3 May 2014

NGOs criticise World Bank loan to Honduran commercial bank for risks of human rights violations

In a letter to the World Bank, twenty-eight Honduran and international NGOs and civil society groups have expressed their concerns over a proposed USD 15m loan to the commercial bank Davivienda in Honduras by the bank’s private lending branch, the International Finance Corporation (IFC). The proposed investment was classified as ‘medium risk’ by the IFC, even though it was admitted that child labour and land disputes could be potential impacts.

In January, the lending practices of the Bank were already called into question as an internal investigation revealed that a loan to the Honduran firm Dinant by the IFC, was not in compliance with the bank’s own ethical standards. The oil company was allegedly involved in assassinations and forced evictions. The adviser/ombudsman (CAO) of the bank stated that IFC staff had been encouraged ‘to overlook, fail to articulate, or even conceal potential environmental, social and conflict risk.’

In the letter to the bank, the NGOs state that ‘given the highly sensitive context in the wake of IFC’s Dinant investment, the risk of human rights violations and the history of land conflicts in Honduras, we find it disturbing that this project is not classified as high risk,’ and that ‘this loan proposal provides a test case for the IFC to demonstrate that it is learning lessons from the Dinant experience.’

IFC spokeswoman Serene Jweied responded that ‘the proposed USD 15m loan to Davivienda in Honduras is focused on providing much-needed access to finance for small and medium enterprises and will not be used to support large, high-risk operations. IFC is disclosing the environmental and social risks relevant in the country context, even though risks associated with this investment are limited’ and that ‘the risk categorisation is fully consistent with our policy.’

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Source: The Guardian | World Bank loan to Honduran bank comes under scrutiny

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