Honduras: Dinant-03/Aguan Valley
Movimiento Unificado Campesino del Aguan
Evictions, land conflict, security concerns
US$30m (A loan)
IFC provided Corporación Dinant -a vertically-integrated palm oil and food company in Honduras, with a corporate loan to enable it to develop young palm oil plantations, increase production capacity in its snacks and edible oils divisions, expand and upgrade its distribution network, and build a biogas facility to generate electricity for own and third-party consumption. The total project cost was estimated at $75 million, and IFC’s proposed investment was a $30 million loan.
Dinant is headquartered in Tegucigalpa, Honduras. It owns palm oil plantations across the Aguan and Lean Valleys and operates two palm oil mills and an edible oil refinery near the cities of Tocoa and La Ceiba. The company also operates a port storage facility at Puerto Castilla; owns vegetable greenhouses and a food processing plant in the Comayagua Valley; and has a snacks plant in San Pedro Sula.
In July 25 2014, the Movimiento Unificado Campesino del Aguan filed a complaint with CAO on behalf of its members in the Aguan Valley. The complaint raises a number of issues related to land disputes, displacement of communities, violence, use of security forces, and environmental impacts which the complainants link to Dinant’s palm oil operations in the Aguán Valley.
CAO found the complaint eligible in August 2014 and initiated an assessment of the issues with the complainants and the IFC client. A CAO team conducted a first trip to Honduras in October 2014 as part of its assessment. After consultation with community representatives, Dinant and the Government of Honduras, the CAO postponed completing its assessment to allow dialogue efforts already underway to make progress.
CAO’s decision to postpone completion of its assessment was aimed at respecting dialogue efforts underway under the auspices of IFC and CBI, and avoiding initiating similar initiatives that could duplicate or complicate those ongoing efforts. The decision to postpone the assessment was formalized with the relevant parties in November 2014.
At the request of the complainants, CAO resumed its assessment in June 2016. The CAO team had conversations with the relevant parties, to help them take stock of the situation, and understand how they would like to move forward in the CAO process in the context of the ongoing dialogue efforts of IFC and CBI.
CAO’s compliance appraisal, published in June 2017, noted that a number of issues raised in the complaints are similar in substance to those covered in a 2014 CAO audit of IFC’s investment in Dinant (Dinant-01 case), and thus by CAO’s ongoing monitoring of IFC’s response to the 2014 audit. Thus, while the complaint issues raise substantial concerns regarding project E&S outcomes and compliance with IFC’s E&S requirements, CAO did not consider that they require a separate compliance investigation. As a result, CAO has decided to consider the issues raised by these complaints as part of its ongoing monitoring of the 2014 audit.
As a result, CAO has decided to consider the issues raised by these complaints as part of its ongoing monitoring of the 2014 audit.
CAO released a monitoring and closing report for the three Dinant cases in November 2018. CAO’s monitoring report acknowledged work supported by IFC to ensure that Dinant’s policies and practices for the management of private security personnel reflect IFC’s Performance Standard 4 (PS4). The report also recognized learning from the Dinant Audit, particularly as relate to contextual risk, use of security forces, and procedures related to client E&S performance, as well as supply chain and conflict risk assessments for agribusiness investments. However, the report noted that IFC’s response only partially addressed the project-level non-compliance findings. PS4 requires investigation by the client of credible allegations against its security personnel. Although IFC reported that a third-party inquiry was commissioned under the supervision of its security consultant, this has not been delivered to IFC. As a result, CAO cannot conclude that this finding has been satisfactorily addressed. As per client commitments of the EAP and PS1 requirements, depending on the outcome of the inquiry, remedies for adverse impacts caused by the project, including compensation, may be required. Nevertheless, CAO has decided to conclude its monitoring and close these cases considering that Dinant fully repaid its loan to IFC in April 2017, and given IFC does not propose any further project-level action.
CAO has released a monitoring and closing report of the three Dinant cases in November 2018. The case is closed.
Status as of November 12, 2018