World Bank Group finances company involved in the illegal destruction of the Congo rainforest

The company, OLAM international, reports rise in net profits today.

Press release - 29 August, 2007
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 one of the world's last major rainforests in remote areas of the Democratic Republic of Congo, says Greenpeace. OLAM is today expected to report much improved results for the first half year, with net profits rising up to 29 percent.

Two weeks ago, the DRC provincial authorities seized illegal timber shipments from OLAM International in the remote province of Bandundu, and the area's Forestry Minister Coco Pembe accused the company of trading illegal timber which had been cut by local companies whose logging permits have expired.

In 2005, OLAM was awarded logging titles in the area, covering over 300,000 hectares, in violation of a 2002 moratorium on the allocation of new logging titles, and the DRC's Forest Code . Ironically, these laws were introduced with the support of the World Bank in an attempt to tackle uncontrolled logging in the DRC. Olam's titles are currently not being logged, as they are subject to a legal review.

The IFC invests significantly in OLAM. In December 2003, the IFC invested US $15 million in the company and, during 2004, a partial guarantee of a further $US 50 million was approved. As of Fiscal Year 2006, the IFC held US$ 11.2 millions in OLAM loans and guarantees.

Despite evidence to the contrary, the World Bank denies any IFC involvement in the DRC forest sector, stating on their 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." "This is an example of the World Bank Groups's appalling double standards when it comes to using international finance to help save the DRCs forests. While the left hand of the Bank claims to save the Congo rainforests, its right hand helps destroy them." said Susanne Breitkopf, forest campaigner at Greenpeace. "Rather than financing the plunder of the world's second largest rainforest, the World Bank should urgently invest in strengthening forest law enforcement in the DRC, to control the wanton and illegal destruction being perpetrated by logging companies."

The seizures of illegal timber from OLAM follow recent revelations about the group's illegal activities in the DRC. In April 2007, Greenpeace published a damning report, detailing how OLAM trades in timber from third parties whose destructive logging operations cause social conflicts, massive environmental damage and significant loss of state revenue.

In May, Greenpeace wrote to the IFC asking that it divest from OLAM on the basis that the group's existing logging titles - awarded illegally after a moratorium on new titles had been put in place in 2002 - should be considered illegal and should be cancelled as a result of a current legal review of all existing cutting permits. This review process has itself been initiated and funded by the World Bank. At the end of July, the IFC rejected this request, and defended OLAM's practices, claiming that the group only works with suppliers who hold valid logging permits that OLAM's operations "have formed part of IFC's supervision process and will continue to do so" and praising the company for its "policy commitment to sustainable forest management",

OLAM's operations have already faced legal issues elsewhere in Africa, and in 2004 it was fined $ 20,000 by the U.S. Commodity Futures Trading Commission for illegal practices in the US market

Greenpeace says the dispute raises questions about the effectiveness of IFC's Performance Standards, which claim to set new international standards in sustainable banking, and which have been adopted by a number of private banks since its launch in 2006.

Greenpeace's Susanne Breitkopf concluded: "The IFC must perform due diligence of its clients and projects. The World Bank needs to clean up its act in the DRC. It needs to ensure its funds are used to improve governance and to alleviate poverty not to fund forest destruction. The World Bank has talked about capacity building in the DRC forest sector since 2002, but five years on, capacity at the local level is still zero and international logging companies continue to operate with impunity."

The provincial administration has virtually no means to control the activities of international logging companies in the forests of Bandundu. The few forestry law enforcers in place lack basic transport and equipment as well as adequate training. Inspectors are tasked with patrolling thousands of hectares using bicycles, and their offices are often just huts equipped with nothing but an old manual typewriter.

Other contacts: Susanne Breitkopf, Greenpeace U.S on: +1 202 489 2092 Brussels: Stephan Van Praet Greenpeace International on: + 32 496161580

Notes: 1. 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.2. The Greenpeace report 'Carving Up The Congo' can be downloaded by going to http://www.greenpeace.org/international/campaigns/forests/africa/congo-report

Exp. contact date: 2007-10-31 00:00:00