Land conflicts and shady finances plague DR Congo palm oil company backed by development funds

2 November 2016 - 9:45am
Press release

European and US development funds are bankrolling palm oil company Feronia Inc despite land and labour conflicts at its plantations in the Democratic Republic of the Congo (DRC). New information now raises questions as to whether the Canadian-based company misused millions of taxpayer dollars destined for international aid by way of companies connected to a high-level DRC politician.

Canadian-based agribusiness company Feronia Inc is majority owned by the UK government's CDC and other European and US development banks. Since 2012, development finance institutions (DFIs) have provided or committed nearly US$120 million to Feronia and its subsidiaries. DFIs claim to follow high standards for due diligence and are mandated to invest in private companies that contribute to the alleviation of poverty.

A report released today by African, European and international organisations provides further evidence to back the claims of local communities that Feronia is illegally occupying over 100,000 ha of land for its oil palm plantations and that wages for workers on the plantations remain below US$2 a day—an amount widely acknowledged to be insufficient to cover basic costs of living in the DRC.

The report also shines the light on complex and opaque financial mechanisms that Feronia operated through its Cayman Islands holding company and that appear to have benefited Barnabé Kikaya Bin Karubi, the Chief Diplomatic Advisor to President Joseph Kabila and the DRC’s most recent Ambassador to the UK (2009-2014).

Jean-François Mombia, director of RIAO-RDC, one of the authors of the report said: “Feronia and its predecessors have been undermining the development of communities for over a century. Why would development banks choose to support a company with such a brutal record of labour and human rights abuses, land grabbing and allegations of corruption? Despite what the company and the DFIs say, the situation for the communities and workers has not improved since the DFIs became involved.”

Virginie Pissoort of SOS Faim (Belgium), another author of the report, said: “We raised alarm bells about Feronia's involvement in land grabs and labour abuses already in an initial report in June 2015. Despite our expressed concerns, the CDC increased its shareholding in the company and a new set of DFIs stepped in to provide Feronia with a financial lifeline, led by the DEG of Germany, FMO of the Netherlands and BIO of Belgium.”

Saranel Benjamin of War on Want (UK) another author of the report, said: “The apparent lack of due diligence from the DFIs is troubling, especially from the CDC. We uncovered obscure, offshore accounting schemes and grave labour and land rights abuses that the CDC should have known about and should never have supported with UK taxpayer money.”

The authors of the report are calling for public inquiries into Feronia Inc and the financial support provided by the CDC and other DFIs. They want Feronia and its DFI backers to immediately make public its land concession documents and the financial reports of all of its current and former subsidiaries.

Jutta Kill, advising urgewald (Germany) on this project, another author of the report, said: “Why does a company need eight or more subsidiaries in at least three different countries to manage 100,000 hectares of land? And why are DFIs financing such a company, operating in a country ranking 147 out of 187 in the 2015 Transparency International Corruption Perception Index? More importantly, what will DEG and the other DFIs involved do to end the suffering of the communities who lost their lands and livelihoods to this company?”

The authors of the report call on Feronia and its DFI owners to adhere to the longstanding demands of affected communities for the immediate return of their lands and for reparations.

The full report is available in English, French and Spanish. A summarised version is available in German. The report will also be available soon in Lingala and Swahili.

The authors of the report are:

RIAO-RDC

AEFJN/AFJN

CNCD

Entraide et Fraternité

GRAIN

SOS Faim

UMOYA

urgewald

War on Want

World Rainforest Movement

 

The development finance institutions that have financed Feronia include:

AECID (Spain)

AFD/Proparco (France)

BIO (Belgium)

CDC (UK)

DEG (Germany)

FMO (Netherlands)

OPIC (US)

 

Media contacts:

Jean-François Mombia Atuku, RIAO-RDC (Senegal / French)

jfmombia.at16@gmail.com

+221 773 469621

 

Devlin Kuyek, GRAIN (Montreal, Canada / French, English)

devlin@grain.org

+1-514-571-7702

 

Ross Hemingway, War on Want (UK / English)

rhemingway@waronwant.org

+44 (0) 7983 550728

 

Virginie Pissoort, SOS Faim (Belgium / Dutch, French, English)

vpi@sosfaim.org

+32 (0) 2 548 06 83

 

Moritz Schröder, urgewald (Germany / German, English)

moritz@urgewald.org

+49 2583 30492 - 19

+49 176 64079965 (mobile)

 

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