Dutch Minister of Foreign Trade answers questions about the FMO's involvement in oil palm plantation company in the DR Congo

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Tweede Kamer | 6 June 2023

Answers from the Minister for Foreign Trade and Development Cooperation to questions from member Futselaar (SP) about the withdrawal by the Dutch development bank FMO of Plantations et Huileries du Congo (PHC)

(Note: translation by Google translate)
 
Question 1
Have you taken note of the letter of 24 February 2023 “Undermined by violence, a development bank mediation process in the DR Congo requires immediate government action” sent, among others, to the Ministry of Foreign Affairs by various NGOs? Do you recognize the sketched image?
 
Answer
Yes, I have read the letter. The specific situation on the ground is difficult to assess. Throughout the project, FMO has consciously ensured that human rights and the rights of the population are respected, including in consultation with our embassy in the DRC. The geographical location of the plantation areas and their difficult accessibility presented a challenge. Feronia/PHC became active in a difficult to access area where the population had been neglected for years by the country's government. In addition to the challenges of making the business viable, Feronia/PHC has also faced local challenges that go beyond its competence, such as supporting health care for the population and establishing an education system.
 
Question 2
Have you contacted FMO about this letter, and if so, what was FMO's response?

Answer
There is ongoing consultation with FMO regarding certain investments, with FMO informing us of relevant developments. The letter has been submitted to FMO in this context. I have been informed by FMO that they have taken note of the letter and that FMO attaches great importance to the smooth handling of the mediation process, with FMO emphasizing that important steps have already been taken between the communities and PHC for further cooperation, communication and discussion of views.
 
Question 3
Do you agree that – even though FMO is no longer investing money in PHC – it should make its exit from this project a “responsible exit”, doing justice to affected communities by repairing, mitigating or compensating negative impacts of the project ?
 
Question 4
Have certain milestones been achieved in implementing the ESAP, which you indicated in 2021 as a condition for loan write-off, and how has this been confirmed? If so, how much?
 
Answer to questions 3 and 4
I understand from FMO that progress has been made in implementing the environmental and social action plan, but that it has not yet been fully implemented.
 
However, at the beginning of 2021, a shareholder conflict arose regarding PHC. As part of the resolution of this conflict, the development banks have decided to sell their loans, including those of FMO, to a subsidiary of co-owner Kuramo Capital Management. The loans have not therefore been waived, but due to the sale, the write-off of the loans no longer applies. The development banks will investigate whether the proceeds from the sale can be used to benefit the local communities in regions where PHC operates.
 
Furthermore, I have been informed by FMO that Kuramo Capital Management and its subsidiary have committed to support the mediation process between PHC and the local population, facilitated by the independent complaints mechanism (hereinafter: ICM1). PHC indicates that it remains committed to the agreements from the environmental and social action plan and the mediation process. This commitment from PHC is positive. At the same time, by selling the loans, the development banks no longer have a legal basis to enforce the environmental and social action plan. I trust that the mediation process will lead to the best possible outcome for all parties.
 
Question 5
To what extent does FMO still influence the company through this financial construction? How does FMO use this influence in relation to the reported human rights violations that continue to take place? Are there any other ways that FMO currently has influence over the company, for example through the Board?

Answer
After the sale of the loans, FMO no longer has a legal relationship with the company, but only an indirect relationship. Agreements have been made regarding the environmental and social action plan (as described in the answer to questions 3 and 4), but these are not legally enforceable. Even now that there is no longer a legal relationship with the company, it is important to FMO that the mediation process is continued, which is why FMO and the Deutsche Investitions- und Entwicklungsgesellschaft (hereinafter: DEG) pay, among other things, the costs of facilitating the mediation of the ICM. DEG took the lead in the investment in PHC, including the preliminary investigation, and the complaint was filed with DEG.
 
Question 6
How is it possible that community members who are in a grievance procedure of the FMO mechanism are not protected against violence? What are FMO and the ICM doing to protect these people?
 
Question 7
Does FMO have a 'zero tolerance' policy for retaliation (reprisals), how is the risk of retaliation managed and exactly does this policy operationalize in the projects where FMO invests?
 
