News / 23 december 2021

2022 is the year for FMO to make good on its promises and provide financial support only to sustainable development

2021 was a turbulent year for Dutch development bank FMO, to say the least. The bank has been under fire for many years for investments linked to human rights violations and suspected corruption. But in the past year, the Dutch press and media have reported on one new development after the other in ongoing cases involving FMO. Below we give a short summary of these cases and call on FMO to make the promised improvements in 2022.


Civil society organisations, including Both ENDS, sent a letter calling on FMO not to approve a proposed loan to the FICOHSA bank, due to suspected corruption and human rights violations. While FMO did indeed not approve the loan and even broke all ties with FICOHSA, it gave no information at all on the case to the CSOs that had sent the letter, including organisations from Honduras who were gravely concerned about FICOHSA's role in corruption and harmful investments. In this way, FMO failed to make a significant contribution to efforts to combat impunity in the Central American country. Transparency on the part of FMO on its knowledge of FICOHSA and its reasons for breaking ties with the bank would give some insight into the precise activities of the political and economic elite in Honduras. Dutch politicians raised questions in parliament asking the government, which has a 51% interest in FMO, to clarify the situation. The government, however, followed the line adopted by FMO and did not find it necessary to provide an explanation or transparency.

Agua Zarca

In May of this year David Castillo, ex-CEO of the Honduran company DESA, was found guilty of the murder of Berta Cáceres, who was assassinated in her own home in 2016. FMO provided DESA with financial support for the controversial Agua Zarca project and, even several years after withdrawing from the project, the bank continued to insist that it had no reason to believe that DESA was an unreliable client. In the meantime, Berta's family is still awaiting the court ruling on Castillo's sentence.

In the summer, research revealed that the FMO loan could even have been directly used to pay for Berta's murder. FMO clearly failed to fulfil its basic duty as a bank, to check thoroughly what the money was used for. An article in Dutch newspaper Het Financieele Dagblad shows that FMO had to suspend its activities for six weeks because it did not meet the requirements of the Dutch central bank DNB regarding money laundering and terrorism. After recent publications in the paper, Honduran CSO COPINH published a statement saying "The banks and the international financial structure that finance projects and companies that violate the rights of communities are responsible and must be sanctioned, as well as their officials".

Barro Blanco

FMO was also faced with an unexpected development in the Barro Blanco dam project this year. Building contractor GENISA suddenly sold the FMO loan of 25 million dollars for the construction of the dam to another investor. This placed GENISA beyond the reach of FMO and its complaints mechanism. The indigenous community, which suffers much harm from the dam project, has been fighting for many years for justice and for recognition of the human rights violations that have been committed. The members of the community continue to hold FMO partly responsible for these abuses. FMO claims that it wishes to reach a satisfactory conclusion to the problem, together with the community, but will have to show in 2022 exactly what means in concrete terms.

A recent opinion article referred to FMO – partly in light of these cases – as a 'dislocation' rather than a 'development' bank. FMO has pledged to learn from its mistakes but has so far shown little evidence of that in practice. We call on FMO to live up to its mandate in 2020 and show the world that it really is a development bank. It can only do that by admitting that it has made mistakes in assessing projects and institutions that it has financed in the past and that it will do much better in the future. FMO needs to provide transparency on all of these problematic cases and not hide behind its clients, lack of capacity or the mantra of collateral damage in light of the supposed development achieved through its support. The mantra should be 'Rather no project than a harmful project'. Only then can FMO guarantee that abuses like those in Honduras and Panama cannot happen again.

You can find more information about the reffered to articles here (Dutch), scroll down to see them.

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