Fair investments? Swedish Governmental funds, land grabbing and human rights in Sierra Leone, by Tilde Berggren

According to a number of local and international NGO’s, journalists and researchers monitoring the situation on the ground, the large scale investment in Sierra Leone between Addax Onyx Group (AOG) and Swedfund, as well as a range of additional investors, is causing concern. The main concern is that the investment is contributing to poverty, decreased access to basic rights and may increase instability and anger amongst the local population. Swedfund is consistently dismissing the concerns, arguing that the monitoring of the situation is not sufficient and not carried out in detail, hence not trustworthy and does not illustrate the overall situation. Swedfund on their side emphasize that the project is in its start-up phase and therefore it is therefore too early to measure impact. However, those monitoring the situation are many and conclusions based on their monitoring are coherent and consistent and can therefore not be dismissed.

Swedfund is defined as a bilateral Development Finance Institution, it is a development finance institution owned by the Swedish State. In 2011 Swedfund signed an agreement to become equity partner with Addax Onyx Group (AOG), committing EUR 10 million to an investment in Sierra Leone. Sweden contributed to create the largest private sector agriculture investment in Sierra Leone ever made. The purpose: to grow sugarcane and produce ethanol for the European market. The Swedish Government as well as Swedfund is said to be committed to comply with a range of principles for businesses and human rights, to ensure that investments, aid and corporation contributes to ensure respect for human rights.

It is more than a rule than an exception that exposure of the negative impacts on the lives of ordinary people of large scale investments are ignored. In the majority of cases it is the individuals that have  access to the knowledge and the financial capital that are taking the lead in exploitation of natural resources while working for governments and multi-national corporations.

It is not unusual that businesses invest in conflicts and post-conflict affected areas where no or few accountability mechanisms exist and where corruption is the norm. To meet the rising demand for accountability of corporations, principles have been developed by international organizations such as the United Nations and the World Bank. The idea to ensure that the corporations be held responsible to some kind of reasonable standards in their pursuit of financial capital is good.

Because of the complicated nature of domestic and international law and the way it relate to multi-national corporations, an alternative to strict legal accountability has taken shape in non-binding international standards. These principles are non-enforceable and may in some cases rather hamper accountability and access to justice in countries without proper accountability mechanisms than helping to support them. Investment agreements may pave the way for abuse and violations of human rights but also huge financial gains for international investors and select few of national political and economic elite.

It is the State that has the responsibility to protect its population against human rights abuses by third parties, such as corporations. It is important to distinguish the responsibility of States and corporations. States ratify legally binding conventions, meaning that they have a legal responsibility to respect and protect human rights. Corporations are merely legally bound by the agreement they have entered, be it with a state, another corporation or an individual. Corporations are bound by the domestic laws governing the state where they establish their business. Even if corporations are bound to “respect” human rights, as established in non-binding UN Human Rights Council and General Assembly resolutions, this is not, to date, a legal responsibility under international law, rather a moral and ethical responsibility.

A State does not violate its human rights obligations if proper accountability mechanisms, such as laws, policies and procedures for investigations, prosecution in a court of law and effective legal remedies, are implemented and enforced. In cases of human rights abuses committed by corporations, it is the responsibility of the State to prevent, punish and compensate when abuses occur, corporations are not attributed such authority.

It is not unusual that very long term agreements are entered into between States and multi-national corporations. A corporation may declare in an agreement and in its general corporate social responsibility strategy that it intend to apply international non-binding standards such as the UN Guiding Principles on Business and Human Rights. A corporation may apply the processes established in these international principles and follow the standards in detail. Yet, the agreement between a State and a corporation may have severe impact on the human rights and lives of large numbers of people unless established domestic standards and mechanisms exists to hold corporations responsible for abuse exist.

When corporations lease large areas of land, people that remain on the land can in the best case scenario agree to limited or no possibility to continue using their land for income and food generating purposes. They might stay on the land without being able to use it or they might leave. They might also be offered to start working for a corporation if such possibilities arise. This often happens under unpredictable and dire working conditions and lack of alternatives to income makes it hard to opt out.