Question 8
Following this case, do you think that the ICM complaints mechanism should develop and offer a protection mechanism for complainants (complainants) who may be at risk in the context of their use of the mechanism?
 
Mitigate the answer to questions 6, 7 and 8 as much as possible. FMO and the ICM have a non-retaliation principle that is laid down in FMO's Speak Up Policy and in the ICM's Non-Retaliation Statement.

The ICM uses guidelines to assess and address the risk of retaliation based on best practices identified through similar mechanisms of, for example, the International Finance Corporation (IFC) and the Inter-American Development Bank (IDB).1 These guidelines are aimed at on prevention, risk assessment and cooperation between FMO, the ICM and external organizations (at the local level) on threats or incidents of retaliation. For example, the ICM can choose to keep the identity of complainants secret, use secure and remote locations to meet with complainants and provide them with the (financial) means to reach these locations. These examples have also been applied to PHC. The risk of retaliation is monitored throughout the complaints procedure and the approach is adjusted if necessary.
 
There is a continuous dialogue with FMO about the (IMVO) policy, so that their policy is fed and adjusted on the basis of new information, developments and experiences that become available. The ICM also adopts a continuous improvement approach, which is reflected in the ICM annual report.2 For example, peer complaint mechanisms and best practices are followed, with the aim of continuing to improve the mechanism, including the protection of complainants . Based on this, procedures are developed and/or adapted. FMO has also informed me that the ICM and the relevant policy should be evaluated periodically, at least every four years. An extensive ICM policy review has recently taken place. The Ministry is not a party to this evaluation. If it appears that policy changes are necessary, a public consultation will take place.
The core purpose of the ICM is to provide an independent platform for complainants when there are disputes related to FMO, DEG and Proparco funded projects. The protection of the complainants is an important condition for the ICM. I have heard from FMO and the ICM that they therefore take utmost care about the risk of retaliation

Question 9
 
Do you agree with the call for independent investigation into reported human rights abuses related to PHC, including, for example, repression against local communities, violence and rape of community members by police, military and PHC security guards, arbitrary arrests, the still unpunished murder of activist Joël Imbangola in July 2019 and the possible role the various development banks have had in funding violent PHC security guards? What are the Dutch government and FMO doing to bring about such research?
 
Answer
Due to the allegations against PHC, local residents have filed a complaint with the ICM. This complaint has been lodged with the German development bank DEG. The complaint relates to (i) the legitimacy of land rights and alleged deprivation of land use, (ii) physical and human rights violations by PHC security agents and police, and (iii) the lack of information and legal support from the communities in themitigate as much as possible. FMO and the ICM have a non-retaliation principle that is laid down in FMO's Speak Up Policy and in the ICM's Non-Retaliation Statement.
The ICM uses guidelines to assess and address the risk of retaliation based on best practices identified through similar mechanisms of, for example, the International Finance Corporation (IFC) and the Inter-American Development Bank (IDB). These guidelines are aimed at on prevention, risk assessment and cooperation between FMO, the ICM and external organizations (at the local level) on threats or incidents of retaliation. For example, the ICM can choose to keep the identity of complainants secret, use secure and remote locations to meet with complainants and provide them with the (financial) means to reach these locations. These examples have also been applied to PHC. The risk of retaliation is monitored throughout the complaints procedure and the approach is adjusted if necessary.
 
There is a continuous dialogue with FMO about the (IMVO) policy, so that their policy is fed and adjusted on the basis of new information, developments and experiences that become available. The ICM also adopts a continuous improvement approach, which is reflected in the ICM annual report. For example, peer complaint mechanisms and best practices are followed, with the aim of continuing to improve the mechanism, including the protection of complainants . Based on this, procedures are developed and/or adapted. FMO has also informed me that the ICM and the relevant policy should be evaluated periodically, at least every four years. An extensive ICM policy review has recently taken place. The Ministry is not a party to this evaluation. If it appears that policy changes are necessary, a public consultation will take place.
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