While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards: PS1: Social and Environmental Assessment and Management Systems; PS2: Labor and Working Conditions; PS3: Pollution Prevention and Abatement; PS4: Community Health, Safety and Security; PS5: Land Acquisition and Involuntary Resettlement; PS8: Cultural Heritage.

This is a Category B project according to IFC’s Environmental and Social Review procedures because a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to generally recognized Performance Standards, guidelines or design criteria.

Environmental and Social Management and Organization: Medicina is ISO 9001:2000 certified and is currently working on improving the existing system, in accordance with the EFQM (the European Foundation for Quality Management) Model. In addition, the sponsor is a member of the Swiss Leading Hospitals Association which they had completed over the past 18 months. The purpose of the Swiss Leading Hospitals Association is to ensure the highest level of patients' satisfaction, highest quality and level of medical assistance exceeding average levels. Medicina is very proud of this achievement, as they were the first facility outside of Switzerland to receive this distinction for service. Medicina will incorporate into their existing quality management system the necessary environmental and social dimensions, in order to be compliant with PS1, as per the attached Environmental and Social Action Plan (ESAP). Labor and Working Conditions: Human Resources (HR) Policy and Management: Currently Medicina employs a staff of 770 with 25% estimated increase in directly contracted employees once the expansion project is completed. In the framework of Quality Management System, the company has adopted an internal Standard on Human Resources Management. The Standard is consistent with Labour Code of Russian Federation and includes the written terms of employment and termination, disciplinary practices, personnel training and development, conflicts resolution and staff satisfaction assessment. Each employee is familiarized with these documents before signing the individual contract. All employees have to undergo a full training program at induction (including company’s internal and client-oriented standards, rules and policies; fire and life safety) and subsequently on health and safety relevant to their job activity. Professional staff is also provided with opportunities for continuing professional development via certified external, corporate or individual training. The procedure of identification of training needs for employees and development of a training plan to address those needs is provided in the HR Policy. Workplace concerns and suggestions can be brought to management’s attention through HR department and/or “suggestion” box to protect the confidentiality of the worker. Worker’s Organization: Although Medicina’s staff have not chosen to join a trade union or bargain collectively, they have such a right under the Labor Code and the Federal law «About Trade Unions, Their Rights and Guaranties of their Activity». Medicina will not discourage employees from forming or joining trade unions or bargaining collectively in the future. Company’s management is conducting annual meetings with staff to address issues relating to their working conditions and terms of employment. Non-Discrimination and Equal Opportunity: Hiring is conducted in accordance with the Russian Labor Code and there is a strict policy against discrimination based on gender, race, age or nationality. Protecting the Work Force: Protection of the work force in Russia is provided through legislation, in particular the Labor Code. The Labor Code was updated in 2006 to provide extensive protection for workers and ensure that a large array of social benefits must be provided by the company. The Client will ensure through the agreed Environmental and Social Action Plan that direct contracts with construction companies, including their subcontractors (all on-site workers), to be used for the expansion project, include labor and employment requirements consistent with PS2. This includes the following: documentation and communication of working relationship (i.e. working conditions, terms of employment, entitlements to wages and benefits) in compliance, at a minimum with national law; recognition of workers organizations and collective bargaining rights in compliance with national law; non discrimination and equal opportunity; provision of a grievance mechanism, no child and forced labour (an awareness of migrant labour if used and associated working conditions); and in particular occupational health and safety of the construction workforce and safety of the community related to construction activities in the neighbourhood. Medicina should monitor or will hire a third party to provide such monitoring, and report any construction accident statistics to IFC. Occupational Health and Safety (OHS): The company employs in-house OHS engineer. In accordance with Russian regulatory requirements, the company has hired licensed company to carry out job safety analysis for each workstation. Based on the results of this analysis, the Action Plan aimed at OHS hazards minimization and control is developed, including use of appropriate PPE in conjunction with training. In 2006 the company had 1 lost time accident (LTA). Medicina will provide further efforts to instill a safety culture and minimize health and safety incidents to a rate of zero. Pollution Prevention and Abatement Medicina facilities will generate solid wastes and liquid effluents. Liquid effluents: These are currently discharged to the municipal sewers under permit and there is a disinfection of biological effluents prior to disposal. Development of the new facility will utilise similar approaches to waste water effluents and the project will comply with IFC requirements. Solid Waste Management: The company’s procedure on solid waste handling is developed based on the requirements of Russian sanitary regulation 2.1.7.728-99. Solid wastes generated as the result of Medicina’s activity is categorised into 3 classes. Class A – non-hazardous solid wastes - are collected separately from medical wastes and removed by the licensed company for further disposal at landfill site. Class B – non-hazardous medical wastes - are collected separately for further disinfection. The company has a separate valid contract with the company “Ekoservice” authorised for the removal of disinfected medical wastes and its final treatment. There is also a special procedure for the collection and storage of Class G - mercury/bactericidal lamps and other hazardous non-medical wastes. These types of waste are removed and utilized by companies licensed to handle industrial wastes. Medicina does not generate highly hazardous wastes containing toxic or infections materials (Class C). Community Health, Safety and Security Principal risks to community health and safety will relate to fire and life safety risks for patients and visitors to the company’s facilities. There appears to be an acceptable level of L&FS control and management at the existing hospital: Smoke detectors, alarms, fire hoses and extinguishers are present throughout the facility and automatic sprinkler systems are present on the top three floors owned by Medicina, as well as in the basement of the building. Electricity supply for all fire protection systems is taken from the city network. In case of electrical supply failure, the system is automatically redirected to the back-up source of energy provided by the city. Firewater supply to feed the sprinkler systems and hose reels rely on the city public network. The company employs in-house L&FS engineer and runs service contracts with external companies on maintenance of the alarm and sprinkler systems. All employees have to undergo a full training program at induction on L&FS issues and periodic evacuation drills are being carried out for the personnel of the clinic. The company has committed to complete the required Master Plan for the whole facility and will assess the existing facility and address corrective action if necessary, once the new facility is constructed and operational, as per IFC’s L&FS guidelines as per the attached ESAP. In conclusion, there are no other significant community health risks associated with this investment. Resettlement and Compensation There is a need for relocation of existing private owners (37) and municipal tenants (24) in the three buildings adjacent to Medicina’s existing facility, which they will demolish and incorporate into the expansion project. The numbers have not been completely finalised and some more people may have privatised their apartments from municipally owned units. There is primarily physical relocation of residential units, with a few small businesses/office units. Medicina will negotiate on a willing buyer willing seller basis with the private owners, both residents and the one private business. There is apparently no threat of expropriation. However, the company could resort to the courts if it felt it was necessary. The Municipal tenants are being relocated to new housing by the City of Moscow. It appears that the local laws and regulations (primarily Housing Code of RF and Moscow City Law No. 67 of 26.12.2006 on Ensuring Housing Rights of Individuals in Cases of Relocations and Vacation of Dwelling Premises (residential buildings) in the City of Moscow, as well as two specific Orders dated July 4, 2005 and July 16, 2007) are reasonably comprehensive and sensitive to the needs of those being impacted. They allow for various relocation options for municipal tenants and adequate timing for the relocation prior to demolition (impacted people should be informed not less than 1 year ahead of the planned resettlement). Demolition is proposed for last quarter of 2008. At the moment a Moscow firm “Moskompereselenie” has been hired to appraise the market value of the properties, and to begin the negotiation process in the coming months with private owners. Further consultation has been agreed upon by the sponsors as well as documentation of the process in the form of a basic Resettlement Action Plan (RAP), which will include the proposed actions of the City of Moscow, who are ultimately responsible for the Municipal tenants. The RAP’s implementation will be monitored over the next year, with regular reporting on progress to IFC. At this time the project appears to be in compliance with PS5. However, the sponsor will be required to complete a RAP as per the ESAP, including a time bound plan on adequate community engagement, consultation, monitoring and reporting on the implementation of the relocation and alerting IFC to any issues of substance that may arise during the process. Cultural Heritage The buildings that will be demolished for the expansion project were originally built in the second part of 19 century. Presently the company is carrying out consultation with the Heritage Agency “Moscomnasledie” due to the integrity of other neighbouring buildings, to explore options for the 2 facades of the buildings facing the street, and in order to preserve them for heritage purposes. They will confirm this with IFC as per the ESAP.

