Borealis suspends construction in Kallo after serious allegations against contractor and continues to support Belgian authorities in investigation

Restart of work on mega project postponed to allow time for investigation and additional social compliance measures

In light of recent developments and media reports of alleged misconduct by its contractor IREM at the construction site for the new propane dehydrogenation (PDH) plant in Kallo, Belgium, on July 27 Borealis decided to halt the construction of its Kallo PDH for three days and suspended the contract with IREM-Ponticelli, the contractor responsible for the piping and mechanical work for the construction of the new PDH project. As the thorough investigation and implementation of additional compliance measures is ongoing, Borealis decided on 1 August 2022 to extend the shutdown for its PDH construction site in Kallo until further notice. Project work will be resumed step by step.

For large construction projects, Borealis works together with specialized construction companies and pays market prices according to Western European standards. Contracts concluded with business partners and contractors contain safeguard clauses that oblige them to comply with all applicable laws, in particular social legislation.

In the specific case, the mega-project PDH in Kallo, Borealis commissioned the company IREM with work and included the protective clauses applicable to all business partners, in particular the Business Ethics Code of Conduct, in the agreement.

At the end of June 2022, Belgian social inspectors came to the site and carried out standard interviews on a number of works on the PDH site. The team involved in this review fully cooperated and was not aware of allegations of human trafficking at any time.

It was only after the intervention of the Belgian authorities in mid-July that Borealis realized that there might have been social fraud on a large scale. The extent of the social fraud and the possibility of human trafficking was not evident earlier and only became clear later in particularly alarming press reports end of July 2022.

Borealis has a zero-tolerance policy when it comes to endangering the safety of its own and contractors' employees and strongly condemns any form of human rights abuse. As a result, Borealis immediately suspended the contract with IREM-Ponticelli on 27 July 2022 due to IREM's alleged breach of several terms of the contract and the ongoing investigation by the Social Inspectorate. Borealis is investigating this matter with the highest priority and is working closely with the Social Inspectorate to advance their investigation. At the same time, Borealis engaged an external law firm to analyse the case.

“In line with our Goal Zero approach, we are currently putting in place additional social controls to identify and address any potential lack of control by contractors as quickly as possible,” commented Wim De Smet, Borealis Site Manager Kallo. “Borealis condemns any kind of human rights abuse. Therefore we have decided to temporarily halt the construction of our mega project in Kallo until all additional compliance measures are in place.”

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