Landless: How the Dutch development bank marginalises farmers

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Workers at Feronia's palm oil plantation in Lokutu, DR Congo. The Dutch development bank FMO has invested heavily in Feronia. (Photo: Hollandse Hoogte / Kris Pannecoucke)
Trouw | 15 October 2019

(Translated from the original)
 
Landless: How the Dutch development bank marginalises farmers
 
The Dutch development bank FMO says its investments promote oil palm plantations in local communities. But the local communities are not welcoming these plantations. They want their land back. 
 
By Erik van Zwam
 
In the Congolese jungle, there are three oil palm plantations measuring 25,000 hectares that have been in use since the colonial era of King Leopold of Belgium. Hidden in the jungle, they are almost inaccessible. Even an old map does not shed light. The best way to get there is by using coordinates.  Yaligimba is at 2º55’50.68”E. Lokutu and Boteka are many days travel by canoe from Yalingimba. 
 
Now in 2019, these colonial era plantations are held by the Canadian stock exchange listed company Feronia, which bought them ten years ago from Unilever. The majority of the shares are held by developments banks from France, Belgium, Germany, Spain, the United States, the UK and the Dutch FMO. Together they invested between 100 and 200 million dollars in Feronia since 2013, which congratulates itself for its good deeds and objectives. ‘Feronia secures jobs and income for 3800 employees and thousands of day contractors.” The company says it invests in houses, schools, clinics, water pumps, roads and responsible agriculture. 
 
The non-profit organization GRAIN, which has contact with the workers on the plantations, paints a completely different picture. In the heat along the equator indigenous farm workers toil for a meager wage that is often not paid on time or is sometimes, as in 2015 and 2016, paid in kind. If the employees do not receive their wages, they must borrow money against usury rates to buy food. They cannot repay these debts and thus become debt slaves. Poverty, malnutrition and hunger are part of their daily lives. Farmlandgrab, which studies land grabbing worldwide, came to similar conclusions. The chosen name of the company is rather cynical, Feronia, after the Roman goddess who gave slaves freedom. 
 
Living wage
 
Linda Broekhuizen, chief investment officer (CIO) of FMO, confirms that there have been delays in wage payments by Feronia, but says that this has now been corrected. She points out that FMO strives for a "living wage" - higher than the minimum wage - and this is, according to her, what exists in the oil palm plantations.
 
There is more to the story. Tensions in the area have increased because of land conflicts. Nine communities on the plantation, which have almost no contact with each other due to the distances between them, joined forces with support from NGOs to demand their lands back. They owned that land for centuries, before it was sold in the colonial era by Leopold to Lord Leverhulme, the founder of Unilever. Leverhulme started production of palm oil with his company Huileries du Congo in 1911. The development banks say that they did in-depth research of the land rights before investing millions and that there was no reason for concern. But, according to NGOs, the banks have refused to share the outcomes of this research for years. FMO says that the documents about land rights can be accessed in the office from Feronia in Kinshasa, the capital of the Democratic Republic of the Congo. The land regsitry in the Congo supported the local communities in the case of the Lokutu plantation in 2012. They refused the ownership documents from Feronia, because they were not according to law. 
 
Death of an activist
 
Relations have not improved since this summer, because of the death of human rights defender Joel Imbangola Lunea, who was active in an organisation that tries to get the stolen land back. Imbangola Lunea was loading his boat with luggage from passengers on 21st of July when a guard from Feronia accused him of stealing palm fruit. When he denied this, the guard attacked the activist, killed him and threw the body in the river, as eyewitnesses explained to Congolese human rights organisation RIAO-RDC. According to this organisation, Imbangola Lunea, supporting a household of five children, was regularly threatened by guards from Feronia. Accusing people of stealing a couple of palm fruits for food is regularly used as an excuse to arrest or intimidate people from local communities, says RIAO. In 2015 a Pygmy couple was killed. The man, Jeudi Bofete Engambi, worked on the plantations. Guards assaulted him because he had a couple of palm fruits. Engambe died from his injuries. His wife protested at the police office. The answer was a rain of bullets. She also died. They left seven children behind. 
 
