FMO did not follow its own rules in financing Barro Blanco dam
Dutch development bank FMO did not sufficiently take into account the rights of the local population and effects on the environment before approving a $ 25 million loan for the construction of the Barro Blanco dam in Panama. This is not in accordance with FMO’s own standards. This was revealed in the long-awaited report by the independent complaints mechanism (ICM) of the FMO and the German development bank DEG, released on May 29. The report was published in response to a complaint filed by the M-10, the movement representing the affected indigenous Ngöbe population, in May 2014. Both ENDS has been supporting the M-10 in its struggle against the dam for years, and was one of the organisations that supported the complaint.
We are pleased that the conclusions of the independent experts of the ICM support our view that the banks did not comply with their standards.
Failure to obtain consent
The dam’s artificial lake will partially flood the territory of the Ngäbe communities living on the shores of the Tabassará river. These people will be forced to leave their homes and places of religious and cultural value. Despite national and international obligations relating to human rights, project developer Genisa failed to obtainthe 'free, prior and informed consent' (FPIC) of the Ngäbe population. According to the report the “lenders should have sought greater clarity on whether there was consent to the project from the appropriate indigenous authorities prior to project approval”.” Another shortcoming relates to the Environmental and Social Action Plan that was appended to the credit agreement. This plan "contains no provision on land acquisition and resettlement and nothing on biodiversity and natural resources management. Neither does it contain any reference to issues related to cultural heritage. ."
In their public reaction to the report, FMO and DEG acknowledge the conclusion of the report that they were not fully appraised at credit approval, but they made no further concrete commitments to ensure that the rights of those affected by the dam will be respected.. The banks claim that they are “facing limitations in their influence” over government processes to come to a satisfactory agreement with all stakeholders involved. Earlier this year though, the development banks did try to influence the government. In February 2015 the Panamanian government suspended the construction of the dam on the basis of Genisa not acting in accordance with the agreed Environmental Impact Assessment. The breaches included the lack of a legitimate agreement between the Ngöbe and Genisa, and violations of environmental laws. In reaction to the decision to halt the project, the FMOsent a letter to the Vice President of Panama, urging the government to resume construction as soon as possible. According to the bank, closing down this project could "negatively influence future investment decisions in Panama."
Banks’ response is inadequate
Anouk Franck of Both ENDS is surprised by FMO's reaction: "Instead of insisting on resuming the project, the bank should have shown us that it takes the interests of the local population seriously and that it acts in accordance with its own policies. Whenever we have meetings with its representatives, FMO assures us that it supports its clients to improve their social and environmental policies and practices. But in the case of Barro Blanco, the bank has shown it does exactly the opposite. In light of the conclusion of the ICM’s reports, indicating the bank did not comply with its standards, we urge FMO to withdraw from the project. Furthermore, to prevent similar situations in the future human rights impact assessments should become standard procedure at FMO. This is an important instrument to ensure that human rights and environmental standards are guaranteed in future projects."
Also read the press release of Both ENDS, SOMO and others, published on the 1st of June.
Dutch newspaper 'De Volkskrant' also covered the story on the 1st of June (in Dutch): Nederlandse ontwikkelingsbank zat fout met stuwdam Panama
You can also read a summary of the report of the complaints mechanism.
For previous news on barro Blanco on our website:
19 May 2015: FMO pushed Panama to continue Barro Blanco dam
6 May 2015: Construction of Barro Blanco dam will be resumed
11 Feb 2015: Construction Barro Blanco dam finally suspended
7 May 2014: Complaint against FMO on grievance mechanism.org
14 Feb 2014: Filing a complaint with the FMO?
In this 'long read' on Barro Blanco you can find a short overview of what has happened around the dam in in the past few years.
Read more about this subject
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.
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News / 10 June 2022
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Letter / 10 June 2022
Both ENDS, SOMO, Oxfam Novib and Recourse send in a submission to FMO's public consultation on its Position Statement on Financial Intermediaries. In this position statement, FMO only takes limited responsibility for the consequences of its investments through so-called financial intermediaries. We call upon FMO to publish a position statement that focuses on protecting human rights and the environment and take full responsibility for this.
Press release / 19 May 2022
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Letter / 15 May 2022
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Letter / 15 May 2022
Joint Submission of comments and recommendations to the Public Consultation on AfDB Integrated Safeguards System
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News / 15 April 2022
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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.
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.
Publication / 2 November 2021
Letter / 23 August 2021
6 civil society organizations, including Both ENDS have submitted a gender comment on the newly proposed EIB Environmental and Social Framework. The EIB Environmental and Social Standards has to be updated to ensure that due attention to gender specific impacts, risks and related mitigation strategies is integrated in the policy and each standard, as well the assessment needs to specifically address the needs and problems of all genders. A lot of improvements can be made in the integration of gender aspects in policy and standards, in order to prevent violation of the rights of women and girls during project implementation, and tools (widely used by other organisations) and or commitments for their development should be included (inclusive consultations, Gender assessments and analyses, gender impact assessment, Legal Assessment Tool (LAT) for gender-equitable land tenure, gender responsive tools for prevention of violence.
Letter / 23 August 2021
Reflecting the duality of gender and climate in the EIB’s Environmental and Social Sustainability Framework’s Standard 5 on Climate Change
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Letter / 5 August 2021
A joint CSO submission to the European Investment Bank, Standard 11 on intermediate finance in the Public consultation on the EIB Group's
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Letter / 5 August 2021
25 civil society organisations, including Both ENDS have submitted a comment on the overarching policy of the newly proposed Environmental and Social Framework of the EIB Group. The EIB has to undertake environmental, climate, social and human rights assessment and appraisal of proposed projects to inform the decision of financing and must not rely on a clients' self-assessment and reporting (solely). The Policy needs to state clearly what the due diligence, monitoring and reporting responisibilities for the EIB are, in particular regarding human rights and contractual clauses with clients should enshrine the standards in all EIB operations, enabling for suspension of contracts if the standards are not implemented.
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 / 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 / 4 June 2021
FMO's new position statement on fossil fuel investments commits to ending new direct finance in the downstream and midstream coal and oil sectors, whilst still allowing for investments in gas-fired electricity generation under exceptional circumstances only. Both ENDS welcomes this development as a step in the right direction.
Publication / 22 April 2021
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.