors, nor did anyone state that he or she was a victim of, or participated in, corrupt activities. It was therefore difficult to substantiate these allegations. The frequency with which similar allegations were reported during the Monitoring Visit, however, suggests that there may be some validity to the claims. For this reason, it is important that the AGT Companies make an effort to investigate such allegations whenever possible, and implement necessary processes to reduce the potential for corruption.

Addressing the potential for corruption will be especially important during the demobilization process and the transition to the Operations Phase of the Projects. Workers at the camps did not have any information about how these demobilization decisions would be made. It appeared to Monitors that direct managers were responsible for making decisions regarding which workers would remain employed and which would have their contracts terminated. The apparent lack of transparency and oversight of this process creates a high potential for corruption. As a result of the lack of information, some workers were concerned that demobilization decisions were made as a form of retaliation against certain workers, particularly those that had made complaints. Many workers, particularly those who were not employed in the Construction Phase, also sought information about how they might be hired during the Operations Phase of the Projects.

AGT provided Monitors with a sample hiring policy that encourages open and transparent recruitment, and were advised that AGT intends to include it as a contractual provision in Operations Contracts where employees are required to work full time on BTC Co. or SCP Co. sites. Such a provision was included in the GSS contract, the contractor that will handle catering at the pump stations during the initial Operations Phase. Based on an interview with GSS’s management, Monitors believe GSS makes hiring decisions in a transparent manner and with proper oversight. The GSS senior manager reported reviewing all applications and interviews, and hiring decisions are made by a team of managers rather than a single individual.


The accessibility and efficacy of labor grievance procedures is probably the most significant and widespread concern Monitors discovered in the implementation of Human Rights Commitments. The apparent ineffectiveness of existing labor grievance procedures impedes the ability of Contractor management and AGT to adequately monitor the protection of human rights, posing a significant potential reputational threat to the Projects. Furthermore, problems with implementing effective labor grievance procedures served to further exacerbate concerns among many workers interviewed that they could not bring labor-related problems to management because of the twin constraints of having month-to-month contracts, and not having non-retaliation clauses in their contracts. The combination of all of these factors appeared to make employees reluctant to raise legitimate concerns about workplace and human rights issues, for fear that they would risk losing their jobs.

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Reputational risks are also greatly increased when workers do not have an effective “internal” route through which to address their concerns. With particular respect to labor grievances, this problem is also linked to issues related to freedom of Association, Freedom of Opinion, Working Conditions, and Remuneration.

The SPJV labor grievance policy allows workers to submit complaints by calling company headquarters in Tbilisi free of charge. The community relations department in Tbilisi maintains a log of the payroll-related complaints received, as well as a “Hotline Log.” The Hotline Log, which includes basic information about all calls received, including requests for employment, does not indicate how the complaints were resolved, but does indicate if issues were referred. Employment complaints were often referred to CLOs, even though employment issues are outside their scope of responsibility. The SPJV reports all complaints to AGT in the monthly employment reports and the quarterly audits.

Most grievances were reportedly made by telephone, rather than in writing. SPJV management told Monitors that the Hotline phone number was posted at work sites on billboards, advertised in communities and on television, and that a particular effort was made to disseminate information publicly about grievance mechanisms as a result of internal suggestions received by SPJV last year. Monitors, however, found only a relatively haphazard posting of the labor grievance procedures in work camps and other locales At the time of the Monitoring Visit, such grievance procedures were only posted in English at the Akhaltsikhe and PS2 camps, and were not posted in the Tsalka camp. Even when accurately posted, it is possible that many AGT workers who do not live or eat in the camps would never have occasion to see the policy, which SPJV management acknowledged was a logistical problem.

Monitors reviewed the numerous entries in the Hotline Log, which clearly demonstrated that at least some workers and community members knew how to use the grievance procedures. Virtually all workers interviewed by Monitors, however, were uniformly unaware of the SPJV grievance process. Almost no workers knew to whom they should raise issues other than concerns about HSE standards, nor were they aware of any specific grievance process. They were also very dubious about using any grievance procedure, making statements like, “I need to keep my job. How could I raise a concern?” or “No one I know would file a complaint, because it would not be listened to.” Several explicitly raised concerns about a grievance process that wasn’t anonymous, stating “People are afraid to make complaints, because they don’t want to be fired. They’re concerned about losing their jobs.”

