THE BLOG

The Suffering of Others

04/02/2015 08:24 am ET | Updated Jun 02, 2015

An eye-witness to a massacre in Honduras shows a scar on his face from a gunshot wound explaining, "There was a hail of bullets. I ran and got shot in the mouth."

An indigenous woman in northeast Cambodia says, "We work very hard now. We do not have enough food to eat since the concession. When there is insufficient food, we keep food for our kids and husband."

In Guatemala, a woman from a community that has faced arrests admits, "I never imagined that there would be deaths, kidnappings, and all of the chaos they brought us."

A villager from Odisha, India says, "We hold the World Bank responsible for our misery. Today, we are left landless and without any livelihood."

These stories have been told before. But for the first time, Oxfam and our partners are drawing together these stories in one report because despite the different sectors involved - from palm oil to power plants, from rubber plantations to dams - and different geographies - Latin America, Asia and Africa - these stories all have two things in common.

First, that these women, men and children have all suffered abuses to their human rights, from being forced from their land and livelihoods, to suffering physical or sexual violence.

Second, that each case we talk about has a connection to the International Finance Corporation (IFC), the World Bank Group's private sector arm - through its investment in banks, private equity, hedge funds and other financial intermediaries.

A massive 62 percent of IFC lending now goes not directly to development projects but to third parties. These financial intermediaries then invest in projects like dams, plantations, power plants, or into small and medium enterprises. The figures involved are truly enormous - in the four years to 2013, the IFC spent $36 billion this way. This is 50% more than the entire World Bank Group spent directly on health and three times more than it spent on education in the same period.

Oxfam has been working with local partners and allies internationally for the past three years to hold the IFC to account for the impacts of its financial intermediaries lending and to push for radical reforms to this financing model. And there's been some progress: in response to pressure, the IFC has begun to take steps to address flaws including streamlining its risk assessment, forming a new committee to assess high-risk projects, and pledging to give environmental and social risks the same weight as financial or credit risks.

But we do not think the IFC has yet addressed the root causes of how its lending results in these human rights abuses.

We're not the only ones who think so. The IFC's own watchdog, the Compliance Adviser/Ombudsman, audited a large sample of IFC financial intermediaries investments back in 2012 and found that the IFC could not guarantee its investments were doing no harm. After the IFC's commitments to reform, including an Action Plan in September 2013, the CAO then updated its audit in October 2014 stating that most crucial findings "remain unaddressed."

The cases we detail in the report demonstrate a systemic failure of the IFC to identify risks, and where it does become aware of problems, to take effective action to intervene. The IFC's strategy to manage social and environmental risks through third parties does not seem to be working. And when it does not work, instead of benefits, local communities end up enduring displacement, loss of livelihoods, fear, violence, criminalization and repression. Women are particularly affected through loss of access to common resources on which their families depend, and in some cases sexual violence.

The Board must act urgently. It must urge the IFC to make fewer but better investments that stick to the IFC's own social and environmental standards. It must ask the IFC to stop investments in high risk new projects via financial intermediaries until it has adequate systems to manage and mitigate that risk. And it must insist that the IFC publicly disclose its clients and sub-projects on all of its investments done through financial intermediaries. Getting projects assessed by independent parties would help ensure safeguards are not breached.

We think it's vital that the human story behind this highly technical issue is heard loud and clear by those who have the power to make these changes. As members of an indigenous community in Cambodia told researchers, "We want the World Bank to know that its money is being used to destroy our way of life. Nowadays, we are surrounded by companies. They have taken our community lands and forests. Soon we fear there will be no more land left for us at all and we will lose our identity. Does the World Bank think this is development?"

Note: the report was done in partnership with Inclusive Development International, Global Witness, Bretton Woods Project, Bank Information Center, Madre Selva, Nisgua, Programme for Social Action, Equitable Cambodia, Urgewald, Committee of Relatives of the Disappeared in Honduras (COFADEH) and Movimiento Madre Tierra Honduras (Mother Earth Movement Honduras)