The World Bank ombudsman issued a stinging critique Friday 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. http://www.nytimes.com/2014/01/11/world/americas/world-bank-is-criticized-for-honduran-loan.html?ref=world
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.
The lush Bajo Aguán Valley, where a land dispute boiled over after a 2009 coup, and where Dinant is the largest single landowner, is a microcosm of many of the problems facing Honduras, one of the poorest and most violent countries in the hemisphere. The vast gap between rich and poor drives continuing social conflict, and because the rule of law is so weak, impunity flourishes.
Since 2009, almost 100 people had been killed in Bajo Aguán, the country’s human rights commissioner, Ramón Custodio, said in June. Most of them were farm workers, although some Dinant security guards were also among the dead. The killings occurred in a climate of violence “practiced by all parties and tolerated by different authorities,” according to the commissioner’s office.
Antonio Trejo, the lawyer for one of the main groups of workers, was killed in 2012. His brother was killed the following year after complaining that the slaying had not been investigated.
“We practically have a war of psychological operations against peasants,” said Juan Almendarez, director of Friends of the Earth Honduras, one of the groups that requested the audit.
In a statement Friday, Dinant said it would defend its reputation against “unfounded comments” in the report, and pointed to a series of actions it was taking to improve its social and environmental standards, with the International Finance Corporation as a “strategic partner.”
The corporation had agreed to lend the company $30 million to expand its oil-palm plantations and snack-food business. It disbursed $15 million in 2009; the rest has yet to be paid out.
In its response to the audit, the corporation defended its approval of the project, noting “there was no evidence of land claims in the legal system or otherwise,” even though the audit found a series of public references to the conflicts in Bajo Aguán.
As turmoil spread in the region, the corporation “chose to remain engaged and work with Dinant” to improve its policies “particularly in security and community engagement,” according to a letter signed by Oscar Chemerinski and Morgan Landy, directors of two departments in the corporation with responsibility for the project.
Dinant agreed to hand over almost 10,000 acres to the Honduran government in 2012 as part of a plan to redistribute land to farm workers. But putting the plan into practice has been difficult, said Yoni Rivas Baire, a leader of the farm workers, because of disputes over the land’s value.
The nongovernmental groups that requested the audit said the World Bank’s president should withhold further financing to Dinant and press it more on human rights and land issues.