Most workers knew about the SPJV CLOs, but also recognized that the scope of CLO duties did not include labor grievances. One said, “We like the CLOs and would be willing to speak with them, but they’re for the communities, not for our labor issues.”

Most workers stated that they would likely never raise a concern with their employer, but if they had to, would probably raise it directly with their immediate supervisor, if they didn’t fear repercussions. Some, with independent relations with more senior managers, said that they could raise issues with those managers. This resulted in very ad hoc scenarios under which labor grievances were brought, based in large part on the workers’ personal relationships.

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There was also some apparent confusion about the policies in place. For instance, an SPJV work site manager told Monitors that complaints may be raised with an administrative person, although that did not appear to be part of the SPJV official policy. In addition, there was confusion about what labor grievance procedures Subcontractors had in place. Reportedly, one of the Subcontractors uses the SPJV grievance policy. Yet, a manager from that Subcontractor told Monitors that labor grievances are to go through the SPJV CLOs, even though those CLOs disavowed this chain of command.

The workers least protected by an absence of effective labor grievance procedures were those employed by the Subcontractors. Without exception, Subcontractor employees interviewed by Monitors said there were no opportunities to raise grievances with anyone outside of their direct chain of command. In particular, Subcontractor employees singled out the SPJV for lack of implementation of an effective labor grievance process.

One employee of a Subcontractor said that her colleagues, who were involved in the brief strike at Akhaltsikhe Camp, had approached both AGT and SPJV senior management about their concerns, but were told that they had to bring those concerns to the Subcontractor’s management instead. When the complaining employees tried to find the person designated by Subcontractor to deal with labor grievance, they were informed that no such individual existed. The employee concluded, “We have no recourse.”

Several other workers suggested that BTC Co. or SCP Co. exercise more oversight over the labor grievance procedures, stating that they “had faith” in BP and its affiliated companies to manage a grievance procedure effectively. There was little information, however, regarding the content of the AGT grievance procedures, or whether AGT even had a non-retaliation policy. In fact, although there is a BP-wide anonymous grievance procedure called “Open Talk,” which has been particularly well-utilized by the BP Business Unit in Azerbaijan, no Georgian worker interviewed by Monitors was familiar with it, or knew how it could be used to protect workers’ interests.

If labor grievance procedures have already been designed and implemented, but simply not well-publicized, Monitors found widespread sentiment among employees that workers needed to be better educated about such policies. Some suggested that workers be trained regarding grievance procedures at the same time that they receive HSE training.

Monitors did not find any direct evidence that retaliatory dismissals had taken place, although, as noted previously, it could not be established why workers who had voiced a complaint did not have their monthly contracts renewed.

3.3.14 Temporary or Voluntary Resettlement

Monitors did not find evidence that any individuals had been removed from their homes as a consequence of Project construction. The AGT Companies utilize a broad network of resources to address land issues. The primary contact for land acquisition and compensation issues is through the Land Team. At the time of the Monitoring Visit, the Land Team had eight Land Officers operating along the pipeline corridor, reporting to a Georgian team leader and an expatriate Land Manager.

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CLOs are the contact with landowners for all other issues. At the time of the Monitoring Visit, the AGT Companies had five CLOs operating in the country, and an additional employee who served as a CLO dedicated to the relevant micro-districts of Rustavi, which she did in combination with her full-time job as the Community Investment Program Coordinator. The CLOs reported to two expatriate social supervisors.

SPJV employed its own CLOs. Monitors met with three SPJV CLOs along the course of the right-of-way. On “Spread Two” of the right-of-way, the SPJV CLOs handled all issues, including land claims, but on “Spread One,” the SPJV employed two Land Officers, in addition to the CLOs.

In addition to the Land Officers and the CLOs, the AGT Companies also contract with an independent NGO -- APLR -- to provide counseling to landowners and to help the AGT Companies collect complaints and monitor responses. APLR is also available to assist the landowners with advice in relation to potential court claims. The AGT Companies rely on the court system to resolve any disputes remaining after the internal grievance process has been exhausted, and abide by the final decisions of the highest court with jurisdiction over the claims.

