Plantations, poverty and power - Critical Information Collective

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2003, IFC promised more financial assistance for the restructuring of Pan African Paper Mills.
In February 2008, RECONCILE filed a complaint with the IFC’s Compliance Advisor Ombudsman
(CAO) on behalf of the residents of Webuye town who have suffered negative health, environmental,
social and economic impacts. According to the CAO’s website, “The CAO Ombudsman has undertaken
an assessment of the complaint and has begun working with the parties to discuss options for
resolution.” 544
Similar patterns suggesting a failure to carry out adequate due diligence and monitoring are clear from
other IFC-financed pulp projects. In November 2004, IFC approved a US$50 million loan to Brazilian
pulp giant Aracruz, to finance the expansion of the company’s pulp and plantation operations. IFC gave
the loan in spite of ongoing land disputes against the company.
In April 2005, representatives from 64 NGOs wrote to then-World Bank president James Wolfensohn to
demand that the IFC cancel its loan to Aracruz.545 In his reply, Atul Mehta, Director of IFC’s Latin
America and Caribbean Department, dismissed the ongoing land claims against the company and stated
that “land dispute issues were fully reviewed during IFC’s appraisal.”546
One week after Mehta sent his letter, 500 indigenous Tupinikim and Guarani people cut thousands of
eucalyptus trees to demarcate the boundary of 11,008 hectares of their land, land that Aracruz had planted
with eucalyptus plantations. “With this act,” the Tupinikim and Guarani wrote to Brazil’s Minister of
Justice,
“we want to express to you and to the entire Brazilian nation that the land belongs to the Tupinikim and
Guarani nations, and should be returned so that we may construct our own future, guaranteeing our liberty
and autonomy, and the future of our children and grandchildren.”
In January 2006, Aracruz and the state police violently removed the Tupinikim and Guarani indigenous
peoples from their villages, using helicopters and firing rubber bullets. Several villagers were injured.547
Shortly afterwards, Aracruz repaid its loan to IFC in full and IFC managed more or less to avoid a public
scandal of financing a company that was involved in shooting at Indigenous Peoples from helicopters.
In early 2005, Peter Neame, IFC’s Principle Environmental Specialist, wrote that “IFC is please to
support this leading Brazilian forest sector company and to recognize their environmental and social
programs and the progress they have made in these areas.”548 Neame’s optimistic view of Aracruz could
hardly be further from the realities faced by Indigenous People living in the area of Aracruz’s plantations.
IFC’s loan demonstrates, perhaps better than any other, how ineffective IFC’s social and environmental
544 “Kenya – Pan African Paper Mills”, Compliance Advisor Ombudsman website, last updated 18 March 2008.
http://www.cao-ombudsman.org/html-english/kenya_pan-african_paper.htm
545 “World Bank and International Finance Corporation (IFC) investment in the company Aracruz Celulose S.A.”, Letter
to the President of the World Bank: Mr. James Wolfensohn, 4 April 2005. http://www.wrm.org.uy/bulletin/93/Aracruz.html
546 Chris Lang (2005) “Open for business: How the International Finance Corporation subsidises the pulp and paper
industry”, World Rainforest Movement Bulletin 95, June 2005. http://www.wrm.org.uy/bulletin/95/Global.html#IFC
547 “Action Alert about violent police action against the Tupinikim and Guarani”, Alert Against the Green Desert
Network, 23 January 2006. http://www.wrm.org.uy/alerts/Tupinikim2006.html
548 Chris Lang (2005) “Brazil : World Bank loan to Aracruz is in breach of Bank forest policy”, World Rainforest
Movement Bulletin 92, March 2005. http://www.wrm.org.uy/bulletin/92/Brazil.html