The CAO story: Contesting procedural irregularities and standards violations by Wilmar and the IFC through the Compliance/Advisor Ombudsman
In 2007, a consortium of concerned NGOs filed a complaint with the International Finance Corporation’s (IFC) Compliance Advisory Ombudsman (CAO) about serious breaches of IFC Performance Standards by its client, the palm oil trading house Wilmar, a prominent member of the Roundtable on Sustainable Palm Oil (RSPO). Today, Wilmar trades about 45% of globally traded palm oil. Based on detailed field studies, the complainants pointed out that Wilmar’s operations were in violation of legally required environmental protection measures, taking over indigenous peoples’ customary lands without due process or negotiated agreements, and clearing lands and using fire without legally required permits. Detailed correspondence, a field visit and meetings followed which led to the CAO Ombudsman agreeing to mediate a few of the many land disputes mentioned by the complainants.
After the failure of CAO-mediated dialogues between the complainants and IFC staff, the Compliance Unit also decided to audit IFC staff for their adherence to the Performance Standards.
The consortium filed a second complaint in 2009 after the IFC persisted in providing further financial support to Wilmar despite unresolved land disputes and the CAO audit being underway. The CAO’s damning audit findings in 2009 led the World Bank President to suspend all World Bank Group funding of the palm oil sector pending the adoption of a new framework for funding future World Bank Group investment in the sector. After extensive consultations a new framework and strategy were adopted in 2011.
Meanwhile, the Ombudsman was able to resolve the land disputes in three concession areas, and following a third complaint engaged in another Wilmar concession (PT Asiatic Persada in Jambi Province, Indonesia) where serious human rights abuses occurred in 2011, when company personnel working with a company-paid mobile police brigade violently evicted 83 families from their homes and bulldozed their dwellings into nearby creeks. However, in April 2013, this concession was sold by Wilmar to non-RSPO and non-IFC funded companies, without prior consultation with the indigenous Batin Sembilan communities who are engaged in the IFC CAO land conflict mediation process.
The documents below provide further information on this issue.