DR Congo villagers vs. Feronia Inc: a brief backgrounder
Who are the communities filing the complaint?
The complaint is being filed by RIAO-RDC, an NGO registered in the DR Congo, on behalf of nine communities situated within the plantation concessions of Plantations et Huileries du Congo S.A. (PHC). Six of the communities are from the Lokutu plantations in the Province of Tshopo (Yanongo, Mwingi, Mwando, Lokutu, Bongemba, and Bokala) and three of the communities are from the Boteka plantations in the Province of Equateur (Bengale and Bolombo, Bolombo-Elinga, and Boteka).
What is the basis of the complaint?
The nine communities are seeking a resolution to a long-standing land conflict with PHC. The conflict dates back to 1911, when their lands were illegally awarded to a predecessor of the Unilever food company, under Belgian colonial occupation. PHC continues to operate on these lands with dubious legal standing and without the consent of the affected villages. The nine communities submitting the complaint, like the other 100 or so communities affected by PHC's concessions, are surrounded by PHC's plantations and blocked from accessing their traditional forests. PHC's claim to a total of 107,000 hectares deprives communities from maintaining their traditional livelihoods based on the use of their customary land now controlled by PHC. This is the principal cause of severe poverty and food insecurity in the villages.
Compensation is always a tricky issue, because communities have a right to be compensated for PHC having deprived them from use of their customary land for over 100 years. Yet, in particular in a situation where this corporate occupation of customary land happens without authorisation from the customary rights holders, compensation is always insufficient to rectify the historical theft of their lands. PHC's actions to compensate the communities for the use of their lands has been and continues to be woefully inadequate. The communities do not have basic health care services, proper education facilities, access to clean water or decent employment opportunities. The vast majority of jobs at PHC that are available to people from the communities are as day labourers on the plantations, with wages that are below the minimum wage and far below the local costs of living. PHC's occupation of customary land has also exposed the communities to countless incidents of harassment, arbitrary arrests and human rights abuses by armed guards patrolling the forests and plantations that PHC claims as concessions.
The communities expect that the dispute resolution and mediation process requested from the DEG complaints mechanism will arrive at mutual agreement with the owners of PHC, Feronia Inc. and the government authorities. The agreement must establish the area of land that PHC can have rights to operate on and the conditions under which it can continue to operate. The complainants further expect that such a mutual agreement will include a time-bound process to ensure community access and customary use to all the land included in the concessions claimed by PHC which the company is not using as plantations (around 75,000 hectares out of a total of 107,000 hectares).
What is the independent complaints mechanism?
The complaints mechanism is a joint initiative of the DEG and the Dutch development bank FMO. Since July 2018, the French Development Finance Institution Proparco has also joined the Mechanism. The Mechanism ensures the right to be heard for Complainants who feel affected by an operation financed by these development banks in order to enable resolution of disputes and assist the development banks in drawing lessons learned for current and future operations. All three banks involved in the mechanism have provided funding to Feronia Inc's DRC plantation operations.
The Complaints Mechanism is supported by an Independent Expert Panel, which decides on the admissibility of a complaint and handles all subsequent processes. The Panel is formed of three international specialists with expertise and experience in mediation, social and environmental issues, as well as in supporting complaints mechanisms.
Who is the company that the communities are filing their complaint against?
PHC is a subsidiary of the Canadian-based agribusiness company Feronia Inc, which is listed on the Toronto stock exchange. Feronia was first established as a Cayman Islands company in 2008 by a group of Canadian and UK businessmen. Its objective was to become one of the largest farming companies in Africa. So far, its activities have been limited to the DRC, where it acquired land for the farming of rice and other crops as well as three oil palm plantations that it purchased from a Dutch subsidiary of the multinational food company Unilever in 2009 through its acquisition of 76.17% of PHC. The remaining 23.83% of PHC was held by the Government of the DRC, which has since been reduced to 16.63% for reasons that have not been made clear in publicly available company documents. Today, all of Feronia's revenues are derived from its PHC plantation operations, as the rice farm is not operational.
How are the German development bank and other development banks involved in the company?