Medicina will disclose the ESRS, and accompanying Action Plan, further details of the expansion project as it develops and the Resettlement Action Plan when it is completed in accordance with IFC and Russian requirements for public consultation and disclosure. In addition the company will develop a grievance mechanism procedure as part of the continual improvement of their Management System for external complaints or issues raised by the community. There is an existing residents committee that the Medicina Project Manager liaises with regularly on the relocation efforts and who can raise any concerns they have throughout the process with the company. The affected residents participated in a public meeting on March 21, 2007 and another meeting is planned for January 2008 to update people on the process. At the public meeting, people raised concerns regarding the speed of relocation because of the terrible condition of the properties, potential for including housing in adjacent neighbourhood, “Tverskaya” as part of the redevelopment plan, and relocate them to that new housing. The residents were also notified of the City of Moscow Order dated July 4, 2005 (1243 RP) and July 16, 2007 (3883 -r), when they were passed. Location of environmental documents in locally affected community: at the hospital in the lobby as well as on the company’s website: www.medicina.ruTo contact the project company, please write to: Vadim Vishnyakov, Financial Director 10, 2nd Tverskoy-Yamskoy pereulok, 125047 Moscow Telephone: +7-495-995-00-33 Fax: +7-495-250-91-80 e-mail: vishnyakov@medicina.ru