Banks warned of liability if Baku-Ceyhan pipeline leaks

The fifteen major banks that financed the controversial Baku-Tbilisi-Ceyhan (BTC) oil pipeline have been warned that they could face court if the pipeline leaks. The banks, including Royal Bank of Scotland and ABN AMRO, would be liable if they had knowledge of a potential cause of pipeline failure, yet failed to act to remove the risk of pollution. The warning to the boards and legal departments of the fifteen banks came in a letter from UK, Georgian and Azeri campaign groups who have been monitoring the pipeline's impacts.  

Several months behind schedule, BP's $3.3bn pipeline runs from Baku in Azerbaijan through Georgia to Ceyhan on Turkey's Mediterranean coast. Experts have testified that the anti-corrosion coating chosen by BP does not stick to the pipeline. Widespread peeling and cracking of the coating has already been reported in internal BP reports. 

The participating banks could incur civil or criminal liabilities if a coating failure causes a leak. The letter informs the banks of reports documenting the extent of coating failure and puts them on notice of the potential civil and criminal liabilities that might arise if they fail to use their powers as lenders to take effective action to prevent pollution. It is an offence to “knowingly permit” a crime. 

Corrosion experts have advised that the only course of action that would remove the high risks (and potential liabilities) of a leak would be for the pipeline to be re-coated with a coating that is fit for the purpose. 

The campaign groups have compiled a dossier that they will make available to any claimants in Azerbaijan and Georgia seeking damages if the pipeline ruptures. 

"The directors of these private banks may not be aware of their liabilities in this project," says Nicholas Hildyard of The Corner House. "Now they have been informed, we hope that they will exercise their duty to take appropriate action." 

“Royal Bank of Scotland and the other banks have turned a blind eye to systemic construction failures on BTC,” says Mika Minio-Paluello of PLATFORM. “Inaction could come back to haunt them in court.”