Take the example of the above mentioned private investment in Sierra Leone between Addax Bioenergy and the Government of Sierra Leone. Addax have leased 44 000 hectares of land, equivalent to 26 000 soccer fields from the Government of Sierra Leone. The land lease agreement is valid for a period of 50 years. 92 villages exist on the leased area, which is inhabited by approximately 14 000 people. Around 2000 work opportunities is estimated to have been created the past four years for these 14 000, 4000 were promised so far.  The people living on the land are paid an average of 8 dollars per 1 hectare and family a year.

The overall lease agreement is entered into between Addax and local Chiefdom Councils. The lease sets out how, amongst other issues, the rent of the lease will be distributed between the central government, the chiefdom council, the local district council and amongst ”those adults treated as land owners”, (which means those people inhabiting the leased land). These adults are not legal land owners of the land; since they according to the laws governing Sierra Leone cannot own land. The Chiefdom Council agrees, in the lease, to “use their best endeavors” to ensure that the lease is signed.

The local land owners were also given a document called an ”acknowledgement agreement” in which they by receipt of an annual payment of 1.40 USD per acre of land, to be shared amongst family, acknowledged the validity of the lease agreement between the local authorities and the corporation.

In return the “landowner” agreed not to interfere with the company’s rights under the lease and they acknowledge the company’s rights to use their plot of land. The signing by the “landowner” on behalf of his family consolidates the free, prior and informed consent process, according to the corporation. The lease gives the corporation exclusive possession over villages, rivers, forests etc. that forms a part of the leased land.

If any conflicts arise on the lease they shall be resolved by arbitration in London, hence not by the national judicial system of Sierra Leone. Knowing the costs involved in arbitration, the chances that any local authorities, would contest any clause in the lease by arbitration in London, are extremely slim. If, however, the parties resort to arbitration, the right to appeal is waived by the lease agreement.

Keeping the above in mind, the process establishing the above lease and “acknowledgement agreement” has been in accordance with established principles by the United Nations on business and human rights and IFC standards. A large number of information sessions were held with the inhabitants of the land and the corporation, tons of evaluations and assessments were made by the corporation. The corporation even feels proud to inform that now, contrary to before, the land owners have a paper showing their registered plot of land. Note however the land owners are not the “owners” they are just called “owners”.

It must be stressed that the majority of the inhabitants in the staked out area have very low, if any education, and often they have not travelled further than to the district town Makeni. The majority of the people in the area live beneath the poverty line. This means that they barely have food for the day. When signing, or putting their thumbprint on the acknowledgement agreement, they could not grasp the large scale implications on their behalf that had already been established by their own local authorities. Perhaps they initially felt lucky to sign the acknowledgement agreement, but they received less than two dollars a year per acre for land they had farmed and resided on for generations.

To them, giving up access to their cassava plantations and the use of a plot of land in exchange for the promises of a large scale investment most likely came with the idea of progress towards a better life. In their world, when the notion of jobs, roads, income, food, education and health arise, it is not difficult to sign such a document. However, at the same time they knew that they did not have a choice, on their behalf, the local authorities had already leased the land and, as noted in the lease agreement ”used their best endeavors to ensure that the lease would be signed” and that the corporation be ensured to ”peacefully and quietly” enjoy the land without any interruption.

It is argued that benefits will come with the investment, but despite these, what the land lease agreement between the Government of Sierra Leone and Addax really implies is that 14 000 people no longer have rights to use the land, freely access areas to hunt and in some cases access clean water. They do however have access to rice. The corporation has established rice plantations. There are however growing concerns by local NGOs that rice does not sufficiently ensure the nutrition needs of the inhabitants.

Hesitation to sign the acknowledgement agreement might have arisen had the inhabitants of the land had equal access to the information and knowledge to that of the corporation and the Sierra Leonean Government. But for a person living far away from international business know-how; that could indeed be obtained at national universities; it is virtually impossible to strategically understand the financial and long term implications of the agreement.

Perhaps they would have thought twice, questioned or demanded conditions had they had equal access to information. Here the Government of Sierra Leone should have stepped in, protected them and ensured that their human rights were ensued. But they did not. The Government was the party that signed the lease agreement. The basic livelihood of 14 000 citizens were with a signature replaced with much more uncertain futures as temporary laborers at the whims of a large-scale investor with limited socio-economic concerns for the population. Surprisingly those working for the company and investors, such as the Swedish Government appear to have a very hard time understanding why the inhabitants now complain about the establishment of the corporation.