Work stoppages resulting from community protests along the right-of-way were not uncommon. The participants in these work stoppages, which ranged from a single individual to large community gatherings, typically sought concessions from the AGT Companies, such as increased land or crop compensation. The work stoppages were also frequently used to protest governmental or social issues unrelated to the AGT Projects. The AGT Companies implemented an effective process for dealing with work blockages, and no one associated with the AGT Projects was authorized to use physical force to remove the protestors.

Instead, CLOs were called to the scene who, in conjunction with site managers, sought to negotiate with the protestor(s). Often, the blockages were resolved without having to call the police; however, company management did call the police if negotiations proved ineffective. Senior AGT management worked directly with the Ministry of Interior in an effort to ensure that responses were appropriate and did not lead to human rights violations. Local police, for example, were ordered to follow instructions from the Ministry, and were prohibited from acting unilaterally.

The land grievance procedures have been used frequently. According to AGT, the land grievance system operated by the AGT Companies has recorded 2200 complaints to date, of which approximately 95% have been resolved. For example, an employee at the SPJV Community Information Center in Akhaltsikhe, indicated 668 complaints have been received in that district alone since 2003. Monitors were advised, however, that some complaints have been outstanding for more than a year. According to the AGT Companies, these delays were caused by various factors, including a lack of agreement on the basis and details of claims, delay in obtaining proof of ownership of affected land, and the requirement to survey affected areas.

In addition, the employee at the Akhaltsikhe Public Information Center reported that SPJV issues a response within seven days, which may include an action plan or a denial of the complaint. SPJV management reported that it always provides a letter explaining why the claim was rejected, although NGOs alleged that such letters often were not sent. APLR also reported

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having difficulty in monitoring the SPJV decision-making process because it on occasion failed to provide written decisions to landowners explaining the reasons for denying a claim. AGT has indicated that this issue has been addressed, and SPJV is now evidently providing written decisions in a consistent and understandable manner.

Monitors also heard complaints from NGOs about the use of the “Necessary Right Of Way” (NROW) doctrine -- a process which allows the AGT Companies to access land along the pipeline corridor. The AGT Companies have relied upon this doctrine only when the landowner is absent, cannot be identified, or refuses to sell the property. Compensation for landowners may then be determined by the Court, if the parties are unable to reach agreement. The Georgian Supreme Court recently ruled that the use of the NROW doctrine is legal and appropriate, but local NGOs claim that AGT is undermining domestic laws through the use of it, as well as affecting landowners’ human and property rights.

A number of land-related issues were ongoing at the time of the Monitoring Visit, many of which are covered in the SRAP reporting process. Most significantly, there was confusion among communities regarding the allowable use of the 500-meter corridor along the right-of-way. For safety reasons, there will be some restrictions on development density within this corridor. According to AGT, however, land owners will be permitted for the most part to continue to use the property as normal. In addition, Monitors were advised AGT will hand back, free of charge to the previous landowner, restricted use of the land purchased for the right of way. At the time of the Monitoring Visit, AGT management was finalizing a booklet with detailed information regarding the various restrictions on land use along the right of way. Monitors are advised at the time of publication of this Assessment, the land use booklet is being distributed and explained in individual meetings with affected landowners.

Monitors conducted community meetings in the villages of Tsinskaro, Naokhrebi, Minadze, and Chivchavi. Meetings were conducted outside the presence of CLOs, and other AGT and SPJV representatives, to maximize the independence of this review. While each community alleged specific problems, there was no evidence of temporary or involuntary resettlement. For instance, in Naokhrebi, the highest priority topic of conversation with Monitors was the division of compensation for “Area 80” land, which villagers claimed was in part communally owned. Villagers claimed that AGT did not give appropriate notice before the Area 80 land was used, and that compensation received for it thus far was inadequate, particularly since there was “substantial damage to some of the land.” However, according to AGT, the State data indicates the majority of Area 80 land is State-owned, with some privately-owned parcels and a very small proportion of it community-owned land. The State data is the data on which BTC Co./SCP Co. are legally obligated to rely, and the community-owned land was initially recorded as State-owned land. It was only confirmed as Community-owned after the land acquisition process had commenced. Monitors were advised that AGT, through APLR, assisted the community in registering their ownership rights. In addition, APLR assisted in creating a community based organisation (CBO), which was legally empowered to sell land to the Project.

