Where does your bank stand?
The Problem for the Big Four
Almost two years ago Oxfam first alerted our big four banks that they are connected to companies linked to agriculture and land grabs overseas in our Banking on Shaky Ground report . These cases frequently involve violence and intimidation, forced evictions and the destruction of crops. Land grabs have long-term consequences on the lives of affected people.
To date, all four banks claim to have responded to the issue of land grabs. But what have they actually done? Two banks, NAB and Westpac, have taken some significant steps with new land-specific policies, while CBA and ANZ have done little. However no bank has done enough. Our new report Still banking on land grabs reveals new links between the banks and already widely reported land grabs.
It shows that the banks will remain exposed to companies connected to land grabs — and the negative impacts this has on their reputation — until they take a zero tolerance for land grabs approach. This involves clear commitments, greater transparency and accountability to ensure that the banks operations don’t contribute to negative impacts on vulnerable communities overseas.
In its 2016 report, Still banking on land grabs, Oxfam reveals that ANZ has connections to companies linked to widely reported land grabs in Brazil, Colombia and Indonesia and another case in Papua New Guinea. ANZ was linked to all but one of the land grabs cases investigated in depth in our report.
Oxfam has also closely followed ANZ’s response to a concerning case in Cambodia. From 2011–2014 the ANZ Bank part-financed a sugar plantation that has been involved in child labour, military backed land grabs, forced evictions and food shortages. While ANZ would not disclose the amount it loaned Phnom Penh Sugar (PPS) since 2011, it is believed to be tens of millions of dollars through its Cambodian subsidiary, ANZ Royal Bank. This loan was issued for a sugar mill, built on, and sourced from, contested land.
Hundreds of families were forcibly removed from their homes in 2010–2011 to make way for the sugar crop. Families were evicted without compensation, or with figures as low as $50 for land that once provided them with food and a livelihood. There have been food shortages because resettlement sites were located on infertile land and destruction of community forests and crops.
In July 2014 it was announced that Phnom Penh Sugar had suddenly repaid its loan to ANZ. ANZ has now left the communities high and dry. The community points out that ANZ has profited from its link to land grabs. They are calling on the bank to make amends and to take action that leads to meaningful change that helps them to rebuild their lives.
Our new 2016 report goes into much more detail on issues that should have alerted the bank beforehand to problems connected with PPS, as well as the bank’s response to the case since Oxfam reported on this case in 2014. Oxfam’s 2014 report also outlined 10 additional cases of ANZ involvement between 2009–2013 with companies accused of land grabbing. Two years later, the bank has yet to response in any substantial way to these allegations.
Is the ANZ adopting Zero Tolerance for Land Grabbing?
While ANZ claims to have responded to the issue of land grabs, its response is far from adequate and it lags behind its competitors NAB and Westpac.
As Oxfam notes in its new report – “ANZ’s response on land grabs casts doubt over whether customers and investors can rely on ANZ to give an accurate appraisal of its exposure to land-related risk and associated human rights violations.”
ANZ has announced that it will review its human rights standards in 2016. While it has signalled that it is reviewing the issue of land grabs, it has yet to commit to any concrete and public commitment as to what action it will take on land rights.
In its 2016 report, Still banking on land grabs, Oxfam revealed that Commonwealth Bank (CBA) has connections to companies linked to widely reported land grabs in Colombia and Indonesia. The report has also included an update on CBA’s connection to a land grabs in Brazil, first reported in 2014.
The Commonwealth Bank manages millions of dollars in shareholdings in an agribusiness giant, Bunge. From 2008–2014 Bunge’s Brazilian sugar mill committed to sourcing sugarcane from five farms on land that had been designated as belonging to local Indigenous people. Farmers had used their political influence and intimidation to disrupt the next steps towards returning the land to the community.
Community members also report their river was polluted due to fertiliser run-off causing children to get ill with diarrhoea, skin infections and other illnesses. People have to travel further away to hunt as so much forest has been cleared for farms.
The Commonwealth Bank hold $16.98 million in the company, according to share ownership records reviewed in February 2016. This leaves the Commonwealth Bank exposed to the financial value and operations of the company.
In 2015 Bunge says it has stopped sourcing sugar from these farms — yet it has not taken any action to address its role in profiting from land grabs across many years.
