CAO Cases

Arne Hoel, The World Bank

Latin America & the Caribbean

Ecuador / Pronaca Expansion-01/Santo Domingo de los Tsachilas

Complainant
Local community members (confidential)
Date Filed
December 08, 2010
Concerns
Air, soil, & water pollution; community health & safety; EIAs and environmental licenses; biodiversity
Case Status
Closed
 

Synopsis

Complaint
In April 2004, IFC approved its first project with Procesadora Nacional de Alimentos C.A. (Pronaca), the biggest producer of poultry and pork in Ecuador, with facilities in Quito, Bucay, Valle Hermoso, and Santo Domingo de los Tsachilas.  The US$20 million loan to expand and upgrade the company’s facilities was followed by a second IFC project in July 2008, which comprised $30 million in loans for general investment purposes.

 

In December 2010, local stakeholders in the area of Santo Domingo de los Tsachilas filed a complaint with the CAO.  The complainants believe that the pork processing facilities in the province are polluting water sources, soil and air quality, including negative environmental impact to a protected forest.  The complainants  also state that the processing facilities lack the required environmental licenses to operate and that appropriate environmental assessments were never undertaken by the company.  The complainants requested to the CAO that their identities remain confidential.

 

CAO Action
The complaint was deemed eligible for assessment in January 2011, and a CAO Ombudsman team has explored options for resolution with the relevant parties.  In late February and early March, a CAO team visited Santo Domingo to meet with local stakeholders and the company as part of the assessment.  CAO's Ombudsman assessment does not entail a judgment on the merits of the complaint.  Rather, the aim is to listen to people's concerns, understand the different perspectives, and gauge whether it is possible to address the concerns in a collaborative process.  

 

Following an Ombudsman assessment, a collaborative resolution to the complaint was not found to be possible.  A final assessment report was released and, in accordance with the CAO’s Operational Guidelines, the case was transferred to CAO's compliance function to ascertain whether there were any outstanding concerns regarding IFC’s compliance with applicable requirements.  A CAO compliance appraisal was completed in November 2011. 

 

The compliance appraisal found evidence of a productive relationship between IFC and Pronaca, where IFC has worked with its client to address deficiencies and implement improvements in environmental performance. Progress has also resulted from the use of IFC’s Advisory Services expertise and external consultancy services.

 

The appraisal found that improvements can be made in Pronaca's reporting of data to IFC (for example, in its Annual Monitoring Reports) in order to provide IFC full assurance that operations are in compliance with applicable IFC guidelines.  IFC recognizes this deficiency and it is the subject of proposed future action by IFC. 

 

Status
The CAO concluded that the case does not merit an audit of IFC’s due diligence and monitoring of its involvement in Pronaca's operations, and the case was closed with no further action in November 2011.

Project information

Institution
IFC
Project Name & Number
Pronaca 26535 & 21901
Department
Agribusiness
Company
Procesadora Nacional de Alimentos C.A. - PRONACA
Sector
Food & Beverages
Region
Latin America & the Caribbean
Country
Ecuador
Environmental Category
B
Commitment
$20 mil A loan; $10 mil A loan and $20 mil C loan

Case Tracker

Ombudsman

  • Eligible: Completed
  • Assessment Period: Transferred

Compliance

  • Under Appraisal: Closed