The World Bank's International Finance Corporation (IFC) is financing a Singapore-based trading group, Olam International Ltd, which has been involved in trading illegal timber in the rainforest of the Democratic Republic of Congo (DRC). The world's 'local bank', HSBC, is also providing financial services to the company, in breach of its environmental policy. Olam is today expected to report much improved profits in its half yearly financial results.
Nearly three weeks ago, the DRC provincial authorities seized illegal timber shipments from Olam International in the remote province of Bandundu. The area's Forestry Minister, Coco Pembe, accused the company of trading illegal timber, cut by local companies whose logging permits have expired.
These seizures of illegal timber follow revelations in Greenpeace's report earlier this year 'Carving Up the Congo' showing that in 2005, Olam was awarded three logging titles covering over 300,000 hectares, in violation of a 2002 moratorium which was supposed to stop the allocation of new logging titles in the DRC. Whilst Olam claims to have since handed back one title, the other two are subject to a legal review expected to report later this year. The report also revealed that Olam trades in timber from third parties whose destructive logging operations cause social conflicts, massive environmental damage and significant loss or state revenue.(1)
Olam is funded by the World Bank Group, whilst HSBC and Royal Bank of Scotland (RBS) are providing financial services to the company.
In December 2003, the IFC invested US$15 million in Olam and during 2004, a partial guarantee of a further $US50 million was also approved.(2) As of Fiscal Year 2006, the IFC held US$11.2 million in Olam loans and guarantees.(3) Despite this, the World Bank denies any IFC involvement in the DRC forest sector, stating on its website that "the Bank does not fund logging anywhere in Africa and our main advice to the Government of DRC is not to expand industrial logging". (4)
Forest campaigner Sarah Shoraka said, "This is an example of the World Bank's appalling double standards. While the left hand of the Bank claims to be saving the Congo rainforest, its right hand is helping finance its destruction. Rather than financing the plunder of the world's second largest rainforest, the World Bank should invest in strengthening forest law enforcement in the DRC, to control the wanton and illegal destruction being perpetrated by logging companies."
HSBC and Royal Bank of Scotland are two of Olam's principle bankers.(5) HSBC's forest sector guidelines prohibit it from providing financial assistance for commercial logging operations in "primary tropical moist forest" or in "violation of local or national laws in respect of illegal logging". The company claims to only support customers in this sector that are operating forests moving towards certification by the Forest Stewardship Council (FSC).(6) RBS does not even have a policy in regard to this.
Shoraka continued: "HSBC and RBS should stop facilitating the carve up of the Congo by cutting all links with Olam immediately."
Olam's operations have already faced legal issues elsewhere in Africa, and in 2004 it was fined $20,000 by the US Commodity Futures Trading Commission for illegal practices in the US market.(7)
The Congo forest is the world's second largest rainforest after the Amazon. In the DRC alone, an estimated 40 million people depend on the forests for their livelihoods. Greenpeace is calling for the cancellation of all logging titles issued since May 2002 and for the moratorium on new logging titles to be extended and enforced until the sector is under control and a land-use plan that includes the participation of local communities is fully in place.
Contact: Greenpeace Press Office on 0207 865 8115
NOTES TO EDITOR
1. The Greenpeace report 'Carving Up The Congo' can be downloaded at http://www.greenpeace.org.uk/media/reports/carving-up-the-congo
2. IFC Summary of Project Information, project numbers 20929 and 22659
3. IFC, letter to Greenpeace, July 31, 2007
4. World Bank website
5. http://www.listedcompany.com/ir/Olam/misc/Olam_ar2006.pdf (page 69)
6. HSBC Forest Land and Forest Products Sector Guidelines (pdf)
7. Commodity Futures Trading Commission, Release 4914-04 (CFTC Docket No. 04-13)
