30 August 2007 - Congo,
The Democratic Republic of the — Back in
April, at the World Bank's spring meeting,
there was much talk about the plight of
the Congo rainforest. We'd just published
a big report detailing how in the Democratic
Republic of Congo (DRC) logging titles were
being granted in breach of a moratorium
that the bank had been instrumental in establishing.
The report launch was so high profile, we
were able to force DRC's rainforest high
onto the agenda of the World Bank meeting
and have also managed to secure another
session at the upcoming autumn meeting.
Given this, you might be surprised to learn
that the World Bank is investing in a company
that is dealing in illegal timber from the
rainforest and has also obtained land in
breach of the country's moratorium. But
that's exactly what's happening.
The World Bank's website says that "the
Bank does not fund logging anywhere in Africa
and our main advice to the Government of
DRC is not to expand industrial logging".
Yet the International Finance Corporation
(IFC), part of the World Bank Group, has
invested heavily in Singapore-based trading
group Olam International to the tune of
millions of dollars over the past four years
- at the end of the financial year for 2006,
IFC held US$11.2 million in the company's
loans and guarantees.
Just two weeks ago, we heard that the DRC
provincial authorities had seized illegal
timber shipments from Olam due to non-payment
of local taxes - the barges were carrying
$500,000 of illegally-logged rainforest
timber. The area's forest minister CoCo
Pembe accused the company of trading in
illegal timber, cut by local companies whose
logging permits have expired. Yet the World
Bank denies that IFC is doing anything wrong.
In addition, we have clear evidence that
Olam has purchased logging titles in breach
of the 2002 moratorium which expressly forbids
the allocation of more land for logging.
Right hand not talking to left?
It would seem that the left hand of the
World Bank doesn't know what the right hand
is doing, and it's not just this distant
and impersonal institution exhibiting double
standards - some high street banks are also
funding forest trashing activities. Take
HSBC, whose recent advertising campaign
would lead you to believe it was the greenest
bank around. Its 'Forest Land and Forest
Products Sector Guidelines' state that it
"will not provide facilities and other
forms of financial assistance [for] logging
operations that are in violation of local
or national laws in respect of illegal logging".
And yet, along with the Royal Bank of Scotland,
they provide financial services directly
to Olam.
A woman from a forest dependant community
gathers firewood.
Enlarge Image When questioned by our campaigners
about the relationship with Olam, HSBC CEO
Stephen Green said that he was unable to
comment further on the relationship for
"legal and regulatory reasons"
although he was keen to reassure us that
"where issues are brought to my attention
they are thoroughly investigated and acted
upon if they are found to be in conflict
with our environmental standards and policies."
All well and good, Stephen, but surely
the point of having a sound environmental
policy is to prevent HSBC getting into bed
with dodgy companies in the first place.
Especially companies like Olam, whose activities
directly contradict HSBC's own forest policy.
Mind you, it's not just HSBC - both Barclays
and Prudential are shareholders in Olam.
If financial institutions put their money
quite literally where their mouth is, they
can force companies to adopt more responsible
practices - without investment, companies
like Olam can't continue to make vast profits
from environmental destruction. The World
Bank could look a bit more closely at its
own guidelines and make sure its funds are
used to increase forest protection and alleviate
poverty instead of funding rainforest destruction.
Meanwhile, it's always worth looking more
closely at what your own bank gets up to
- without our hard-earned cash, they can't
function either.