“The colonial days of King Leopold have never been far away on the plantations of Feronia,” explains Jutta Kill from the German environmental organisation Urgewald. “The labour conditions are appalling. The FMO should ensure that violence and intimation stop.” Urgewald was involved in the report Land conflicts and Shady Finances (2016) about the wrongdoings at Feronia. 
 
Feronia sent its condolences after the death of Imbangola Lunea, but says that it was a private matter that has nothing to do with the company. The development banks, including FMO, are careful and have started their own investigation. Also the German, French and Dutch development banks have had a complaints mechanism operating for a while. The nine communities used that mechanism. Currently a complaint is in process on the land conflict. 
 
Arbitration
 
Criticism also exists of the complaints procedure. Tomaso Ferrando from the Global Legal Action Network (GLAN) of the UK: “No one knows what the arbitration looks like. What role do local people get? The timelines of the procedure are not known. And the complaints panel uses Feronia’s infrastructure to do research."
 
He fears that the arbitration will focus on compensation, benefit sharing and investing in social projects. “But the local people want their land back and and want to remove Feronia from their lands. Feronia can keep the palm oil factory. The development banks such as FMO should ensure due process.”
 
According to the Dutch FMO, which has only been financing the company since 2015,  a solution is being sought through independent mediation. The lawyer Ferrando asks himself why development banks like FMO would invest in a company like Feronia that has also had financial problems for many years. “FMO knew about the contested land rights, the extreme poverty amongst workers, the appalling working conditions, the violence and the arbitrary arrests of workers.” 
 
All this contrasts with the objectives of the FMO to improve the living conditions in the project area and to help solve the land rights conflict. FMO CEO Peter van Mierlo confirms there are risks to projects in unstable and unsafe countries.  “Through financing projects, sometimes in difficult areas and areas with violence, the local people do get a higher chance of economic developments. It is not realistic to think this can be done without incidents.” 
 
The local people are not helped by social projects that never materialise, says Jutta Kill. “They want their land back.” Ferrando shares this conclusion. “Development banks such as FMO have to give back the concession areas to the local communities and help them develop the area.”
 
Insufficient research upfront
 
FMO also finances projects in other countries with land rights violations, amongst other issues. Intimidation, mistreatment, arbitrary arrests, manslaughter and even the killing of activists and human rights defenders are used to protect the interests of the company or the local government in such projects.
 
This occurred over the past ten years in Sierra Leone, Honduras, Panama, Senegal, Liberia and Guatemala. Investigations into several projects financed by FMO show that insufficient preliminary research appears to have been done. These are just a few of the over 800 projects that FMO finances, with a total of 9.6 Billion Euro currently invested. Trouw did not research all these other projects. But Paul Hoebink, emeritus professor of development studies, assumes that wrongdoings are occurring at a large scale. He has done research into aid and finance in developing countries over the past decades. 
 
Just like with Feronia in the Congo, the core of the wrongdoings is usually the land rights of the indigenous peoples, says Hoebink. “In developing countries there are no or very weak land registries. Ownership of land is often not formal. Usually these are traditional rights, that are very old. You have to research that properly, as FMO, before you finance a project. In many cases this does not happen. But it is an obligation under the UN Declaration of on the Rights of Indigenous Peoples.” FMO says it does more than enough research.
 
Large evaluation
 
Hoebink pleads for a "large systemic evaluation of FMO”, one of the four biggest development banks in the world. “It is high time to compare all the nice objectives of FMO with the practices on the ground. Too many things now seem to be going wrong.”
 
FMO says it tries, when financing companies, to demand compliance with international standards for human rights, land rights and currently also climate targets. Linda Broekhuizen: “If a company is not in compliance, we construct an action plan. If the client does not agree, the finance will not happen. If there are issues later on with progress in the action plan, additional measures are taken to get the project on track. If it really doesn’t work out, we withdraw.” She adds: “Every murder is one too many for FMO. It is terrible if that happens.”
 
