In a first, IFC settles lawsuit with Honduran farmers

To kick off the year, I have a story about the first time the International Finance Corporation settled a lawsuit brought by a community alleging that it was harmed by an investment.

It stems from a 2009 IFC investment to Corporación Dinant, a palm oil company in Honduras. In the lawsuit, a group of Honduran farmers allege that Dinant forced people off their land, tortured, kidnapped, and murdered community members; and claim that IFC’s Asset Management Company profited from those actions.

Dinant tells Devex that it denies all of the allegations in the lawsuit, including charges of murder, which it called “completely meritless,” and said it is committed to respecting human rights.

The settlement, once approved by the court, would have AMC pay $5 million, most of which will go to support community programs that will be managed by an independent third party. An IFC spokesperson tells me that neither IFC nor AMC “has admitted to any wrongdoing or agreed to any remedial action as part of the settlement agreement.”

While the farmers are “happy that there has been a resolution,” they also think it took too long and never should have had to go to court, Marissa Vahlsing, one of the EarthRights International lawyers representing the farmers, tells me.

This settlement comes at a time when IFC is adopting a new approach to remedial action which will govern what happens when something goes wrong with its investments. The draft policy has come under fire from advocates who say it lacks critical details, doesn’t include a mechanism for IFC to pay for harm, and is vague on which “exceptional” circumstances may result in remedies.

Read the full article from Devex here.