Since 2013, development banks have provided more than US$180 million to either PHC or Feronia Inc., with the stated goal to help return PHC to profitability and secure employment opportunities in the region. A consortium of lenders led by the DEG approved a US$49 million loan facility for PHC in December 2015. Besides DEG (US$16.5 million), Dutch FMO (US$16.5 million), Belgian BIO (US$11 million) and investment fund EAIF (US$5 million) contribute to the loan facility. The UK's CDC is a major shareholder of Feronia Inc. (holding 33 percent of Feronia Inc. shares as of October 2018, down from 67 percent in mid-2017); the AFD and Proparco of France, the AECID of Spain, the African Development Bank, and OPIC of the US indirectly hold equity positions in Feronia Inc., through their investments in the African Agriculture Fund (AAF), which is registered in Mauritius. In late 2017, a new private investor, Straight KKM2 Limited, which is also registered in Mauritius, provided fresh funding to Feronia and purchased a portion of the shares held by the CDC.
Were the development banks aware of the community grievances before they made investments in the company?
A report published by the organisations GRAIN and RIAO-RDC in June 2015 documents the historical and ongoing land conflict between PHC and the communities whose customary land PHC claims to hold under concessions. The report was available to the consortium of lenders led by DEG before they approved the US$49 million loan facility in December 2015. Both the CDC and the lenders invested in Feronia through the African Agriculture Fund also made investments in Feronia subsequent to the publication of the 2015 report.
Has the investment of development banks in Feronia and PHC provided some benefits to the local villages?
Development banks underline the importance of PHC as employer in a "remote and underdeveloped region" and justify their investment with their client's contribution to the local economy as well as reducing the need for palm oil imports. "The financing secures approximately 3,800 permanent and up to 4,000 seasonal jobs in a least developed and post-conflict country," DEG writes in its Information Note on the Bank's funding to PHC, adding that "PHC estimates that a total of 57,000 people directly benefit economically and socially from its activities."
However, the majority of PHC's workforce is employed as day labourers under very precarious conditions. Recent reports confirm that (1) labourers earn between 15 and 30 Euros for a month's (backbreaking) work, less than the legal minimum wage of 7,075 CFA per day - around 75 EUR per month ; (2) daily quota are set so high that labourers are regularly unable to achieve them, resulting in reductions to already meagre wages; (3) the company has been paying less than the days labourers have worked, claiming "IT problems" while short-changing labourers; (4) only employees are issued individual protective clothing, e.g. for the application of agrochemicals while labourers are expected to share equipment - which often results in workers applying toxins without protective gear; and (5) housing provided to employees by the company is sub-standard, with up to 14 people sharing what can at best be described as shacks.
Feronia Inc. has stated that by 2020 PHC will rely on day labourers only in exceptional cases and have completed the move to employing 7,200 people as company employees. A recent report by a German Member of Parliament who visited the PHC plantations in August 2018, however, casts doubts on this promise: "At the same time, [Feronia CEO] De Carnière mentioned several obstacles to fulfilling this goal: (i) worker pensions are more expensive than previously thought; (ii) there are not enough houses for workers [employees are provided with free housing]; (iii) the currently managed plantation area of 25,000 hectares is too small to employ this many people." According to the report, PHC's plantations generate one full-time job for every seven hectares of plantation.
While PHC's operations provide little employment and poor working conditions for local villagers, the company has destroyed their traditional sources of livelihoods by depriving them of the use of their customary land. Of the 107,000 hectares that Feronia claims as concessions held by PHC, around 75,000 hectares are forested areas. The company's armed security guards patrol these forests and prevent local villagers from hunting, fishing or gathering food and medicinal plants. They are also prohibited from collecting oil palm nuts from the traditional oil palm groves that are within the forest, which is a critical source of food and livelihoods in this part of the Congo. The villagers say that they are regularly stopped and searched by armed guards patrolling the PHC concessions, including when they use the roads. If they are found with oil palm nuts or palm oil, the guards will accuse them of having stolen nuts from the PHC plantations and will demand bribes or submit them to arrest or beatings. There are numerous cases of villagers accused of stealing PHC's oil palm nuts having been tortured and killed by company guards or local police. In 2015, for example, seven children were left orphaned after police killed both indigenous pygmy parents. The father was accused of collecting a few oil palm nuts left on the ground after harvest at the Boteka plantation. site; he died in hospital after he had been arrested and tortured.
For more information see:
RIAO-RDC, AEFJN, Entraide et Fraternité, GRAIN, SOS Faim, UMOYA, urgewald, War on Want and WRM, "Land conflicts and shady finances plague DR Congo palm oil company backed by development funds," 2 November 2016: https://www.grain.org/article/entries/5564-land-conflicts-and-shady-finances-plague-dr-congo-palm-oil-company-backed-by-development-funds
RIAO-RDC and GRAIN, “Agro-colonialism in the Congo: European and US development finance bankrolls a new round of agro-colonialism in the DRC”, 2 June 2015, https://www.grain.org/e/5220