There were also a number of comments during the four community meetings conducted by the Monitors that the grievance system wasn’t working effectively, because villagers’ concerns were not responded to for many months. Finally, there were numerous questions raised

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by villagers about the demobilization process, and how it would impact members of the communities who were employed by AGT or the Contractor, as well as frequent questions about ongoing land usage after the Construction Phase of the Project was complete.

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IV. RECOMMENDATIONS

4.1 Introduction

As noted in the Executive Summary, Monitors did not find evidence that AGT, its Contractors or Subcontractors breached AGT’s Human Rights Commitments. There are areas, however, in which the AGT Companies could put in place further safeguards to prevent issues from potentially leading to a breach. Additionally, the Monitors heard some allegations that could cause reputational, if not legal, risks for the AGT Companies.

The following recommendations were developed by Monitors in a collaborative process with AGT management, in an effort to best address the legal and reputational concerns identified by Monitors’ findings. Monitors initially drafted each of the recommendations contained below, but then worked with AGT management to hone the recommendations, and ensure that they were feasible and could potentially be implemented during the remaining time left during 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 the recommendations below.

4.2 Recommendations Regarding Implementation of Human Rights Commitments


Many of the non-discrimination issues are tied to the apparent lack of an effective grievance mechanism for reporting acts of alleged discrimination in the workplace in particular. Monitors therefore heard far more procedural complaints about discrimination, and the inability to raise such concerns without fearing reprisals, than substantive complaints. Thus, the recommendations in the Assessment regarding “Labor Grievance Procedures” (subsection 4.2.13) are equally applicable to this section. These recommendations include:

• communicating widely an anonymous labor grievance procedure; • communicating widely a non-retaliation policy regarding discrimination and other

issues; • subject to operational requirements, limiting the widespread use of monthly contracts

to situations where it is anticipated that the workforce will be continuously employed for less than one year;

• designating Industrial Grievance Officers with whom employees can speak regarding concerns; and

• ensuring greater oversight by AGT with respect to Contractors and Subcontractors so that employees affiliated with the Projects can raise concerns in an effective manner.

(i) Recommendation: Conduct training sessions for all relevant AGT, Contractor,

and Subcontractor management regarding fundamental worker rights. Such training should address ILO Conventions and the current status of rights granted under the Georgian Labor Code as far as applicable.

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AGT Response: AGT will prepare training sessions and/or materials regarding fundamental worker rights for relevant managers. It will request Contractors do the same and may offer assistance in this.

(ii) Recommendation: AGT should ensure that a single senior manager is charged with monitoring and auditing all compliance, including by Contractors and Subcontractors, regarding respect for fundamental human rights and labor rights, particularly those related to Non-Discrimination, Working Conditions, and Freedom of Association. This position should also be kept apprised of labor grievance procedures implemented by the Contractors and Subcontractors.

AGT Response: AGT will ensure that a single senior manager is charged with assuring compliance with fundamental human rights.

(iii) Recommendation: AGT should seek to determine the credibility of any allegations of sexual harassment that took place at AGT work camps, including by seeking out any former Contractor or Subcontractor employees who may have experienced such harassment or have knowledge about alleged incidents. If any of the allegations of sexual harassment are substantiated, AGT should take all necessary steps to ensure that mechanisms are in place to prevent such recurrences of this behavior, that channels exist for the accurate reporting of such incidents in the future, and that those who committed the acts of harassment are properly punished, if still employed by AGT, its Contractors, or Subcontractors.

AGT Response: AGT considers an allegation of this nature extremely serious. AGT has therefore already commenced an exercise to determine the veracity of the allegation. Following this exercise, AGT will take any necessary and appropriate action, in accordance with the findings.

(iv) Recommendation: While the current practice of designating canteens for different employees is not a breach of a fundamental human right, Monitors recommend that AGT encourage Contractors and Subcontractors to, where feasible, invite all employees to eat at a single integrated canteen at work camps, thereby treating all employees equally regardless of their status within the organization. In the event a single canteen is not feasible, Monitors recommend that workers be allowed to choose the canteen in which they will eat.

