WASHINGTON, (Reuters) – The World Bank’s private-sector arm yesterday accepted criticism from its internal watchdog that it should have done more due diligence on a loan to a Honduran company allegedly linked to multiple killings.
The bank’s International Finance Corporation (IFC) said earlier this month that it disagreed with some of the findings of the watchdog report, which said it should have done more careful research before approving a $30 million loan to Tegucigalpa-based Corporacion Dinant, a palm oil company.
IFC backed away from its initial disagreements on Wednesday and said it would cancel the loan if Dinant did not agree to strengthen its community engagement and review its security practices.
It gave the company half the $30 million loan in 2009, but has not disbursed any funds since.
At issue is just how much due diligence IFC should do before giving money to companies in conflict areas, and how it should react to escalating violence after a deal goes through. The World Bank arm aims to spur private investment in developing countries.