However, without doubt the people did not have access to information about the overall consequences of the agreement. They did not know the implications of the clauses stipulating that Addax Bioenergy do not need pay corporation tax until 2022 and is exempted from paying duty on a number of goods and the overall implication of this on Sierra Leone. What if they knew that international firms shift profits to lower tax jurisdictions cost Africa $38bn (£25bn) a year? According to the Africa progress report 2013 by the Africa Progress Panel chaired by Kofi Annan Africa lose, through such tax loopholes, twice as much as the total gains from all donor funds. Perhaps then they would have hesitated signing? Had it been that Sierra Leone was a country where corruption and abuse of power was not common, had Sierra Leone not been governed by a system of complex local and central power structures, in which high levels of corruption exist, had they known that research indicates that prospects of a better life increase only for those already having a good life when these kind of investments are made, perhaps they would not have signed any agreement.

Perhaps the inhabitants would have questioned the consequences for their country, for themselves and for the coming two generations. Perhaps they would have demanded that any conflicts between Addax and the Government of the lease agreement be settled in a local court where they could access justice, instead of in a court of arbitration in London. What will happen when the illusions of newfound prosperity fades and the 14 000 people start requesting for the indications of a better life they had when they signed the agreement?

Anger against corrupt local leaders was part of fuelling the conflict in Sierra Leone. Thus feelings like those existing before the war may again arise. Increased malnutrition, lack of water and food may create cleavages between local communities and ethnic groups. Signs of anger and protests against the corporation have already occurred. People are starting to question the agreements they signed to lease their land, as they just four years after the deal was closed already see negative consequences. Yet, the corporation, the investors, the Sierra Leone government are justifying the situation by referring to compliance with international principles established for human rights and business. They are doing so correctly. Addax Bioenergy followed many existing principles of corporate social responsibility.

However fairness and equality in access to knowledge and information did not exist. If the Government of Sierra Leone does not represent the people then investing countries like Sweden must step in a take responsibility. It is not justifiable to support investments when accountability systems are not in place, corruption is known to be rampant and human rights violations are not tackled.

The Africa Progress report 2013 released 10 May, indicates that the establishment of corporations may improve the overall financial situation of a country, but not the situation of the poor; instead they rather tend to increase the gap between poor and rich.

According to the United Nations Special Rapporteur on the right to food, countries with weak land governance increases the risk of large-scale land deals turning in to actual “land grabs” where free, prior and informed consent of affected communities is not sought and human rights violations often occur.

Evidence shows that few jobs are created by biofuel-related investments relative to other sectors and where small-scale farming is replaced by large-scale and heavily-mechanized monocultures. Many of the former land users’ end up jobless and landless according to the Special Rapporteur.

The case of Sierra Leone, supported by the Swedish Government’s aid scheme and implemented by Addax bioenergy is justified by compliance with the processes stipulated in the principles for business and human rights as well as by informing about the benefits Addax has given the community. What is not noted by the Swedish Government, the Government of Sierra Leone and Addax is that compliance with international standards for businesses and enterprises, does not exclude responsibility for human rights.

Governments are still obliged to comply with legally binding human rights law. There must be a scrutiny of the ways corporations and donor countries use the principles of human rights. Businesses and Governments in countries with natural resources must be held accountable for allowing investments prone to result in abuses against its populations establish when legal conditions and accountability mechanisms does not exist. And, corporations must take moral and ethical responsibility. Responsibility cannot be avoided by hiding behind processes established in principles of business and human rights.

Tilde Berggren is a human rights lawyer having worked the past eight years with policy development at the United Nations headquarters in New York, including with the High Commissioner for Human Rights and the Special Advisor on Gender Issues, with human rights monitoring and reporting in the UN Mission in Sierra Leone and with Civil Rights Defenders in Kosovo and Macedonia.

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One Response to Fair investments? Swedish Governmental funds, land grabbing and human rights in Sierra Leone, by Tilde Berggren

  1. Pingback: Weekend Special – Africa is a Country

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