AGT Response: Canteens have already been constructed at the work camps. At this advanced stage of the Project it is not logistically feasible to invite all employees to eat at a single integrated canteen. Furthermore, having separate dining facilities has made it possible for Contractors to provide different menus in canteens to cater for employees’ different food preferences. Nonetheless, AGT acknowledges the perception of disparate treatment in terms of food quality. Therefore, AGT will continue to ensure that the high quality of food at all canteens is maintained. During the Operations Phase will have one standard of canteen service for all employees.

(v) Recommendation: AGT should exercise an assurance function over its Contractors and Subcontractors to prevent discrimination in their hiring or employment practices. This may be achieved by AGT providing a mechanism whereby Contractor or

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Subcontractor employees may make anonymous reports directly to AGT regarding labor grievances such as disparate treatment. Although the existing contractual relationship may prevent AGT from resolving issues involving another company's employee, AGT should, to the extent possible, communicate with Contractor and/or Subcontractor management in an effort to raise awareness about these concerns.

AGT Response: AGT recruits and generally obligates its Contractors to recruit employees in an open and transparent manner. Any concerns in relation to the recruitment process may be raised by employees (direct or contractor) or community members via a range of grievance mechanisms. For example, Open Talk which is an anonymous mechanism for raising employee grievances is being implemented in accordance with the roll out of the Code of Conduct across the BP Group.

(vi) Recommendation: AGT, Contractors, and Subcontractors should strive for similar work conditions for those employed in like positions on the AGT projects. This would cover, for example, developing a policy regarding conditions such as salary, rotation schedules and accommodation. Monitors recognize that such a plan may be difficult to implement at this late stage of the Projects, but may be useful for future projects. Therefore, at a minimum, AGT should remind the Contractors and Subcontractors of their obligations not to discriminate in the conditions provided for employees in like positions.

AGT Response: AGT will continue to strive for similar work conditions for employees in like positions, subject to objective criteria eg relevant qualifications, skills, experience and labor market conditions etc. AGT will work to ensure that this recommendation is carefully considered for future projects.

(vii) Recommendation: While recognizing the legitimate business reasons for compensating expatriate employees on a different scale than that used for Georgian nationals, Monitors recommend that AGT address perceptions of preferential treatment of expatriate employees by working to nationalize the workforce in a timely manner and publicizing such efforts.

AGT Response: AGT has in place an Operations and Employment Training Management Plan that seeks to achieve nationalization of the workforce. As the Construction Phase nears completion there will also be a reduction in the expatriate workforce.

(viii) Recommendation: To minimize miscommunications between local employees and expatriate workers, the Operator should encourage Contractors and Subcontractors to seek to ensure that at least one employee at each job site is conversant in all the major languages spoken at that site, and can act as a translator between expatriate and local workers when language barriers present obstacles.

AGT Response: AGT will attempt to ensure that at least one employee at each job site is conversant in all the major languages spoken at that site, and will request its Contractors also follow the recommendation.

(ix) Recommendation: AGT should provide anti-discrimination and cultural awareness training for all employees at least once per year.

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AGT Response: AGT will distribute training materials in order to raise the awareness among its employees on anti-discrimination and will request Contractors do the same. AGT may assist Contractors in this process.


(i) Recommendation: To address real or perceived instances of retaliation for participating in collective bargaining activities, AGT, the Contractors and Subcontractors should widely communicate a non-retaliation procedure, as described below in subsection 4.2.13.

AGT Response: AGT has followed a non-retaliation policy, however it will more widely communicate this policy amongst its workforce. It will request Contractors communicate a non-retaliation policy to their workforce and ensure that their Subcontractors do the same.


(i) Recommendation: In the forthcoming Operations Phase, AGT should review the working conditions for its employees, as well as employees of any Contractors and principal Subcontractors. In addition, AGT should consider implementing a process whereby the AGT Companies review samples of new and revised employment contracts utilized by the Contractor and/or principal Subcontractors prior to being issued to employees. To do so effectively, AGT should ensure, as suggested above in subsection 4.2.1, that a single AGT senior manager be charged with overseeing this review.

AGT Response: AGT will commission periodic reviews to assess compliance with the employment commitment outlined in the Operations Employment and Training Management Plan (ETMP). One of the ETMP commitments requires the review of employment contracts.

