World Bank Group's role in illegal African rainforest destruction is exposed: company implicated in Congo forest plunder posts rising profits

Washington, USA - The World Bank's International Finance Corporation (IFC) is financing a Singapore-based trading group OLAM International Ltd. which provincial Forestry Minister Coco Pembe has accused OLAM of trading in illegal timber in one of the world's last intact rainforests in the Democratic Republic of Congo (DRC).

The timber being traded by OLAM is sourced from local companies in the province of Bandundu whose logging permits have expired. Local authorities have seized shipments from OLAM, claiming the company didn't pay taxes and underreported their timber volumes. OLAM is expected to announce a 29 percent rise in net profits today.

In 2005, OLAM was awarded logging titles covering over 300,000 hectares in the Bandundu region, in violation of a 2002 moratorium on the allocation of new logging titles, and DRC's Forest Code, both of which were introduced with the support of the World Bank in an attempt to tackle uncontrolled logging in the DRC.

In December 2003, the IFC invested $15 million in OLAM and, during 2004, a partial guarantee of $50 million was approved for the company. World Bank records show that, as of fiscal year 2006, IFC held $11.2 million in OLAM loans and guarantees. Meanwhile, the World Bank denies any IFC involvement in the DRC forest sector, stating on their website that 'the Bank does not fund logging anywhere in Africa and our main advice to the Government of DRC is not to expand industrial logging.'

'This is an example of the World Bank's double standards when it comes to using international finance to help save the DRC's forests. While the left hand of the Bank claims to save the Congo forests, its right hand helps destroy them,' said Susanne Breitkopf, Greenpeace forest campaigner. 'Rather than financing the plunder of the world's second largest rainforest, the World Bank should invest in strengthening forest law enforcement in the DRC, to control the wanton and illegal destruction being perpetrated by logging companies.'

In April 2007, Greenpeace published a report detailing how OLAM trades in timber from third parties whose destructive logging operations cause social conflicts, massive environmental damage and significant loss of state revenue. In May, Greenpeace wrote to the IFC asking that it divest from OLAM on the basis that the group's existing logging titles, awarded illegally after a 2002 moratorium on new titles, should be considered illegal and cancelled. At the end of July, the IFC rejected this request, claiming that the group only works with suppliers who hold valid logging permits and that OLAM is committed to sustainable forestry.

OLAM's operations have already faced legal issues elsewhere in Africa, and in 2004 the company was fined $20,000 by the U.S. Commodity Futures Trading Commission for illegal practices in the United States.

'There are serious questions about the effectiveness of the IFC's Performance Standards. The World Bank Group should ensure its funds are used to improve governance and to alleviate poverty, not to fund forest destruction. Despite capacity building talks about the DRC forest sector since 2002, international logging companies continue to operate with impunity and the government has no means to control them,' concluded Breitkopf.