The International Finance Corporation’s (IFC, the Bank’s private sector arm) controversial investment in the Dinant palm oil company in Honduras is again in the spotlight (see Observer Winter 2014). The Compliance Advisor Ombudsman (CAO), the accountability mechanism of the IFC, decided in August to assess two complaints presented by grassroots groups in Honduras.
The Movimiento Campesino Refundación Gregorio Chávez and the Movimiento Unificado Campesino del Aguan both filed complaints at the end of July on behalf of their members in the Aguan Valley. The groups accused Dinant’s security guards of committing human rights abuses, including kidnapping, murder, forced disappearances and evictions, as well as polluting the environment. In their complaints both organisations say that by funding Dinant the World Bank is not complying with its mission to reduce poverty. “Instead in our region it has only contributed to displacing communities, persecution and the murder of peasant leaders, which has deepened the agrarian and food crises which we face.”
A January CAO audit report strongly criticised the IFC for its $30 million loan to Dinant because it failed to comply with its own performance standards. The audit pointed to systematic problems, such as the IFC’s organisational culture which judges results on financial terms ahead of environmental, social and conflict risks (see Observer Winter 2014). The IFC is currently meant to be implementing an action plan on the Dinant case to remedy its failures. The action plan was released in April following criticism by civil society that the January version was inadequate (see Bulletin May 2014).
Furthermore, an August CAO audit on the IFC’s $70 million loan to Honduran bank Ficohsa found that the IFC excluded serious allegations from its project documents about Ficohsa’s investment in Dinant and failed to adequately address environmental and social risks (see Bulletin August 2014).