IFC fails to act on human rights abuses in Honduras

[Judi Lynn]

IFC fails to act on human rights abuses in Honduras
23 January 2014
IFC fails to act on human rights abuses in Honduras

23 January 2014

Summary

•CAO audit finds violations of multiple performance standards in loan to Honduran palm oil company Dinant
•Audit report highlights systemic problems with IFC procedures
•IFC rejects some audit findings and defends investment in Dinant
•Civil society organisations call for investment suspension, comprehensive action plan and independent investigation

A January audit report has strongly criticised the International Finance Corporation (IFC), the World Bank’s private sector arm, for its $30 million loan to a controversial Honduran palm oil project managed by Corporación Dinant. The audit by the Compliance Advisor Ombudsman (CAO), the IFC’s accountability mechanism, was initiated in April 2012 due to claims that Dinant had been involved in human rights abuses, including the killing, kidnapping and forced eviction of farmers in the Bajo Aguán region, where the corporation’s palm oil plantations are located and land rights are heavily disputed (see Update 85). An estimated 92 people have been killed between 2009 and 2012, the majority of them local farmers, according to figures from the Honduran National Commission for Human Rights. The audit was finalised in October 2013 but Bank management held up its publication (see Bulletin Dec 2013).

The CAO report concluded that, among other things:

• The IFC’s environmental and social (E&S) “review failed to ensure that adequate consideration was given to relevant risks and impacts around” security personnel and indigenous peoples.
• The review “was not ‘commensurate to risk’, and thus did not meet a key requirement of the sustainability policy. In particular IFC accepted an overly narrow definition of project E&S risk, without adequate consideration of project context or contemporaneously available sources of information regarding land conflict and insecurity in the Bajo Aguán.”
• The CAO found “no indication that IFC supervised its client’s obligations to investigate credible allegations of abusive acts of security personnel” and its obligation not to “sanction the use of force by security personal “other than for preventative and defensive purposes in proportion to the nature and extent of the threat.”
• The “IFC did not give due consideration to the requirement that IFC exercise remedies where appropriate in a situation where a client does not or is not able to re-establish environmental and social compliance” and that the “IFC did not have a reasonable basis on which to conclude that the project could be expected to meet the performance standards over a reasonable period of time. The decision to invest was thus not in compliance with the Sustainability Policy”.
• The CAO found “no evidence that the communities living closest to Dinant’s properties were consulted during the preparation of the environment and social assessment” which is a breach of the IFC’s policies. The IFC’s “failure to disclose the Dinant E&S assessment was not compliant with its policy on disclosure of information. IFC remains non-compliant on this point.”

More:
http://www.brettonwoodsproject.org/2014/01/ifc-fails-act-human-rights-abuses-honduras/?utm_source=rss&utm_medium=rss&utm_campaign=ifc-fails-act-human-rights-abuses-honduras