World Bank leaves door open to slavery in Paraguay

The advance of illegal deforestation and reports of modern slavery in the Chaco region have not prevented a multi-million dollar loan from the IFC/World Bank to Brazilian meat export giant, Minerva S.A. to expand its operations.

In an exclusive report, investigative journalism platform Reporter Brasil reveals how international investments are generating a severe environmental and human rights crisis in Paraguay. The investigation, supported by the ITUC, highlights a loan of US$ 85 million from the International Finance Corporation (IFC), an arm of the World Bank, to Minerva.

The vertiginous growth of beef production in the past years has been based on the exploitation of indigenous workers and the destruction of the unique dry forests of the Chaco, in South America. Evidence of these practices in the region was clear in 2013 when the Minerva financing was approved. At the time, the IFC classified the investment in its highest risk category for the “significant potential” of negative environmental and social impacts that are “diverse, irreversible, or unprecedented.”

The World Bank’s private lending arm claimed that its investment in Minerva would help improve conditions in the Chaco. However, five years later the problems of modern slavery and environmental destruction persist, and little progress has been made on supply chain responsibility.

As part of the investment package, Minerva agreed to an “Environmental and Social Action Plan”. Among other actions, it included the undertaking of a “supply chain verification system” as well as of a mapping exercise to identify those regions and suppliers more likely to allow child and forced labour. However, the company missed the deadline to meet these commitments. Today, it is unclear whether the IFC is holding Minerva accountable and ensuring the implementation of the measures necessary to prevent forced and child labour in the beef supply chain.

“Granting a loan of this size to increase investments without strict conditionality in a region where large scale human rights violations and environment destruction are taking place was a questionable decision. But then leaving the door open to slavery and child labour is truly a scandal”, said Sharan Burrow, ITUC General Secretary.

Trade unions in Paraguay have denounced the complicity of the government in allowing rights abuses to go unpunished. Labour inspections in cattle farms are rare and local authorities lack the most basic human and material resources to enforce the law. While the vastness of the Chaco – an area roughly the size of the United Kingdom – constitutes a barrier to law enforcement, it is not a reason to allow environmental and labour rights violations.

“The IFC must show that its safeguards are not dead letter and ensure immediate, proactive efforts by Minerva to stop forced and child labour. Minerva needs a robust supply chain verification system and active monitoring of suppliers”, said Burrow. “Finally, the government is ultimately responsible for not protecting workers and letting corporate power interests prevail over fundamental human rights”.

Read the in-depth report.