Honduras: World Bank palm oil loans linked to murders

World Bank dollars in front of a palm oil plantation The World Bank finances huge oil palm plantations in Honduras

In 2009, the World Bank lent $15 m to Dinant, an Honduran palm oil company implicated in violent land conflicts and murders. Although the World Bank’s Ombudsman is now looking into the project, a second instalment could soon be paid to Dinant. Please tell the World Bank to cancel the loan and prevent similar loans in future

In November 2009, the World Bank’s International Finance Corporation paid the first of two £15 million loan instalments to Grupo Dinant, a notorious palm oil company in Honduras. The money was paid shortly after a military coup had ousted the democratically elected President – a coup backed by Grupo Dinant’s CEO, Miguel Facusse. 

Dinant’s oil palm plantations have been at the centre of land conflicts dating back to the 1970s. Since the coup, Dinant and another palm oil company have been implicated in the murder of around 80 peasants. Killings are continuing with complete impunity, the region around the plantations has been heavily militarised and long-standing peasant communities have been violently evicted. Yet the World Bank’s loan assessment – last updated in February 2013 – claims: “Dinant understands the importance of having good relationships with their neighbouring communities and are quite proactive in this regard.”

Following an NGO complaint by Rights Action, the World Bank’s Ombudsman is now considering whether all of the correct procedures have been followed.  There is no guarantee that the World Bank will not pay the second $15 million instalment to Dinant – nor are they considering to formally withdraw the entire loan. And the Ombudsman’s remit is worryingly narrow.

Please sign the letter to the World Bank and tell them to cancel the loan and prevent similar loans in future

Miguel Facusse, owner and CEO or Grupo Dinant, is one of the richest and most powerful businessmen in Honduras. His company began to acquire large areas of land in Hondura’s Bajo Aguan region in the early 1990s, land which peasant communities had acquired under agrarian reform laws. According to a Human Rights lawyer, between 1992 and 1994,”three large landowners used a combination of fraud, coercion and violence to consolidate ownership of 73.4 per cent of the land transferred under the prior Agrarian Reform” in Bajo Aguan.

Today, Grupo Dinant, one of those landowners, occupies 22,000 hectares of the most fertile land.  In 2009, President Zelaya had promised peasant communities legal titles to some of those lands. The same year, Zelaya was ousted by a military coup, which was internationally condemned and led to Honduras being suspended by the Organisation of American States.  Miguel Facusse strongly backed the coup and has also been one of the main benefactors of the coup.  Zelaya’s promises to return some of the lands occupied by Grupo Dinant to peasants were withdrawn. Peasant communities therefore so no option but to peacefully re-occupy some of the lands themselves.

Since the coup, around 80 peasants and their supporters have been murdered in Bajo Aguan in conflicts related to Grupo Dinant and another palm oil company.  Long-standing peasant communities have been violently evicted and the region has become heavily militarised, with military, police and Facusse’s armed security forces acting in unison. Eyewitnesses consistently report the involvement of Facusse’s security forces in killings, kidnappings and other human rights abuses. Across Honduras, human rights violations are being committed with impunity. 

The World Bank loan was approved shortly before the coup but paid out after it, in November 2009, when human rights abuses across Honduras had begun to escalate. World Bank documents related to the loan claim that no significant social impacts were foreseen, even though they state that Grupo Dinant had around 300 armed security guards, and even though the history of land conflicts was well known. The loan helped Facusse – and the Honduran post-coup regime – to gain international respectability, at a time when the Organisation of American States was calling on international organisations to review their links with Honduras. By financing a biogas plant at a palm oil mill, it also helped to ensure that Grupo Dinant’s palm oil would meet EU biofuel ‘sustainability standards’. Those standards ignore all human rights violations but make it difficult for palm oil to pass greenhouse gas standards without methane capture, i.e. without a biogas plant in this case. 

The loan was conditional on Grupo Dinant reporting on any adverse social impacts yet despite the mounting evidence of the company’s subsequent involvement in many dozens of killings, it was never cancelled.

Following a complaint by Rights Action, the World Bank’s Ombudsman is now investigating whether World Bank procedures for ‘due diligence’ had been followed – a very narrow remit, which avoids the real questions involved.

This case shows how meaningless the World Bank’s ‘sustainability standards’, including for palm oil finance (resumed in 2011 after two years of suspension) are.

Dear Sir/Madam,

I am deeply concerned that a World Bank loan paid by the International Finance Corporation (IFC) to the Honduran plantation company Grupo Dinant in November 2009 has never been cancelled and that a second loan instalment of $15 million could be paid this year.

Although the Ombudsman (CAO) is currently investigating whether the World Bank followed its own standards and exercised ‘due diligence’, I fear that the remit of this investigation is far too narrow and does not address the real questions:

+ How did the World Bank come to lend money to a company that had been at the centre of land conflicts for several decades, shortly after a military coup backed by the company’s owner, and in the context of serious concerns over the new regime’s human rights record and widespread impunity?
+ Why did the World Bank give money to one of the richest in Honduras, one whose owner was supportive of and linked to the coup at a time when the Organisation of American States had suspended Honduras’s membership and had called on international institutions to review their relations with Honduras?
+ Why was the loan not cancelled when it became apparent that Dinant had breached the loan conditions by not disclosing its role in a large and growing number of murders and other human rights violations?

I believe that full answers to those questions must be disclosed and lead to a much wider review than solely of the loan granted to Grupo Dinant. It is unacceptable for the World Bank to invest in a country during or following a coup and in the face of international condemnation (e.g. by the Organisation of American States), and to invest in a country where human rights violations are being committed with impunity – especially when there are links between loan recipients and the regime in question. Furthermore, the case illustrates how meaningless supposed social and environmental ‘safeguards’ , including for palm oil investments are.

Meantime, Grupo Dinant must be found to be in breach in their loan conditions, the loan must be cancelled and no further funds must be paid out to the company.

Yours faithfully,

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