Climate & Energy Blog

Guilty as charged: World Bank-funded palm oil company accused of murder in Honduras

Posted Jan. 14, 2014 / Posted by: Jeff Conant

About a year ago, in March 2013, Friends of the Earth and a coalition of allied groups requested that the World Bank cease its support for Grupo Dinant, a Honduran palm oil company implicated in dozens of murders as well as other human rights abuses. Our call to pull World Bank funding was based on years of evidence, some of which we cited in an article posted at the time, when we wrote: “Dinant’s oil palm plantations have been at the center of land conflicts dating back to the 1970s. Despite a long history of conflict, the International Finance Corporation paid the first of two $15 million loan installments to Grupo Dinant in November 2009 -- shortly after a military coup had ousted the democratically elected president. The coup was publicly supported by Grupo Dinant’s CEO, Miguel Facusse.”

Given our work on the issue and our ongoing concern for what is essentially a war on peasants in the Aguan Valley and throughout Honduras, we are extremely pleased that an independent audit by the CAO Ombudsman of the International Finance Corporation last week issued what the New York Times called “a stinging critique of the bank’s private-sector arm over a loan to a Honduran palm-oil company engaged in a violent conflict with farm workers over land tenure.”

The UK Guardian echoed the sentiment: “The verdict could not have been clearer: the World Bank's private lending arm failed to comply with its own ethical standards when it lent millions of dollars to a Honduran palm oil company accused of links to assassinations and forced evictions.”

The study concluded that the International Finance Corporation, which lends to companies in developing countries, failed to follow its own requirements when it first approved the 2009 loan to Corporación Dinant, and that its supervision afterward was inadequate.

Regarding the violence in the region, the CAO investigation states: “According to civil society sources there were at least 102 killings of people affiliated with the peasant movement in the Bajo Aguán between January 2010 and May 2013, with specific allegations being made linking 40 of these to Dinant properties, Dinant security guards or its third party security contractor. Allegations in relation to the killing of at least 9 Dinant security personnel by affiliates of the peasant movement have also been made.” 

While we are pleased that the findings of the independent review match our own understanding of the situation in Honduras, we have yet to see the World Bank withdraw funding from the project. In its response, the IFC has rejected some of the CAO findings -- though it fails to specify which ones or provide evidence to support its rebuff.

Juan Almendarez, Director of Friends of the Earth Honduras (Movimiento Madre Tierra) said, "We condemn the policies of the World Bank that have failed to avoid the human rights violations of poor farmers´ families and cooperatives in the Aguán Valley, and we consider the World Bank´s response to the result of the CAO audit to be unjust and inhuman."

The Guardian article is worth quoting at length:

The audit, one of the most critical issued by the Bank's internal watchdog, was unequivocal. The IFC failed to spot the serious social, political and human rights context in which Dinant operates, or if it did, failed to act effectively on the information; and failed to disclose vital project information, consult with local communities, or to identify the project as a high-risk investment.

The CAO also said staff was incentivized "to overlook, fail to articulate, or even conceal potential environmental, social and conflict risk." They warned that such incentives could lead to, as indicated by the loan to Dinant, the IFC taking "uninformed risks with serious consequences for people, the environment and/or the Bank Group's reputation." 

The findings are shocking, but merely confirm what Friends of the Earth and other civil society groups have been pointing out for years: Miguel Facusse, the largest land-owner in Honduras, has been using money provided by the World Bank to grab land and wage a private war on peasants. But the findings also point to a larger concern -- the Honduras case is but one among infinite examples of global finance and multilateral “development” banks using the pretext of ‘poverty reduction’ and ‘development’ to marginalize, dispossess, and even murder those who fail to abide by the dictates of their economic program.

In a related advocacy effort in 2011, civil society groups shined the spotlight on Grupo Dinant’s participation in the United Nations Clean Development Mechanism, eventually causing both the UK government and the French utility EDF Trading  to withdraw from the project, leaving Grupo Dinant without tradable carbon credits -- a major victory in a carbon market fraught with abuses.

Of course, there remains a long way to go for human rights in Honduras. Since the November 2013 Honduran elections -- widely recognized to have been marred by systematic fraud -- the country continues to be wracked by state-sponsored violence. Under such conditions, where impunity is the rule rather than the exception, it is no surprise that the country’s powerful elites literally get away with murder.

What is a surprise is that, with the release of the CAO-Ombudsman’s report, the peasants of the lower Aguan Valley just might begin to see some justice.

UPDATE, January 17: A group of global and Honduran civil society groups are now calling on World Bank President Jim Yong Kim to take immediate action to withhold funding to Dinant, to require Dinant to halt all violence directed at local farmers, to find a peaceful and sustainable resolution to conflict over land, and to ensure that appropriate incentives are in place to secure IFC staff’s adherence to its policies and procedures. To read the statement, click here.

Image credit: Jason Taylor

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