Press highlights World Bank blunders in Congo's forest
11 December 2007 | Washington, DC
Last week, the Financial Times published an article on the World Bank's errors in its forest operations in the Democratic Republic of Congo (DRC) and allegations of support for illegal logging in the country by the International Finance Corporation (IFC). Just two days later, the IFC announced it would sell its stake in Olam International Ltd., the Singaporean commodity trading company accused of "environmental malpractice" in the world's second largest rainforest. As those gathered in Bali for the United Nations conference on climate change discuss the importance of forests to the future health of the planet, the Bank's missteps in Congo deserve a closer look.
According to the Financial Times (FT), the World Bank has admitted errors in its forest sector operations in the Democratic Republic of Congo (DRC), home to the planet's second largest rainforest. The Bank's admissions come in response to a damning internal investigation into its forestry projects in the DRC, set to be discussed by the Bank's Board in January 2008.
In a sidebar, the FT also reported that the Bank’s private sector arm, the International Finance Corporation (IFC), has been forced to face up to allegations that it has supported a company engaged in illegal logging activities in the DRC. Just two days after the FT article was published, the IFC announced its divestiture of a 3.35% equity stake, reportedly worth between $7 and $100 million, in Olam International Ltd. Greenpeace has accused the international commodity trading company of sourcing timber from "destructive and illegal" operations in the DRC. Almost immediately after the divestment announcement, Olam's share prices dropped on the Singapore stock exchange. In its announcement, the IFC said its "decision is driven by policy considerations and is not indicative of IFC's opinion on Olam's financial position and performance." Without elaborating on the reasons for selling off its Olam stock, the IFC said it is "committed to good international practices in environmental sustainability."
While increasingly recognized for its importance to the planet's climate as well as its unparalleled biodiversity, the Congo basin is central to the lives and livelihoods of the more than 40 million Congolese people who depend upon it. The forests in the DRC are inhabited by an estimated 250,000-600,000 Pygmy people -- indigenous, forest-dependent communities -- who have lived in and from the forests, and, together with other forest-dwelling populations, protected them for hundreds, if not thousands of years.
When peace returned to some areas of the DRC in the early part of this decade, so too did financiers like the World Bank and investors eager to take advantage of the window of opportunity to access the country's vast natural resources. The Bank's strategy for reviving the DRC's economy relied heavily on increasing investment in the forest and mining sectors. This push for greater revenue-generation from the country's forests centered heavily on the prospect of industrial logging, raising the specter of environmental degradation and social disruption -- particularly acute risks for the forest-dependent communities most touched by logging. These groups wanted a voice in decisions being made by the government and the Bank about reform of forest sector regulations, the design of a process for reviewing the legitimacy of existing logging titles, and the future allocation of forest rights. However, despite efforts to raise concerns, many felt they were being left out of this important process altogether.
In 2005, twelve representatives of Pygmy communities in the DRC submitted a complaint to the World Bank's independent Inspection Panel, claiming that the Bank's failure to respect its own policies on indigenous peoples, environmental protection, and public consultation in its forest sector operations, jeopardized their rights and the future of the country's vast forest. The claimants argued that the Bank failed to acknowledge the existence of the hundreds of thousands of pygmies living in and dependent on the country's forests when designing the legal framework for the forest sector and the processes for deciding how forest lands should be allocated and used.
After two year of investigations, the Inspection Panel completed its report in September. Although it was not publicly available, the document was obtained by the press in October, leading to wide coverage of its critical findings, which largely confirmed the Pygmies’ complaint.
Under official World Bank rules, neither the Inspection Panel report nor the Bank management’s response to it is supposed to be made publicly available – including to those who filed the initial claim! – until after the Bank’s Board has officially discussed the two documents in a single session. The flaws in this process, which silence the claimants at a most crucial moment and deprive the Board of critical input, are widely acknowledged, including by some inside the Bank. And while management is supposed to consult with affected populations in framing its response to the Panel, it refused to discuss it with complainants who were in Washington in October during the World Bank's Annual General Meetings.
This case draws attention, not for the first time, to the potential need to restructure the process of responding to an Inspection Panel report. It is only because of the recent press coverage that the Pygmy communities may be able to formulate a response before the Board discusses the matter (a session currently scheduled for mid-January 2008).
Read recent press coverage
- World Bank admits Congo omissions, by William Wallis and Dino Mahtani, December 7, 2007. (Financial Times website)
- IFC to offload $7.5m Olam stake, by Dino Mahtani, December 9, 2007. (Financial Times website)
- World Bank Arm to Sell Stake in Singapore's Olam, Reporting by Alister Bull, editing by Maureen Bavdek, December 10, 2007. (Reuters website)
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