Activists accuse World Bank of deadly dealings in Honduras

An internal report is set to raise the lid on funding for an industry that’s forcing farmers off the land.

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Action sent a letter to the World Bank calling the situation a “human rights disaster” and accusing the financial institution of “gross negligence.”
But that didn’t stop the IFC from approving a $70 million investment in one of Dinant’s major lenders, Banco Financiera Comercial Hondurena (Ficohsa), the following May. It gave the IFC a 10 percent stake in Ficohsa — increasing the IFC’s exposure to Dinant — and enabled the Honduran bank to loan millions more to the troubled palm oil company.
Those circumstances triggered calls for a second investigation the CAO has promised will examine “Ficohsa’s significant exposure to Dinant and other potentially high-risk sectors and projects.”
The crisis stretches back to the 1970s, when the government distributed land occupied by indigenous people to farmer cooperatives. After the cooperatives went bankrupt, the government and the cooperatives sold much of the land to a few rich Hondurans, including Facusse, in the 1990s.
The US-educated son of Catholic Palestinian immigrants and uncle of a former Honduran president, Facusse evicted the farmers and indigenous community using private security forces with the help of the military and police.
The land conflicts worsened after a July 2009 coup d’etat overthrew the left-leaning President Manuel Zelaya. He was forced out of Honduras days after visiting the Aguan Valley, scuttling a controversial land-reform effort that rural farmers had celebrated but the country’s economic and political elites opposed.
Confidential US diplomatic cables released by WikiLeaks indicate the coup was backed by powerful figures including Facusse, whose plane transported Zelaya’s foreign minister out of the country.
Dinant spokesman Pineda said Facusse didn’t know about the plane’s use during the coup until the following day. He said the pilot, summoned by the air force, “did not use his best judgment and should not have participated in such acts.”
Pineda also rejected as baseless allegations that Facusse’s landing strips were used to transfer drugs.

The IFC’s critics say problems often arise because more than half of its global lending portfolio is handled though financial intermediaries. The “hands-off lending” creates problems because the IFC “doesn’t have a clue” about what happens to its money, Chowla says.
“There’s very little transparency on the side of the financial institutions in what they’re investing in,” he said in an interview. “Taxpayer money from around the world is financing what ends up in many cases with negative results.”
The World Bank has declined to comment on what ethical standards the IFC has applied to its investments in Honduras until the internal investigation into Dinant is published. However, an IFC spokesman admitted the group is concerned about the land disputes.
“We have been in close contact with Dinant since 2010, when the land occupations began, and have worked with the company to improve its policies and practices, particularly in security and community engagement, in an effort to address the more volatile security environment,” the spokesman, who asked not to be named, said in an email.
Regarding Ficohsa, the spokesman said the IFC has supported the Honduran bank since 2008 in order to help expand its lending to small- and medium-sized enterprises.
“Our work through financial intermediaries provides much-needed access to finance for millions of individuals that we would never be able to reach directly,” the spokesman said.
Although human rights groups suggest World Bank and IFC officials have lost their moral compass in Honduras and other developing countries, insiders say the issue is more complicated because it’s far from clear what actions to take in corrupt societies.
Katherine Marshall, who worked on international development for the World Bank for 35 years, says it operates on the assumption that it’s possible to make changes from within institutions.
“There’s a whole level of cocktail party discussions about who’s corrupt and who’s taking payments,” she says. “But if you don’t have evidence, it’s difficult to operate on that if you’re an external partner.”
Now a senior fellow at Georgetown University’s Berkley Center for Religion, Peace and World Affairs, Marshall says international finance groups must weigh the costs and benefits of taking on each client.
“You don’t want to be naive and stupid, but if you’re involved in these countries,” she says, “you’re missing a major point if you’re not ready to have a discussion about the dark side.”
Last December, World Bank director Kim said the agency plans to hire more rule of law experts to fight corruption in international development.
“You have a cancer and you have to treat it,” he said. “And by the way, we know it’s treatable. If you don’t treat it, it’s malpractice on our part.”
But Rights Action’s Bird says the Aguan Valley’s farmers are tired of such abstract talk. They want the IFC to stop funding Dinant directly and indirectly.
“If international investors were held responsible for the consequences of their investments,” she says, “it would go a long way in putting a rein on some of the abuses.”

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http://www.globalpost.com/dispatch/news/regions/americas/140103/world-bank-honduras-dinant-african-palm