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.
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".
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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The Barro Blanco dam project in Panama, which has Dutch financial support, is causing indigenous lands to disappear under water. Both ENDS is working to protect the rights of indigenous communities living near the dam.
Indigenous Hondurans are resisting the construction of the Agua Zarca hydrodam. Their fight has cost several lives, including that of Berta Cáceres. After considerable public pressure, Dutch development bank FMO withdrew from the project.
Large-scale infrastructural projects have detrimental effects on local people and the environment, while their benefits are felt elsewhere. Both ENDS is working to ensure that local people have a greater say in decision-making and is investigating the way these projects are funded.
Development banks should comply with strict environmental and human rights rules to ensure that their projects benefit and do not harm the poorest groups. Both ENDS monitors the banks to make sure they do.
News / 10 July 2020
Dutch development bank FMO is considering investing in the controversial Ficohsa bank in Honduras. The bank has close ties with the elite in Honduras, which holds considerable power in politics, the (para)military and the business community. Last Wednesday, a number of Honduran organisations, including the indigenous organisation COPINH – whose leader Berta Cáceres was murdered in 2016 – sent a letter to the FMO management. The letter, signed by forty organisations including Both ENDS, calls on FMO not to do business with this bank.
News / 23 July 2021
The million-dollar loan that the Dutch development bank FMO provided to project developers of Honduran company DESA for the construction of the controversial Agua Zarca dam project in Honduras, may be related to gross corruption and malpractice. This is concluded in an article published today in the Dutch news paper Financieel Dagblad, based on information provided by COPINH, the indigenous organisation that has been opposing the construction of the dam for years. Several members of the organisation, including its leader Berta Cáceres, were murdered. DESA director David Castillo has recently been convicted of being involved in the assassination of Cáceres in 2016.
News / 27 July 2021
In April 2021, the Dutch development bank FMO announced that it is no longer involved in the Barro Blanco project, a controversial dam in Panama. GENISA, the Panamanian company that built the dam, unexpectedly paid off the multi-million dollar loan early. The question is to what extent, now that the bank is no longer actively financing the project, FMO can still be held responsible for the damage and suffering that was caused when this was still the case.
News / 7 February 2017
Last week, Global Witness published 'Honduras: the deadliest place to defend the planet'. This shocking report clearly shows the worrying situation of human rights in Honduras and backs the demand of Both ENDS and partner COPINH: FMO must divest from the Agua Zarca dam.
News / 16 December 2019
Earlier this month, the seven men found guilty of the murder of Berta Cáceres were sentenced to jail for periods between 30 and 50 years. The court confirmed its opinion that Berta Cáceres was murdered for her role in defending the rights of the indigenous Lenca communities.
News / 2 March 2021
Today it is 5 years ago that Berta Cáceres was shot in haar home in La Esperanza, Honduras, for defending the rights of indigenous people. The leader of indigenous organisation COPINH resisted the Agua-Zarca hydropower dam that was planned to be build in indigenous territory. The actual murderers have been convicted, but not so the intellectual authors of the murders.
News / 2 March 2017
Today, it is exactly one year ago that Berta Cáceres was brutally murdered in her home in Honduras. Cáceres was a globally known human rights defender and coordinator of the indigenous Lenca organisation COPINH. The murder of Berta is closely related to her protest against the Agua Zarca dam, a hydroelectric project financed partially by the Dutch development bank FMO.
News / 8 November 2021
Both ENDS and SOMO condemn violence against Indigenous community near the Barro Blanco dam in Panama
Members of the Indigenous Ngäbe Buglé people were brutally attacked by Panamanian police on Friday 29 October 2021 from a parcel of private land near the FMO-financed Barro Blanco hydroelectric dam. The victims, all members of the anti-dam movement M22, had peacefully occupied the land after their protest camp got dismantled in July this year.
News / 6 March 2018
On Friday, March 2, the director of DESA, David Castillo, was arrested in Honduras on suspicion of involvement in the murder of Berta Cáceres, exactly 2 years ago. The Honduran government refused for a long time to not only detect the actual murderers, but also the intellectual authors of the murder of Cáceres.
News / 6 July 2017
Both ENDS and SOMO welcome the announcement done today by the Dutch and Finnish development banks, FMO and FinnFund, to exit the controversial Agua Zarca hydroelectric project in Honduras. Conflict about the project has led to violence in the region, including the murder of three leaders who opposed the project. In March 2016, renowned human rights defender Berta Caceres was murdered for opposing this project in indigenous Lenca territory.
News / 17 May 2018
Today, three representatives of the Honduran indigenous people's organisation COPINH, together with the family of environmental activist Berta Cáceres, who was murdered in March 2016, announced that they are preparing to press charges against the Dutch development bank FMO. COPINH accuses the FMO of complicity in human rights violations in connection with the controversial Agua Zarca hydroelectric project.
External link / 31 May 2018
Sometimes things must go terribly wrong before big players start to move. In March 2016, Honduran activist Berta Cáceres was murdered because of her leading role in the protests against the Agua Zarca hydro dam, co-financed by the Dutch FMO. One and a half year later, FMO changed their policies to prevent such events in the future.
News / 6 April 2017
The closing of the Barro Blanco dam last year caused not only material but also cultural damage in the affected Ngäbe-Buglé communities in Panama. So far, funder FMO is not taking responsibility for the human rights abuses caused by the project. So, what now?
News / 1 December 2018
On Thursday, November 29, seven suspects of the murder of Berta Cáceres (in March 2016) were found guilty. Members of the indigenous human rights organisation COPINH, of which Cáceres was the leader, and close relatives of Cáceres herself see the ruling as the first step towards justice for her murder and the recognition that the company DESA is co-responsible for this. They also point out, however, that the process was permeated with corruption, intimidation and other abuses from the very beginning, and that the masterminds behind the murder are still walking around freely.
News / 10 June 2022
In a new Position Statement on Financial Intermediary (FI) Lending, Dutch development bank FMO argues for limited responsibility over the outcomes investments that are channeled through commercial banks, investment funds, and other financial intermediaries, representing by far the bigger sector of its portfolio. In doing so, FMO is undermining its development mission, including the protection of human rights and addressing the climate crisis. FMO intends to delegate these key responsibilities to its FI clients only, falling short of best practices of peer financial institutions. In a joint submission prepared by Both ENDS, Oxfam Novib, Recourse and SOMO, we argue that FMO can do much more to ensure the protection of human rights, the environment, and to measure the development impact of its indirect investments.
Letter / 7 July 2020
A number of Honduran organisations sent a letter to the FMO management to call on FMO not to do business with Honduran bank FICOHSA. The bank has close ties with the elite in Honduras, which holds considerable power in politics, the (para)military and the business community.