News / 23 July 2021

Dutch development bank FMO's funding for Agua Zarca project possibly linked to malpractices

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.

Responsibility for public interest

The article in the Financieel Dagblad supports Both ENDS's position that FMO must drastically improve its policies. FMO operates in countries where there is great poverty and inequality and where good governance is lacking. FMO has a responsibility to adhere to international environmental and human rights standards, such as the OECD Guidelines and UN Guiding Principles. These standards require thorough research into human rights and environmental risks, transparency and inclusive decision-making processes.



Letter with five recommendations

In May 2021, Both ENDS, together with SOMO and Oxfam Novib, sent a letter to FMO with five important recommendations to prevent future abuses within projects financed by FMO.

1. Indigenous) communities are FMO's partners and should at all times be involved in and consulted about projects in their area. Establish your own, credible and direct lines of communication with project-affected people and CSOs;

2. FMO must be transparent about projects to be financed, as currently the level of transparency is far from sufficient. Launch and consult publicly on a review of your Disclosure Policy;

3. FMO must be accountable and compensate any damage caused. Commit to prepare management action plans (MAPs) in response to complaints and establish remedy funds;

4. FMO must be extra careful with financial intermediaries. Launch and consult publicly on a mandatory Position Statement on Financial Intermediaries;

5. FMO's projects should stimulate sustainable development and investments in climate-unfriendly (fossil) projects are at odds with this. Develop a clear climate vision across all its operations, including public reporting on and targets to reduce emissions.


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