World Bank evaluation criticizes IFC oversight of soy project in Brazil
6 June 2005
A new Compliance Advisor Ombudsman (CAO) audit calls for environmental reclassification and better oversight of the International Finance Corporation's (IFC) project.
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The International Financial Corporation (IFC) evaluation arm, the Compliance Advisor-Ombudsman (CAO), released a critical audit of the IFC's environmental and social categorization of its loan to the Amaggi Group soy conglomerate (Brazil). The report calls for an environmental reclassification of the project and better and clearer oversight.
Project background
Amaggi Group is a soy conglomerate that operates in three Brazilian states and is owned by Matto Grosso's governor, Blairo Maggi. In September of 2004 the company received the second of two $30 million USD loans from the International Finance Corporation. The first had been approved two years earlier. The loans were meant to expand the Amaggi Group's operations, especially with regard to third party growers and suppliers. In November of 2004, then World Bank President James Wolfensohn called for an audit of the Amaggi loan in response to complaints.
Inaccurate environmental classification
The project was only rated category B by the IFC, despite the implications of funding a large-scale agro-industry expansion in an Amazonian state. Since then various civil society groups expressed their concerns about the impacts of the Amaggi group and called for the IFC to conduct better oversight of their loan and the implementation of the environmental management plan.
Accusations of Amaggi involvement in slave labor
In late 2004 two of Amaggi's third party suppliers were found to be employing forced labor when federal agents freed a total of 84 slaves. The International Labor Organization produced a report on this egregious oversight by both the IFC and Grupo Amaggi, which was published in early 2005.
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