CAO Cases

Arne Hoel, The World Bank

Latin America & the Caribbean

Honduras / Ficohsa-02/Tela

Garifuna Community, Fraternal Black Organization of Honduras
Date Filed
October 09, 2015
Land grabbing, displacement, environmental degradation, lack of economic benefits
Case Status



Banco Ficohsa (‘the client’) is a large Central American commercial bank with its main operations in Honduras. Following earlier investments to support trade finance, housing and SME loans, in May 2011 the IFC Board approved an equity and sub-ordinated debt investment in Ficohsa (project #29257). 


In October 2015, an Indigenous Garifuna community lodged a complaint with CAO with the support of a local NGO, Fraternal Black Organization of Honduras (OFRANEH).  The complaint alleges a number of issues stemming from the Indura Beach and Golf Resort (Indura project) at Tela Bay, Honduras. Specifically, the complaint alleges the following impacts: land grabbing, community displacement, lack of economic benefits and environmental degradation.


Ficohsa is a financier of the Indura project. 


CAO Action

CAO found the complaint eligible for assessment in December 2015, and conducted multiple field visits to discuss options for addressing the complaint with the relevant parties. During the assessment process, CAO understood from community members that pursuing a dispute resolution process was not an option at this point in time. An assessment report was released and in line with CAO’s Operational Guidelines, the complaint was referred to CAO's compliance function for appraisal. 


CAO released its appraisal report in June 2017. As CAO previously prepared a compliance investigation of IFC’s investment in Ficohsa (released August 2014, link below), CAO’s appraisal considered IFC’s performance in relation to its supervision of Ficohsa as it relates to the Tela Bay project. After a review of IFC’s documentation CAO has identified questions in relation to the adequacy of IFC’s supervision of E&S risks that relate to the issues raised in the complaint. Firstly, CAO has questions as to whether IFC adequately assured itself that its client applied IFC’s E&S requirements to the project. Secondly, CAO has questions as to how IFC supported its client to ensure that the E&S issues raised in the complaint have been adequately assessed and, where relevant, are being managed in accordance with IFC’s requirements.


While these circumstances would ordinarily merit a CAO compliance investigation, given CAO’s ongoing monitoring of IFC’s investment in Ficohsa, CAO decided that a separate compliance investigation was not required. Rather, CAO considered the issues raised by the Tela Bay complaint as part of its ongoing monitoring of IFC’s investment in Ficohsa.


In June 2019, CAO released a monitoring report in relation to IFC’s investments in Ficohsa. Regarding the Indura project, CAO summarizes actions taken by IFC to assure itself of its client’s application of IFC’s requirements to the Indura project. IFC was aware of community concerns regarding the Indura project. As part of a May 2015 site supervision visit, IFC reviewed Ficohsa’s documentation in relation to the Indura project. Following the complaint to CAO, IFC commissioned a consultant review of the root causes and interests associated with the CAO complaint. In June 2018, IFC conducted a further review of client supervision documentation related to the Indura project. IFC’s attention to the E&S risks and impacts associated with the Indura project reflected Sustainability Policy requirements for risk-based supervision of financial intermediary clients, and their exposure to high-risk subprojects. While IFC’s consultant reached broadly positive conclusions regarding the project’s social performance, the methodology employed did not provide sufficient evidence that IFC’s FI client had properly: a) applied IFC’s E&S requirements to Indura; or b) supervised PS compliance with regard to the issues raised in the Indura complaint. Upon review of available documentation, CAO concludes that IFC lacked sufficient evidence that the Indura project was prepared and implemented in accordance with PS1, PS5, PS6, and PS7 requirements.



Overall, CAO finds that IFC’s response to this compliance investigation only partially addressed its compliance findings. Nevertheless, CAO has decided to close its monitoring of the investigation considering that IFC divested from its Ficohsa equity and corporate loan investments. IFC continues to have active investments with Ficohsa to support its housing and SME business lines. However, these investments are not of a nature that requires IFC to monitor the application of its E&S requirements to the client’s corporate lending portfolio, which includes the loans to Dinant and Indura.

Updated June 13, 2019


All documents, including CAO’s appraisal, investigation, and monitoring reports in English and Spanish, together with IFC’s response, are available under “View Documents” below.


Project information

Project Name & Number
Ficohsa 26394, 27341, 29257
Global Financial Markets
Banco Financiera Comercial Hondureña S.A.
Latin America & the Caribbean
Environmental Category
$20m, $35m, $70.1m

Case Tracker


  • Eligible: Completed
  • Assessment Period: Transferred


  • Under Appraisal: Completed
  • Monitoring: Completed

Useful Links