How can it happen, that a development bank like FMO, that has been financed with Dutch taxpayers money for years and is owned with 51% of the shares by the Dutch government, ends up in these kind of problem cases? The bank has the objective to stimulate social and economic developments in poor countries. According to Paul Hoebink the problem is in the word ‘bank’. “With these sort of institutions, the bankers are the decision makers. They look at return on investments. Only through pressure from governments and NGOs are some social components added.”

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Activists murdered in Honduras
 
During a protest against the Agua – Zarca dam in Honduras in July 2013, a soldier kills Tomas Garcia. He is a leader of Copinh, the organisation for the protection of the rights of indigenous peoples in Honduras, amongst which the Lenca. In their religion the water of the rivers should continue to flow as a symobol for life and should not be stopped, with a dam. 
 
William Rodriguez, also an activists with Copinh, is killed in May 2014. Half a year later the body of his brother, Maycol Rodriguez, is found in the river. Berta Cáceres, a woman leader at Copinh, is killed in March 2016 in her own home. There are arrests, including the director of Desa, the company building the dam. 
 
FMO starts financing the project in 2014, when the first killing had already taken place. Only in 2017 does FMO divest, one year after the murder of Berta Cáceres. Her daughter Berta Zunica Cáceres starts a court case against FMO. The first hearing is 1st November. 
 
Her lawyer Chana Samkalden from the law firm Prakken d’Oliveira: “We ask for a judgement that says that FMO acted unlawfully. When that judgment arrives, we will look into adequate compensation.” She blames FMO for not adequately researching the risks of the loan to Desa. “FMO knows what is good for the indigenous peoples, but does not respect the right to self-determination of the local communities. It is a very paternalistic approach.”
 
An independent research committee, commissioned by FMO, concluded that the development bank has only conducted very limited consultations with the indigenous peoples. That goes against its own principles. 
 
Landgrabbing and hunger in Sierra Leone
 
In 2011, the FMO, together with the Swedish development bank Swedfund, becomes a minority shareholder in the Swiss energycompany Addax. It rents from the government of Sierra Leone tens of thousands of hectares of agriculture lands for sugar cane to produce ethanol biofuel. FMO wants to create 4000 jobs. 
 
Four years later FMO withdraws, because all has gone wrong. That is the conclusion from Swedwatch, which researches societal impacts of companies investments. Local farmers from sixty villages have had to give away their lands to become workers at Addax, after pressure form the government. 
 
Addax quickly gets into financial problems and workers only get part of their due salaries. People who were farmers before cannot grow their own vegetables anymore or keep cattle. The consequence is food insecurity and hunger. FMO says they tried to find a solution at the time where farmers could continue to work on their own land and at the same time become day contractor with Addax.
 
“The objective of 4000 jobs was never achieved”, says Malena Wahlin from Swedwatch. “Also the energy production from biofuels has delivered too little to Sierra Leone. It was a disastrous investment.”
 
In 2019, the problems for the local communities are not over yet, according to Swedwatch. FMO had no exit strategy to help the indigenous people with the problems that Addax created. 
 
Tension and violence in Guatemala
 
In 2012 FMO becomes a financier and shareholder in the company Hidroeléctrica Santa Rita, which constructs a Hydroelectric power station in Guatemala. Five year later an independent research institute from the International Finance Corporation, a sister organisation of the World Bank, publishes a report on the project. 
 
The report states that FMO and other development banks have not properly researched the social and environment impact for the indigenous communities. “An inadequate assessment was made of the impacts of the project for the biodiversity, the use of land, the impact on drinking water, livelihoods and cultural heritage.” The report continues: “It has lead to tensions and violent incidents.”
 
In 2014 and 2015 there were several deaths of people opposed to the hydroelectric power station. FMO ends the shareholders relation and investments in 2017. FMO recognizes that local stakeholders need to be protected and not oppressed as was the case. 
 
