Why the World Bank Must End Its Support for Palm Oil in Honduras

In a recent press release issued by Friends of the Earth International, we asked for cancellation of a World Bank loan to Honduran palm oil producer Grupo Dinant. Here's why:

Around the world, the palm oil industry is fast becoming recognized as a "leader" in ecological destruction and human rights abuse. Some of the companies drawing most attention are huge Indonesian and Malaysian firms, includingWilmar International and Sime Darby. Wilmar has been involved in such repeated abuses that institutional investors like the Norwegian Sovereign Wealth Fund have dropped their stocks from its portfolio, while Sime Darby, whose abuses are equally grave, may be next on the list.

But palm oil is an equal-opportunity market that relies on cheap labor and large expanses of land to turn a profit. As such, small-ish players in small countries are just as capable as the large global firms in wreaking havoc.

Grupo Dinant in Honduras is one such company, whose track record of violence and land grabbing implicates it in some of the most serious abuses of human rights in Central America today. The company, owned by a single wealthy individual, runs a virtual terror campaign to ensure control of a large swath of land in the Lower Aguan Valley near the Caribbean coast of Honduras. I visited the area years ago, and wrote about it in 2011, when a recent surge of killings brought to light the fact that the company was actually receiving Certified Emissions Credits under the United Nations Clean Development Mechanism.

As Friends of the Earth International and allied NGOs have made clear, the violence and impunity continue. Today, with 89 peasant farmers dead in the Aguan Valley, Grupo Dinant is in the spotlight again, as the World Bank's International Finance Corporation (IFC), which has loaned $30 million to the company, has requested that Dinant hire an international security consultant assess its security program and to provide training for the company's security forces.

The memo from IFC says that the consultant will "work with Dinant to develop a Corporate Security Policy and Code of Ethics based on the UN Voluntary Principles for Business and Human Rights (VPBHR)." But given that Dinant's security force consists of known paramilitaries, and given the track record of abuse and impunity in the region, retraining them to respect human rights is akin to training pit bulls to act like poodles by putting pink ribbons on them. That is, it's a distraction, and a dangerous one.

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 IFC 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.

Since the coup, Dinant and another palm oil company have been implicated in the murder of dozens of peasants. Killings are continuing with complete impunity, the region around the plantations has been heavily militarized, and long-standing peasant communities have been violently evicted. Yet the World Bank's loan assessment - updated last month - claims: "Dinant understands the importance of having good relationships with their neighboring communities and are quite proactive in this regard."

The recent statement from the IFC follows on an audit from the IFC's own Compliance Advisor/Ombudsman (CAO) which states that that "IFC's performance in relation to this project merited further enquiry," including consideration of "whether IFC policies and procedures provide adequate guidance to staff on how to manage social risks associated with Projects [sic] in areas that are subject to conflict or conflict."

The CAO exists thanks to years of civil society demands, and while it is laudable that the body is taking the case seriously, the bureaucratic language masks a grim reality. The IFC's response - retraining thugs to quit being thugs - would be laughable, were it not for the lives involved.

In 2011, FIAN, an international NGO working for food rights, produced a report on human rights violations in Bajo Aguan, documenting "evidence of the involvement of private security forces hired by Dinant and other companies owned by Miguel Facusse in human rights abuses and, in particular, in the murder of peasants in Bajo Aguan." When the report was brought to the German development bank DEG, the Bank confirmed FIAN's findings and canceled a $20 million loan to Dinant.

Still, the violence continued, supported by the IFC.

A 2012 public hearing on the human rights situation in the peasant communities of the lower Aguan concluded that the agrarian conflict there is the "most serious situation in terms of violence against peasants in Central America in the last fifteen years."

Still, the violence continued, supported by the IFC.

The IFC's statement says that the agency "has engaged with the company and government to help identify a peaceful solution," that "Grupo Dinant is cooperating with its investigations," and that "the company's approach is to handle land claims and occupations through the Honduran courts."

None of this considers the fact - well-evidenced through years of independent investigation - that the company is, in fact, the aggressor, and that the government of Honduras cannot be expected to reign in a company run by one of the country's most powerful and well-connected individuals.

Does the World Bank really expect that security forces who have acted with impunity on behalf of a company that is closely allied with the illegitimate coup government ofHonduras can be retrained to respect human rights?

At best, you'll get them to do a better job of burying their victims and their crimes, and carrying on with business as usual - which, ultimately, may be all that the IFC really wants to do.

To view the FoEI press release, click here.