How the legacy of colonialism built a palm oil empire
Mongabay | 26 June 2020
A grave among oil palms in Cameroon. (Photo: Dylan Collins)
How the legacy of colonialism built a palm oil empire
By Victoria Schneider
Due to the legacy of decades of colonial rule and the subsequent lack of local expertise and capital needed to meet the requirements of the World Bank’s economic incentive programs, newly independent governments drew on foreign capital during decolonization in the mid-20th to keep businesses and exports running. As a result, some of the biggest tropical commodity companies were founded during colonial times and still operate in countries once occupied by colonial powers.
One of these is Société Financière des Caoutchoucs (Socfin), a Belgian holding company that operates palm oil and rubber plantations through dozens of subsidiaries across Africa and Southeast Asia.
For years, Socfin has been rebuked by civil society organizations for alleged human rights violations at its plantations. Several lawsuits and complaints have been submitted over alleged misconduct including irregularities in land acquisition processes, poor working and housing conditions and the absence of the sustainable inclusion of local farmers.
Socfin, meanwhile, refutes criticism of its operations, saying its aim is to further development in Africa and ensure that local communities and their workers are the beneficiaries of their operations.
Between 1885 and 1908, Belgium’s King Leopold II exerted control over a vast area of Africa that would later become the Democratic Republic of the Congo. His rule was characterized by systematic brutality that led to the deaths of an estimated 10 million people and one of the first recorded uses of the term “crimes against humanity.”
Today, statues of King Leopold II are being defaced and torn down in Belgium as the country, like many others around the world, is reckoning with a past rooted in racist exploitation. But statues are but one vestige of colonialism that has persisted for more than a century. Several of the biggest tropical commodity companies were founded during colonial times and still operate in countries once occupied by colonial powers. One of these is Société Financière des Caoutchoucs (Socfin), a Belgian holding company that operates palm oil and rubber plantations through dozens of subsidiaries across Africa and Southeast Asia, and which has been rebuked by civil society organizations for alleged human rights violations at its plantations.
Socfin is listed on the Luxembourg Stock Exchange and partially owned (38.75%) by French multinational corporation Bolloré. For years, Socfin has been subject to harsh criticism for malpractices in the establishment and management of its tropical plantations in eight African and two Asian countries: Cameroon, Côte d’Ivoire, Liberia, Sierra Leone, Democratic Republic of Congo, Sao Tomé et Principe, Ghana, Indonesia and Cambodia. Civil society organizations, grassroots movements in countries of operation and international NGOs have voiced concerns, including what they say are irregularities in land acquisition processes, poor working and housing conditions and the absence of the sustainable inclusion of local farmers.
In 2010, non-governmental organizations submitted a complaint to the multinational Organisation for Economic Co-operation and Development (OECD). After the case was dropped in 2017 due to Socfin‘s failure to perform an audit of its operations and implement monitoring procedures, NGOs sued Bolloré last year to enforce an agreed-upon action plan.
Socfin refutes criticism of its operations, saying its aim is to further development in Africa and ensure that local communities and their workers are the beneficiaries of their operations. The group implemented a new responsible management policy in 2017 and has since started a campaign promoting what it claims are positive actions of the company by helping train local residents in agricultural techniques, providing jobs, education and infrastructure for communities, building wells in Cameroon and schools in Côte d’Ivoire, and developing rice cultivation programs for local farmers in Sierra Leone. A Socfin representative said the company also recently spent $50,000 to fight COVID-19 in Sierra Leone.
“As governments and all kinds of development agencies are not efficient at all, the private sector can be,” Socfin CEO Luc Boedt told Mongabay in 2017. “Why should fish be imported while you could create fish farms in Africa? Why are tomatoes imported, why import hundred thousand tons of meat?”
Taking advantage of a brutal regime
“One can do nothing with nothing, but one can do plenty with little,” is the welcome message of Socfin’s website. According to Socfin, these are the words of Adrien Hallet, a Belgian agro-economist who founded the company in 1909 after he “developed the methodical cultivation of rubber tree and palm oil in the Congo” and had moved on to Malaysia to apply the skills he acquired in West Africa to plantations in Southeast Asia.
What is not mentioned on Socfin’s website is the context in which Hallet came to Central Africa in the first place, nor the underlying factors leading to the enormous economic success Hallet and his companies consequently enjoyed.
Hallet traveled to the Congo Free State, now known as the Democratic Republic of the Congo (DRC), in 1889 to work in a trading office, soon becoming its executive director. The Congo Basin was rich in natural resources, especially ivory. After the invention of the automobile tire in 1888, the extraction of natural rubber became a lucrative business, one in which the Belgian monarch Leopold II wanted to be a part.