No research into the impacts of a coal plant in Senegal
 
The monster, this is how the local communities call a gigantic coal plant next to Bargny on the coast of Senegal. Around 70,000 inhabitants live there and find that the project did not take air quality, groundwater, land rights and impacts on local fishery into account. 
 
They filed a complaint in 2016 with the independent expert panel of the FMO, one of the financiers. The commission judged that it is hard to understand how the social impact of the coal plant and the environmental impact were not researched. Also the bad or hardly existing communication of the Sendou power station and FMO with the local communities is challenged.
 
In 2017 FMO admits that mistakes were made. Measures are introduced to prevent cooling water from being discharged directly into the sea, in order to prevent damage to fish stocks. Other issues for the communities are also being dealt with.
 
The inhabitants of Bargny ask themselves why these days a highly polluting coal plant is being built with financing from FMO.
 
Houses and farmfields flooded in Panama
 
The construction of the Barra Blanco Dam in Panama is an obvious violation of FMO policies. Lands from the Ngabe-Buglé people were flooded without consent and compensation. How can the FMO step into a project that so clearly violates its own policies? asks Kristen Genovese from the center for research on multinationals SOMO. 
 
The research institute has followed the investment from FMO in the dam since 2011. Because of the reservoir, houses, schools, religious places, farm fields and forests are flooded. In 2012 the police intervene to repress protests against the dam. The result: two deaths. In other protests the police usesrubber bullets. 
 
The Ngabe-Buglé people use the complaints mechanism (ICM) from FMO. The independent expert panel from the ICM concludes after research in its annual report of 2014/2015 that the financiers did not take the land rights well enough into account with the acquisition of the land for the dam. 
 
Also the impacts on the environment have not been researched properly. Complaints from the local communities were not taken seriously. In September 2018 the panel identifies that many problems have not been solved. FMO responds that it is searching for solutions within the given situation.  
 
Farmers evicted in Liberia
 
At the end of October 2018 FMO and two French banks finance the Maryland Oil Palm Plantation (MOPP) in Liberia with ninety million Euro. Research by FMO indicates that the project is in the highest risk category for negative social and environmental impacts. FMO has been warned. 
 
Despite that, indigenous people are not being engaged with the investment and the use of their traditional lands. That becomes clear in the research report ‘Respecting Rights?’ in 2015 from Forest Peoples Programme and Social Entrepeneurs for Sustainable Development (SES-Dev) in Liberia.
 
Before the civil war, which started in 1989, the 9,000 hectares of land are used by the company Decoris, which had evicted farmers from their lands decades before. Decoris disappears during the bloody civil war. In the nineties, the indigenous people retake possession of their traditional lands. 
 
In March 2011, MOPP announces that it will take over the Decoris plantations. MOPP confiscates all land up onto the borders of villages and houses. No farmland is left for the villagers, concludes the report ‘Respecting Rights?’. 
 
FMO wants to create 33,000 jobs and 150,000 indirect employees with its investment in MOPP. MOPP will produce for the local market, thereby lowering expensive imports and reducing the price of food. 
 
Local famers tell a different story. They explain that their farmlands have been destroyed and their water sources polluted with pesticides and that food shortages have developed. In the report ‘Respecting Rights?’, three years before the investment from FMO, this is already noted. 
 
The Liberian NGO SESDev documents the complaints from the villagers in the MOPP area. Farmers lose their income and are not compensated. MOPP uses the Liberian national police to ‘intimidate farmers, arbitrarily arrest them and poison their cattle.’
 
This happens in 2019, especially in new areas where Decoris was absent before. ‘MOPP expands further and further and does not respect the land rights of farmers,’ says Daniel Krakue from SESDev from Liberia. ‘Farmers are forced to move.’ FMO responds that it has not received these types of signals. 
 
Krakue:”The local communities ask MOPP to respect their land rights. FMO and other banks demand proof of ownership. But paper proof does not exist in a country like Liberia. It is about ancestral lands where farmers live and work from generation to generation. 
Original source: Trouw
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