FMO’s mission is to support entrepreneurs and make sustainable development possible in those places in the world where this is the most necessary. Sometimes these are complicated projects in complex circumstances. In 2014, FMO granted a loan to the Honduran company DESA for the construction of the Agua Zarca hydroelectric facility. Together with our co-investors, we arrived at this decision after an extensive and careful process based on the policies and procedures applicable at the time. The support of the local population was also taken into consideration; the project enjoyed broad support among the local population.
The project was a small-scale ‘run-of-the-river’ power station in the Río Blanco area in Honduras. We expected this project to have a positive impact on the standard of living in Honduras. The hydropower station would supply urgently needed electricity and create jobs in a country where more than half of the population is living in poverty. At the start, we were aware that this was a complicated project with diverse stakeholders.
On 2 March 2016, Berta Cáceres was murdered, human rights activist and chair of COPINH, the organization that opposed the construction of the hydroelectric facility. This murder upset us deeply, and our hearts and our thoughts go out to her family and friends who have had to go on without her for over five years now. At the beginning of this month, the CEO of DESA was convicted of involvement in the murder of Berta Cáceres. We are profoundly shocked by this. Earlier we gave this response.
Until we exited this investment, in July 2017, we always intended to make careful decisions on the basis of information available at that time. After the death of Berta Cáceres, we commissioned an independent investigation into the way FMO acted and the circumstances around the project in Honduras. In September 2016, the outcomes of this investigation were published.
As a result of legislation, increased supervision, and adjustment of our own policies much has changed within FMO since the exit. Project selection criteria have become increasingly strict, with an even greater focus on local interests, their complexity, human rights, and Know Your Customer.
A question before us again, and all the more pressing, is to what extent FMO still can and wants to be active in fragile states with – at times – inadequate legislation and regulations, where the rule of law is sometimes enforced to a limited extent only. These are the states where we can make the greatest difference and being active in these states is what is expected of us. At the same time, investments in fragile states entail the highest risks. In the months ahead, we will review our strategy up to 2030. We will do this in consultation with our stakeholders in the Netherlands, internationally and locally. This dilemma will be part of this review.