Under the guise of a “philanthropic mission” to stimulate trade and provide humanitarian assistance for the Indigenous population in Central Africa, Leopold had succeeded in convincing other European countries to entrust the Congo to him as his private property in 1885. His agenda to turn Belgium into a colonial power through the extraction of natural resources by means of a forced labor system and land expropriation was only revealed years later.
While colonial rule was flourishing all over Africa, Leopold’s government in the Congo Basin was committing atrocities against the Indigenous population, which comprised most of the labor force for resource extraction. If rubber collection quotas were not met, punishment could include kidnapping, the severing of hands and murder. Demographers estimate that by the end of Leopold’s reign, the population had decreased by around 10 million people.
It was during this period that Socfin’s founder Adrien Hallet was sent to Central Africa, where he secured his own wealth after studying natural rubber and developing new cultivation methods to maximize yields. To what extent he knew about the brutality taking place in the Congo, or whether he was involved in it, is not evident from the sources available. Records show Hallet was in the orbit of the royal family and obtained wealth through the trade of African rubber.
The profusion of human rights abuses in the Congo eventually led other European leaders to force Leopold to relinquish control of the Congo Basin territory in 1908.
But by that time Hallet had moved on to Southeast Asia, where climatic and soil conditions were just as promising for plantation development as in the Congo Basin. The general environment was more suitable for Hallet’s business plans, one of the factors being a cheaper and more productive labor force. He experimented with the cultivation methods he had developed in Africa and was a crucial part of launching an international investment in Asian rubber plantations. That’s when he founded Socfin in 1909.
Today, Southeast Asia – particularly Indonesia and Malaysia – is the world’s palm oil hotspot, producing around 85 percent of the global supply. But during Hallet’s time, oil palm trees (Elaeis guineensis) were imported there primarily for aesthetic purposes. Hallet, so the records say, noticed large oil palms lining the streets, with their fruits containing more pulp and a smaller core than the ones he knew from Africa.
Hallet turned this observation into a business idea and in 1911 started the world’s first large-scale commercial oil palm plantation in the Asahan Regency on the Indonesian island of Sumatra. He subsequently teamed up with his friend, French writer Henri Fauconnier, who had acquired land in Malaysia, and began exporting palm oil to Europe.
Early 20th century Europe was rapidly industrializing and increasingly reliant on products produced in colonized territories. As the rubber boom waned, palm oil demand was rising. Hallet, having diversified crops on his plantations from an early stage, was able to continuously tap into capital and expand his holdings. By the time of his death in 1925, he had founded more than 20 companies and controlled 73,000 hectares of rubber plantations, 29,000 hectares of oil palm plantations and 21,000 hectares of coffee plantations in Africa and Southeast Asia.
However, expansion did not stop with Hallet’s death. Robert Hallet, Adrien Hallet’s son, took over control of the Hallet Group, using profits from Southeast Asia’s rubber boom in the 1920s to reach deeper into Africa where Socfin established two large plantations in the Congo in the 1930s. By 1944, the group was managing about a third of Indonesia’s rubber production, which, records indicate, came at a cost to local communities whose residents endured the imposition of the colonial system, including forced labor and the appropriation of ancestral land.
By 1940, the Hallet group was controlling 350,000 hectares of land in Asia and Africa, as well as providing 6 percent of the world’s rubber supply and 20 percent of global palm oil exports.
When the colonized world in Asia and Africa acquired independence between 1945 and 1960, Socfin managed to survive without taking a major hit. But decolonization didn’t mean the end of foreign control of Indigenous land in the developing world; it just changed its shape. Although many plantations in former colonies were expropriated and nationalized in the 1950s and ‘60s, soon afterwards, due to the legacy of decades of colonial rule and the subsequent lack of local expertise and capital needed to meet the requirements of the World Bank’s economic incentive programs, the newly independent governments drew on foreign capital to keep the businesses and exports running.
“[Newly independent African nations] inherited unevenly developed economies … Markets often functioned imperfectly and foreigners dominated trade and most modern businesses,” a report by the World Bank described in 1981.
Companies that had operated in the Far East, Southeast Asia and Africa had an advantage in the new scramble for land that soon began, and took over newly nationalized plantations. Again, land was given into private hands, just that now it was legitimized by international bodies like the World Bank and the International Monetary Fund (IMF), which were promoting privatization and foreign investment through their structural adjustment programs.