(ii) Recommendation: AGT should request SPJV and principal Subcontractors to clarify their current employment practices, in relation to:

• timekeeping procedures, including travel time; • procedures for requesting and granting leave days; • public holiday pay; • provision of contracts of employment; and • communications with workers regarding these subjects.

To the extent the SPJV and principal Subcontractors have committed to adopting procedures in relation to the points outlined above, AGT should periodically confirm that the procedures are effectively implemented.

AGT Response: AGT will take appropriate steps to address this recommendation.

(iii) Recommendation: AGT should ensure that all employees of the Contractors and Subcontractors are provided with written contracts stipulating their terms of employment (particularly their rate of pay for regular and overtime labor).

AGT Response: AGT will continue to provide written contracts to its employees and seek to ensure Contractors continue to do the same.

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(iv) Recommendation: If short-term (e.g. one-month) contracts are used in the future during this or other Projects, Contractors and principal Subcontractors should:

• address these contracts’ potential to create a general reluctance on the part of workers to raise legitimate concerns. This may be achieved by widely communicating a non-retaliation policy.

• ensure, through either a training session or through postings, that workers on such contracts clearly understand the renewal provisions in those contracts, as well as other laws applicable to their employment conditions, including provisions regarding overtime, working hours and notice.

AGT Response: As stated previously, AGT will widely communicate a non-retaliation policy and will request Contractors to do the same. In addition, AGT will work with Contractors to ensure that all employees are aware of and understand their contracts.

(v) Recommendation: If short-term (e.g. one-month) contracts are used in the future during this or other Projects, AGT should clarify, if it has not already done so, the terms applicable when such monthly contracts are used, including notification prior to dismissal.


(vi) Recommendation: AGT legal opinions regarding Project overtime indicate “international labor standards or practices which are customary in international Petroleum transportation projects,” rather than the Georgian Labor Code, are applicable. AGT should supplement its legal opinions with an analysis of the international standards or practices in relation to overtime.

AGT Response: AGT has already commenced this analysis on international standards or practices in relation to overtime.

(vii) Recommendation: AGT should develop a comprehensive policy specifying the governing labor standards and identifying those areas where international standards apply in lieu of the Georgian Labor Code.


(viii) Recommendation: AGT should seek to ensure that the demobilization of work force personnel during the final Construction Phase of the Project is undertaken as transparently as possible. This may be achieved, for example, by ensuring:

• objective selection criteria is used in the demobilization process; • direct supervisors of employees should not be given sole discretion to make

demobilization decisions; • employees are notified in advance regarding the demobilization process; • all demobilized employees are provided with information regarding potential jobs in

the Operations Phase of the Projects for which they may have appropriate skills; • if feasible, a demobilization strategy should be developed by AGT to guide

demobilization decisions.

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AGT Response: AGT already has a demobilization plan in place and has provided demobilized employees with information regarding alternative positions. AGT will undertake demobilization of its workforce as transparently as possible and will strongly encourage Contractors to do the same. AGT will request information from its Contractors to confirm the required standards are being met.

(ix) Recommendation: All employees working for AGT, Contractors, or Subcontractors must have access to potable water.

AGT Response: This is a contractual requirement of the SPJV and checked by the Doctors from the AGT HSE Department. AGT is following up on the specific case referred to in the report.

(x) Recommendation: AGT should share concerns with the security Contractor regarding the risks of requiring 24-hour shifts for security personnel, including the potential for exhaustion and impaired judgment.

AGT Response: AGT will raise this issue with its security contractor and request the SPJV to do the same.

4.2.4 Forced Labor

(i) Recommendation: None.

4.2.5 Child Labor


4.2.6 Migrant or Temporary Labor



(i) Recommendation: AGT should continue to ensure that adequate health and safety training and PPE are provided to all employees of Contractors and principal Subcontractors.

