World Bank Slammed for Dinant Loan Linked to Honduran Killings

by Pratap ChatterjeeCorpWatch Blog
January 14th, 2014
Photo of Bajo Aguan solidarity event: hondurasdelegation. Background image of Honduran palm oil plantation: Lon&Queta. Images used under Creative Commons license

An independent ombudsman has confirmed that World Bank officials should have raised serious questions about human rights abuses before approving a $30 million loan to Corporación Dinant in Honduras in 2009 for a palm oil plantation project. Despite the findings, the Bank has refused to cut ties to Dinant.

Dinant, a major Honduran snack food and agricultural company owned by Miguel Facussé, has cashed in on a recent boom in demand for biofuels to become one of the biggest players in this field in the Honduras – it manages 22,000 acres of palm tree plantations, exporting half of the produce to other countries. (Palm trees yield a fruit which can be processed to produce biofuels that is in high demand by governments who want industry to reduce their dependence on fossil fuels like coal and petroleum in order to meet international obligations to mitigate global warming under the Climate Change convention)

Much of the palm oil development in the Honduras is taking place in the Bajo Aguán valley where an escalating conflict is taking place between large land owners and thousands of landless peasants.

“At least 19 farmers in this region have been killed in the context of conflicts with biofuel industry interests and given that Honduras, since the June 2009 military coup, has been ruled by an illegitimate and repressive regime,” wrote Rights Action, a Washington DC based group that works in Central America. “Concurrently, Dinant is immersed in numerous explosive land conflicts in which credible charges of violent actions, including murders, and fraudulent land acquisitions had been levied against the company.”

Despite the fact that the situation was well known – the International Finance Corporation (IFC) – the private sector arm of the World Bank – made a $30 million loan to Dinant in 2009.

One year later, a complaint about the IFC loan was sent to the president of the World Bank in November 2010 by a group of NGOs. The complaint was taken up by the Office of the Compliance Advisor/Ombudsman (CAO) of the IFC.

CAO has weighed in to agree partially with Rights Action. “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 Office of the Compliance Advisor/Ombudsman (CAO) of the International Finance Corporation said in its audit. The IFC, it said, “was or should have been aware of a series of public allegations and negative perceptions in relation to its client.”

The activists say this confirmation is important. “You’ve got credible evidence that IFC’s client was complicit in forced evictions, drug trafficking, and dozens of killings and was likely an accomplice to the overthrow of a democratically elected government, and there are zero consequences,” David Pred, executive director of Inclusive Development International, told the Huffington Post, an online newspaper.

However, the IFC has refused to cut its ties with Dinant. “As long as things are moving in the right direction, we feel we are adding more value by remaining engaged,” Atul Mehta, the IFC’s global director of agribusiness, told the Financial Times, stating that the information that the World Bank had in 2009 “did not suggest that this was an entity we shouldn’t be doing business with.”

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