Socfin was one of the key players in this post-colonial period. Using the extensive knowledge of tropical plantation management the company had acquired over almost a century of operations, Socfin reorganized itself and its portfolio of subsidiary companies in the mid-20th century, emerging in the 1980s and ‘90s with new investments. Some were located in the same countries as before independence, some in other former colonies. In the DRC, for instance, the company acquired an abandoned plantation formerly run by Unilever, another big player in the game; in Indonesia, Socfin subsidiary Plantations Nord-Sumatra entered a deal with the government to create Socfin Indonesia (Socfindo).
Throughout its many transformations, Socfin remained a globally influential player in the rubber and palm oil industries. And that didn’t change when it was slowly absorbed by one of the world’s most secretive multinationals: the Bolloré Group.
In 1988, the French logistics giant started to gain control over Socfin’s holding group, the influential Banque Rivaud. The move came as part of a major reshuffling of Bolloré by its CEO, billionaire Vincent Bolloré. Within several years, he turned his family’s paper and freight business into one of Europe’s top 200 companies by expanding its activities to include logistics and supply chain management, the production of plastics, microfiber and electric cars, and management of media and public relations companies in France and abroad. With the acquisition of Rivaud, and thereby Socfin, the Group expanded its influence into the tropical commodity sectors – particularly in Africa.
Over the past 20 years, Bolloré has managed to build an incomparable network of influence on the continent, mostly in countries formerly colonized by France, by using the World Bank and the IMF’s programs as a tool to acquire a variety of strategic concessions of port terminals, warehouses, railway lines, and tropical plantations. In 2018, the Group recorded a revenue of 23 billion euros ($25.8 billion). Taking over Socfin meant acquiring the last piece needed to control entire supply chains into and out of Africa.
Controversy has followed Socfin from colonial times to today. The company’s operations in several countries, including Cameroon, Sierra Leone, Liberia and Cambodia, have faced accusations of irregular land acquisition, human rights abuses and corruption by communities, human rights groups and NGOs. As a key shareholder of Socfin, Bolloré has come under fire too. However, despite the numerous international complaints and campaigns, the company has managed to stay indemnified.
A first request for comment sent to Bolloré in 2016 was referred to Socfin by Clara Lemarchand, who heads the company’s Corporate Social Responsibility division (RSE). Another request sent this year was unanswered. In its sustainable development report of 2017, however, the group states that it “continues to be influential as a responsible shareholder” referring to the Socfin group as having “adopted and implemented an ambitious sustainable development policy which is paired with a transparency policy validated by the Forest Trust [now named Earthworm Foundation].”
Socfin rejects any wrongdoing and refers to its Sustainable Development Reports. Since 2015, the company has acquired ISO 14001 certifications “and is preparing for the RSPO certification planned for 2020 (2 sites) and 2021 (the remaining 4 sites),” said CEO Boedt, who added this demonstrates the company’s “important efforts for further social development in Africa.”
Following the halt of the OECD investigations last year, four international NGOs – the Cameroon Centre for the Environment and Development (CED Cameroon), the Cameroon Foundation of Rational Actions and Training for the Environment (FOCARFE), the French association Sherpa and the German NGO Misereor – took legal action against Bolloré at the High Court in Nanterre, France. The plaintiffs, led by Sherpa, allege the company did not implement agreed-upon measures to improve living and working conditions on its plantations in Cameroon.
“Bolloré accepted mediation by the NCP and signed the action plan, and Socfin didn’t,” explained Marie-Laure Guislain, head of litigation of Sherpa and in charge of the case. The court has yet to make a ruling.
“Agroindustrial companies in the palm oil sector have a terrible impact on the workers and the environment,” Guislain added. “There has been a legal gap in this sector in France and economic giants can do whatever they want. We hope this lawsuit can affect other sectors as well, where mother companies have impunity when it comes to the subsidiary or sub-contractors abroad.”
Over the past several years, other countries have joined the complaints and legal actions against Socfin. A lawsuit was filed from the Indigenous Bunong people in Cambodia; in Liberia, where Socfin was given a $10 million loan from the IFC in 2007, 22 villages submitted a complaint to the monitoring body of the IFC, the Compliance Advisor Ombudsman (CAO). According to the CAO brief, residents say the company engaged in activities “related to land grab and forced eviction, lack of consultation, economic displacement and loss of livelihood, employment conditions and labor rights violations, water pollution, gender-based violence and threats of reprisals and intimidation.”
As of publication of this story, the cases have yet to be resolved.
The research for this story began in 2013, with field visits to Cameroon and Sierra Leone in 2015 and 2016. The author closely monitors the course of events, regularly receives updates from communities and people on the ground and fact-checks new developments through conversations with the relevant stakeholders in affected countries.
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