AGT Response: AGT confirms that distribution of PPE to this Contractor has been resolved and that safety “toolbox talks” take place with staff on site. 4.2.8 Freedom of Opinion and Expression

The issues Monitors discovered regarding Freedom of Opinion and Expression were tied to the lack of an effective grievance mechanism. Thus, all the recommendations in the section devoted to “Labor Grievance Procedures” are applicable to this section as well -- including suggestions with respect to:

• communicating widely an anonymous labor grievance procedure; • communicating widely a non-retaliation policy;

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• subject to operational requirements, limiting the widespread use of monthly contracts to situations where it is anticipated that the workforce will be continuously employed for less than one year;

• designating Industrial Grievance Officers in the work camps or at pump station facilities with whom all employees may speak about labor issues; and

• ensuring greater oversight by AGT of the Contractors and Subcontractors so that employees affiliated with the Project have the opportunity to raise concerns in an effective manner.

(i) Recommendation: Training should be provided in relation to the Human Rights Commitments, including Freedom of Opinion and Expression, and be delivered to AGT, Contractor and Subcontractor personnel. (See also discussion of Grievance Procedures in section 4.2.13 below.)

AGT Response: AGT will prepare training sessions and/or materials for its relevant management and will request the Contractors do the same. AGT may assist with the Contractors with this.








(i) Recommendation: 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 Projects is performed as consistently and transparently as possible.

AGT Response: AGT agrees and is taking appropriate steps to address this recommendation. In the contracts with Operations Contractors whose employees work full time at BTC Co./SCP Co. sites, AGT is already seeking to include a provision that establishes an open and transparent recruitment policy that must be followed. This recruitment policy states that skilled employees should be employed solely on the merit and unskilled employees randomly selected. The provision also requires the recruitment process be documented.

(ii) Recommendation: AGT should continue to monitor the hiring practices of the Contractors and Subcontractors for Project and Operations to

• ensure that their hiring policies are transparent and avoid corruption on the local level; and

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• periodically evaluate the effectiveness of these procedures and make appropriate adjustments.

AGT Response: AGT agrees and will continue to take appropriate steps to address this recommendation.

(iii) Recommendation: For any future construction project, AGT should seek to ensure that hiring by Contractors and principal Subcontractors follows the current procedures for transparent hiring of the workforce.

AGT Response: AGT agrees and will take appropriate steps to address this recommendation.

(iv) Recommendation: As recommended in section 4.2.3 above, seek to ensure that the demobilizations of workforce personnel during the final phase of Project construction is completed as transparently as possible, so that employees do not develop the impression that demobilization is a form of retaliation. Direct supervisors of employees should not be given sole discretion in making demobilization decisions, including decisions regarding renewal of monthly contracts.

AGT Response: AGT will undertake demobilization of its workforce as transparently as possible and will strongly seek to encourage Contractors to do the same. AGT will request information from its Contractors to confirm the required standards are being met.


(i) Recommendation: AGT should communicate widely a non-retaliation policy as part of its labor grievance procedure, and ensure that the Contractor and principal Subcontractors do the same.

AGT Response: AGT agrees and will take appropriate steps to address this recommendation.

(ii) Recommendation: AGT should review implementation of the labor grievance procedure for its scope and effectiveness, and ensure that Subcontractor workers are included in the procedure. To do so effectively, AGT should ensure that a single AGT senior manager be charged with overseeing this review.


(iii) Recommendation: Appropriate education and training regarding the non-retaliation policy and labor grievance procedures should be conducted with AGT, Contractor and Subcontractor workers in conjunction with labor rights training. AGT, Contractor and Subcontractor supervisors, as well as workers, should be educated regarding the role and importance of the labor grievance procedure.

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AGT Response: AGT will provide training sessions for its relevant management and will request the Contractors do the same. If required, AGT will assist Contractors with this training.

(iv) Recommendation: AGT should consider a variety of initiatives in establishing a labor grievance procedure that is non-retaliatory and anonymous, including more widespread use of drop boxes for workers in camps. It should also follow the successful model of the BP Azerbaijan Business Unit in utilizing the BP “Open Talk” policy -- which provides multiple options for submitting anonymous complaints to BP management, including by telephone and email. All employees should be trained regarding the use of “Open Talk,” including employees of Contractors and principal Subcontractors.

AGT Response: As stated previously, in accordance with the roll out of the Code of Conduct across the BP Group, AGT will provide Contractor employees with access to Open Talk. Open Talk provides an anonymous mechanism for raising grievances and is a key component of the Concerns Programme. The Concerns Programme is applicable for all levels of personnel to report work-related ethical, legal, compliance or human rights concerns. Under the programme, there is a range of anonymous reporting mechanisms and the availability of drop boxes will be expanded throughout works sites.

