World Bank President establishes audit for loan to Amaggi Group - 11/03/2004

The President of the World Bank, James Wolfensohn, determined to send the case of the loan to the Brazilian Amaggi Group - owned by the Mato Grosso State governor Blairo Maggi - to the Office of the Compliance Advisor Ombudsman (CAO) of the International Finance Corporation (IFC), a section of the WB that makes loans to the private sector. The decision, which included the request of an audit with the results to be divulged publicly, was announced in a letter from Wolfensohn to the Forestry Working Group of the NGO and Social Movement Brazilian Forum (FBOMS).

The US$ 30 million dollar loan was approved on September 23 this year, even though Brazilian NGOs had repeatedly advised the IFC with respect to the incorrect characterisation of the project, which implied a failure to include the evaluations considered necessary from an environmental and social perspective. The project envisions expanding capacity of the Amaggi Group to process soybeans in areas of expansion of this crop in Mato Grosso state. Now the IFC regulations establish that expansion projects with great importance in vulnerable ecosystems should be categorised as an "A", which includes environmental impact studies and other preliminary measures - however IFC functionaries presented the project to the Bank's board with a category "B", which disposes a series of precautions.

The FBOMS's Forestry Working Group, which includes Brazil's principal environmental NGOs as well as the principal social movements and local union networks, brought to Wolfensohn's attention this process, including through the act of removing its representatives from a consultation on a worldwide review of IFC policies. The NGOs considered that the categorisation of this project could represent a precedent which would lower the standards of financial institutions in relation to projects of great importance in Amazonian regions of forests and savannahs.

In his letter, Wolfensohn manifests the hope that with this attitude, the WB can continue to play an important role in the promotion of dialogue on complex themes such as soybean growth, and he stated that "the audit will provide an independent review of the issue and the results will be made public", concluding "I await the results of the CAO's work". The director of Friends of the Earth-Brazilian Amazonia Roberto Smeraldi, to whom the Wolfensohn's letter was directed, evaluated the decision of the WB's president as positive and transparent, commenting "if civil society's arguments were to have been considered two months earlier, today this audit would not have been necessary".

Downloads:
 
To see all documents regarding the proposal of the second loan by the IFC to the Amaggi Group (available on the IFC site):
- Summary of Project Information

See an investigation by researchers from the University of Florida regarding the first IFC loan to Amaggi Group:
An evaluation of International Finance Corporation financing of Grupo André Maggi in the soybean sector: Environmental and social impact considerations

See the study conducted by Profundo, a consultant for the CEBRAC Foundation, about financing for the Amaggi Group by private and public banks:
Bank loans and credits to Grupo André Maggi: A research paper prepared for Fundação CEBRAC


Related news:

Brazilian NGOs Forum removes itself from the WB consultation
Date: 09/29/2004
Source: Amazonia.org.br

IFC defends Brazil soy loan, greens attack
Date: 09/27/2004
Source: REUTERS

IFC contradicts the WB’s president and finances soybeans in Amazonia
Date: 09/24/2004
Source: Amazonia.org.br

IFC discusses proposed loan to the Amaggi Group with NGOs
Date: 06/08/2004
Source: Amazonia.org.br

IFC to postpone vote on loan for the Maggi Group
Date: 05/10/2004
Source: Amazonia.org.br

Letter by Brazilian NGOs to IFC about a proposed loan to soybean group Maggi
Date: 05/07/2004
Source: Amazonia.org.br