Case Name
Juana Doe et al. v. IFC

Case Status
Filed

Issues
Land rights; accountability of international organizations; violence against land rights defenders

Country
Washington, D.C. and Honduras

Summary
This is one of the most severe cases of corporate-related human rights abuse (and financier negligence) in the past decade. The International Financial Corporation (IFC), the World Bank group’s private lending arm, provided loans to Honduran millionaire businessman Miguel Facussé’s palm oil businesses even though, at the time, there were widespread allegations that his company, Dinant, employed hitmen, military forces, and private security guards to intimidate and kill local farmers who had contested Facussé’s claims to the land. The IFC (with US taxpayer money) knowingly financed Dinant’s campaign of terror and dispossession against Honduran farmers. The IFC’s own internal watchdog, the CAO, found that IFC failed to adhere to its own policies to protect local communities, and continued to allow the company to breach those safeguards and either failed to spot or deliberately ignored the serious social, political and human rights context in which this company is operating.

The result was an explosion of extreme violence by public and private security forces against the farmers, their movement leaders, and lawyers representing them con land rights cases. Over 100 farmers have been killed since November 2009 when the IFC disbursed the first half of a $30 million loan to Dinant; and the number of killings continues to grow today. So too has IFC’s support of Dinant; even after the IFC’s internal watchdog scolded IFC for the 2009 loan, IFC continued supporting Dinant via an opaque system of financial intermediaries.

While the IFC boasts of its mission to “end extreme poverty by 2030 and boost prosperity in every developing country,” the IFC has knowingly entered one of the world’s most persistent and abusive land conflicts on the side of Dinant, a primary author of poverty and violence in Honduras. In the words of one farmer in the Bajo Aguán, the IFC is not “ending poverty”; it is “ending the lives of the poor.”

EarthRights International filed the case with the support of several other human rights lawyers, including: Jonathan Kaufman, Judith Brown Chomsky, and Lauren Carasik.

 

Clients/Plaintiffs
More than a dozen campesinos (farmers) in the Bajo Aguán region of Honduras who have been shot, killed and terrorized by Dinant and those working on its behalf. Since the 1970s, Honduran farmers in the Bajo Aguán have farmed small parcels of land. Facusse coveted this land, and in the 1990s he began trying to acquire large swaths of it for his palm oil businesses - including Dinant. Local farmers allege that Facusse used fraud, coercion and even outright violence to dispossess them of the land they had long worked. Despite public allegations to this effect, the IFC has channeled millions of dollars to Facusse and his Dinant corporation, even as scores of farmers speaking out against Facusse and Dinant were violently murdered in the Aguan.

 

Perpetrators:

International Financial Corporation (IFC) and its opaque financial intermediary, the IFC-AMC.
The International Financial Corporation (IFC) is part of the  World Bank Group, and lends to private businesses throughout the world. The IFC has been involved in palm oil cultivation in Honduras since at least 1997, when it loaned $55 million to Cressida Corporation, a precursor to Dinant. The IFC didn’t stop there. In November 2009, the IFC gave $15 million to Dinant despite the rapidly deteriorating social and political climate and the tensions over land ownership in the region. And even when IFC could not deny that it was undisputedly backing a company responsible for deaths in the Bajo Aguan, IFC continued to fund and support Dinant, including through its financial intermediary, IFC-AMC.

Dinant
Corporaćion Dinant is a privately owned integrated palm oil and food company in Honduras founded by now-deceased Honduran magnate Miguel Facussé Barjum. It is headquartered in Tegucigalpa, Honduras, and is one of the principal palm oil companies in that country. Since the 1990’s, Facusse has been involved in several land disputes with campesinos in the Bajo Aguán region of Honduras; campesinos claim that Facusse used fraud, coercion, intimidation and outright violence to wrongfully acquire their land for his palm oil empire.

 

The IFC and IFC-AMC’s support to Dinant (a summary):

  • The Cressida Investment: In 1997, the IFC made its $55 million Cressida Investment. The investment included a $45 million loan and a $10 million equity stake. The IFC’s loan was repaid in 2001 when Facusse sold Cressida to Unilever. The IFC also made a substantial profit on their equity position on the sale to Unilever.  Between 1997 and 2001, Cressida and Facusse acquired palm holdings in the Aguan through force, fraud and coercion. Facusse kept those holdings, which became part of Dinant.

 

  • The Dinant Loan: In 2009, the IFC made its $30 million Dinant Loan to facilitate Dinant’s young palm production. The loan included two $15 million installments, the first of which the IFC paid out in November 2009. Among other things, the IFC made the $15 million payment after a destabilizing coup d’état and with actual knowledge that there were ongoing land disputes involving Dinant’s properties in the Aguan. The IFC has delayed the second $15 million payment, but has not cancelled the loan or, on information or belief, exercised its contractual rights to force Dinant to stop terrorizing the people of the Aguan. In 2014, the CAO released an audit of the Dinant Loan and found that IFC flagrantly violated its own policies at every stage of the loan, including its appraisal, pay-out and continuing supervision.

 

  • The Ficohsa Investments: IFC and IFC-AMC have also enabled Ficohsa’s substantial and continuing support for Dinant. For years, Ficohsa has been one of Dinant’s largest creditors, if not its largest, providing tens if not hundreds of millions of dollars to Dinant. In 2011, the Defendants made a massive $70 million investment in the Honduran bank, including a 10% ownership stake, which it expanded in 2014.

 

  • Between 2011 and 2014, Ficohsa lent around $40 million to Dinant. The Defendants knew that Ficohsa had and would continue to have massive exposure to Dinant, and enabled that lending. In order to receive IFC money, under IFC policies, Ficohsa should have reduced its Dinant investments. But, instead of requiring that divestment – and even though Dinant was on an IFC Watch List – IFC staff waived their own policies for Ficohsa’s loans to Dinant.

 

  • The GTFP Guarantees: The IFC has also more directly enabled Ficohsa’s lending to Dinant through loan guarantees. In 2013, and perhaps at other times, the IFC has guaranteed short-term loans (worth more than $5 million) from Ficohsa to Dinant through its Global Trade Finance Program. IFC knew that its guarantees enabled Ficohsa’s lending to Dinant, knew that Dinant was implicated in gross human rights abuses, but approved the transactions regardless.

 

Reports

  • The IFC’s internal watchdog, the Compliance Advisor Ombudsman (CAO)’s scathing report.
  • Report of Annie Bird, an advocate for the farmers, who has meticulously documented the violence against farmers in the Bajo Aguan.

 

Press

‘Bathed In Blood’
World Bank’s Business-Lending Arm Backed Palm Oil Producer Amid Deadly Land War
By Sasha Chavkin

World Bank lending arm forced into U-turn after Honduras loan row
By Nina Lakhani

More information on the Land Conflict in Honduras.

 

Legal Documents

Juana Doe et al v. IFC Complaint

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