(v) Recommendation: AGT should consider creating Industrial Grievance Officer positions, which would have responsibility within work camps or pump stations for educating all employees regarding fundamental human rights and labor rights issues, and receiving labor grievances about alleged violations of human rights policies from all employees engaged in the Project -- whether employed by AGT, the Contractor, or principal Subcontractors. This position should answer to a single senior manager charged with monitoring and auditing compliance by AGT, Contractors, and Subcontractors, with fundamental human rights and labor rights practices, including those related to Non-Discrimination, Working Conditions, and Freedom of Association. Depending on the size of the workforce during the Operations phase, AGT could incorporate these responsibilities into an existing position rather than hiring additional employees. Whether new positions are created or whether the responsibilities are incorporated into an existing position, the Industrial Grievance Officer should have substantial direct contact with workers at each location.

AGT Response: AGT has carefully considered this recommendation but is not prepared to implement it at this stage. AGT will review it again during 2006, following the roll out of the Concerns Programme and expansion of Open Talk.

4.2.14 Temporary or Voluntary Resettlement

(i) Recommendation: Although it may be difficult to implement at this late stage, AGT should consider creating for any future projects a centralized database that would incorporate all concerns received from community members, including those reported to AGT CLOs and SPJV CLOs, as well as those received directly by AGT and SPJV management. Such a database may help to respond to community concerns in a consistent, coordinated, and timely manner.

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AGT Response: Through the ongoing BTC ‘Lessons Learnt’ process AGT will pass on this recommendation to other BP-operated projects

(ii) Recommendation: To reduce potential reputational damage to the Projects, AGT should take all reasonable steps to address the concerns of citizens in affected communities, including confusion about issues such as the allowable uses for the land corridor along the right-of-way after the Construction Phase has been completed. Although Monitors recognize that communities have been provided with information on land usage in the interim period between the Monitoring Visit and the publication of this Assessment, AGT management should continue to provide communities with information in an ongoing and pro-active manner on such topics as environmental, health, and safety concerns. Appropriate steps should be taken by AGT to ensure that community members understand the information provided, taking into account practical barriers to understanding. These steps could also include periodic community meetings with AGT management and/or CLOs and continued interaction with local government officials.

AGT Response: AGT has already commenced distribution of booklets explaining the process of handback of land use and acquisition of additional servitude rights. The booklets contain information on the pipeline safety zone restrictions and form the basis for individual discussions with each affected landowner. Each landowner will be visited by a combined team of BTC and APLR representatives, to answer any queries and provide clarification as required. Additional information is being distributed at Community and Village level, emphasizing the importance of the safety restrictions and explaining their relevance in practical terms. This is part of an ongoing information process, which will expand in breadth and depth as Project moves further into the Operation Phase.

(iii) Recommendation: Due to the ongoing nature of community concerns, which the

Monitors assume will extend into the Operations Phase of the Project, AGT should continue to devise and implement effective ways to engage with affected communities in a timely and substantive manner. Although this engagement process will be greatly assisted by AGT’s decision to retain CLOs and Land Officers for a period of at least one full year from the commencement of Operations, AGT must also ensure that, if CLO positions are phased out at some time in the future, community members will know how to contact AGT regarding any questions or comments they may have about the Projects. Finally, as long as the CLOs and Land Officers are retained by AGT, they should be provided with as many resources as possible to enable them to address community concerns and requests for information on such topics as safety and grievance procedures in an effective and swift manner.

AGT Response: AGT recognizes the need to continue long term, to engage and communicate with affected communities in a timely and substantive manner and is committed to this goal. During 2006, as the Project moves into the Operations Phase, a strategic review of AGT’s long term engagement strategy with communities, local government and other key stakeholders will be undertaken. This will incorporate a review of community-facing staff resources, training for such staff and consideration of the most effective communications channels and materials for these audiences.

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APPENDICES

A Framework for Implementation of Human Rights Commitments

B Documents Reviewed

C Excerpts from Citizen’s Guide to the BTC Project Agreements

D Biographical Information for Monitors

E AGT 10 Layers of Monitoring, Assurance, and Oversight