Oxfam’s 2014 report also outlined additional cases of Commonwealth Bank involvement with companies accused of land grabbing. Two years later, the bank still hasn’t issued a substantial response to these cases.
Is the Commonwealth Bank adopting Zero Tolerance for Land Grabbing?
While CBA claims to have responded to the issue of land grabs, its response is far from adequate and it lags behind its competitors NAB and Westpac.
In 2014 Oxfam reported that NAB had been funding the world’s leading processor and trader of Palm Oil — Asian agribusiness giant Wilmar. Since 2007, Wilmar and its subsidiaries have been linked to numerous land grab allegations in Asia and Africa, and hves been targeted by environmental NGOs for contributing to deforestation and negative impacts on threatened species such as the orangutan.
While the company has made efforts to improve, it still faces a number of concerning allegations that it is operating without the free, prior and informed consent of communities.
In its 2016 report, Still banking on land grabs, Oxfam revealed that NAB has connections to companies linked to widely reported land grabs in Brazil and Colombia. The report also provided information on a new case study linked to one of Wilmar’s suppliers in Indonesia.
In Indonesia, communities are reporting threats, intimidation and the destruction of their crops and rubber trees after a palm oil company (PT SIL) acquired a controversial lease to 2,800 hectares. Communities report violence and threats as the company seeks to push them off their land in order to expand its plantation.
Is the NAB adopting Zero Tolerance for Land Grabbing?
In November 2014 the NAB published its policy on improper land acquisitions — and became the first of the big four banks to take policy action on land grabs since the release of our report.
Oxfam welcomed the policy as a positive step in the right direction. But Oxfam has pointed out that it does not yet ensure that the bank can’t back land grabs. To do so it would need to include measures to ensure justice for affected communities, a stronger recognition of community land rights through requiring Free, Prior and Informed Consent, and clearer disclosure of its links to land deals.
As noted above, Still banking on land grabs included new information about NAB’s links to companies connected to land grabs – raising the question of how the bank will respond given its new policy.
In its 2016 report, Still banking on land grabs, Oxfam revealed that Westpac has connections to companies linked to widely reported land grabs in Brazil and Colombia and Indonesia.
The impacts of these cases on communities, include deepening land inequality, food shortages and community-directed violence and intimidation.
In its 2016 report, Oxfam also revealed updated information on Westpac’s possible connection to a company with likely links to land grabs in Papua New Guinea (first reported in 2014).
In Banking on Shaky Ground we reported that Westpac had a long-standing financing relationship with WTK — a company that has links to land grabs in Papua New Guinea (PNG). We also found links with other companies connected to land grabs.
The information on Westpac’s connection to WTK was based on public records with the PNG Investment Promotion Authority (IPA) on two WTK companies. Company filings from both companies listed a relationship with Westpac as recently as 2010 and 2012.
On 18 November 2014 new documents were filed with the IPA that state that as of this date Westpac no longer has a financing relationship with WTK. Westpac then said that the relationship with one of two company subsidiaries, WTK Realty Ltd, had ended in 2000.
The documents filed are normally expected to be filed at the time the financing relationship ended – not more than a decade later.
On checking the new evidence, Oxfam assesses Westpac’s recent claim that it has not had a relationship with WTK for several years as plausible, but not conclusive. If true, this would mean that Westpac’s former clients incorrectly listed a financial relationship with the bank for many years after the relationship ended.
This case highlights the challenges of researching the world of finance and the reasons why we call for the banks to be more transparent on their exposure to the risks associated with land acquisitions and land grabs.
Is the Westpac adopting Zero Tolerance for Land Grabbing?
In mid-November 2014 Westpac published a ‘Financing Agribusiness’ policy. In the policy, Westpac said it would not finance agribusiness companies that did not respect the rights of all local communities including the right to free, prior and informed consent (FPIC) on land deals.
Oxfam welcomed this as a significant step, as FPIC is central to safeguarding their land rights.
Westpac has also said it won’t fund companies that destroy important conservation forests, violate the rights of workers, or mistreat livestock.
While Westpac refers to the term ‘zero tolerance for land grabbing’ in its policy, it does not yet tackle issues such as disclosing the bank’s exposure to land deals, or justice for communities affected by land grabbing which are central to Oxfam’s recommendations for a zero tolerance approach.
As noted above, Still banking on land grabs included new information about Westpac’s links to companies connected to land grabs – raising the question of how the bank will respond given its new policy.