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World Bank’s IFC criticized over Honduras project

January 11, 2014

WASHINGTON — The World Bank’s private finance arm was criticized Friday by an internal ombudsman for its involvement with a controversial Honduras agriculture business accused of grave human rights violations.

The ombudsman said the International Finance Corporation was not diligent enough in reviewing questions about fights over land rights and murders of local peasants in supporting the palm oil plantation and processing projects of Dinant Corp. in 2008.

The IFC’s agreement to lend $30 million to the $75 million project was not supported by an adequate environmental and social assessment of the project, given the history of conflict between Dinant and local peasants, the Bank’s Compliance Advisor Ombudsman said in a report.

“In a sector and country where risks of conflict and violence around land were or should have been known to the team, CAO finds that IFC’s review was not ‘commensurate to risk’,” the CAO said.

“IFC was or should have been aware of a series of public allegations and negative perceptions in relation to its client that went significantly beyond those that were considered in the course of its integrity due diligence process.”

The project, in Honduras’ northern Aguan Valley, has long been criticized by non-governmental organizations due to the land conflicts tied to Dinant plantations.

The CAO report cites NGO data that 102 people tied to the Aguan Valley peasant movement were killed between January 2010 and May 2013, 40 of the deaths tied to Dinant or security personnel working for the company.

Nine Dinant guards are also reputed to have been killed by people tied to the peasant movement, which contests Dinant’s claim to own the land it used for the palm oil plantations.

The CAO said the IFC should have gone much further in examining the project ahead of approving it and should have supervised it better, considering the violence that impacted it in 2009 and 2010.

It said that even though the issues and the deaths were very public, the IFC had claimed to it that there was no information pointing to problems with the land tenure or signs of conflict involving Dinant, according to the report.

A statement from Oxfam and other NGOs called on the World Bank “to take immediate action to withhold funding to Dinant, to require Dinant to halt all violence directed at local farmers and find a peaceful and sustainable resolution to conflict over land.”

The group also called on Kim to hold responsible IFC staff “who failed to adequately identify and address the risks of the project.”

“We are deeply disappointed that the World Bank’s response to this investigation has not taken into account the violations of the human rights of poor farmers in the Aguan Valley who have been the direct victims of Corporación Dinant,” said Yoni Rivas of the Movement of Unified Campesinos in Aguan in a statement.

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