IFC to be audited for policy violations over palm oil projects

NGO complaint regarding Wilmar taken up by CAO

Update: September 2008

In July 2007, Forest Peoples Programme with 18 other NGOs including local groups in Indonesia filed a complaint with the International Finance Corporation's (IFC) Compliance Advisory Ombudsman (CAO) about the IFC's funding of the palm oil producing and trading company, Wilmar. The complaint raised concerns about the impacts of Wilmar's operations on local communities, company violations of Indonesian laws and environmental policies, and IFC staff's violations of IFC policies and procedures. We also complained that the IFC, as a member of the Roundtable on Sustainable Palm Oil (RSPO), was contravening RSPO rules by asserting on the IFC website that Wilmar's operations were compliant with the RSPO's standards.

In response, the CAO took up the complaint and after field visits and meetings with the complainants agreed to divide the complaint into three parts:

1. to carry out a mediated negotiation between Wilmar-affected communities in Sambas district and Wilmar to seek to resolve the land conflicts there;
2. to carry out a mediated dialogue between the complainants and Wilmar about the wider social and environmental violations;
3. to carry out a mediated dialogue between the complainants and the IFC to discuss ways of improving the application of IFC policies in the oil palm sector to avoid social and environmental harms.

Progress so far:

The IFC did remove the offending information about RSPO compliance on the web site, while the CAO then moved ahead with the mediated dialogues.

1. The CAO-mediated negotiations between Wilmar and the communities in Sambas is underway and making steady progress.
   
   
2. There has been some confusion about the issues to be addressed in the second dialogue and a further correspondence about these matters with the IFC has ensued.
   -  FPP and NGO letter to CAO - August 2008 (pdf)
   
-  CAO letter to FPP - September 2008 (pdf) 


3. The CAO-mediated dialogue between the NGO complainants and IFC staff was held on 30 November 2007 but was unfruitful as IFC would not admit that anything needed improving. The complainants thus asked that the CAO audit the IFC for compliance with IFC policies and procedures. The CAO then carried out an appraisal to see if such an audit was justifiable. The CAO has just announced that indeed such an audit is justified and will now take place.
   -  CAO Appraisal Report - September 2008 (pdf)