By the National Reporting Team's Sam Clark, source: "ABC Radio Australia"
Leading Australian banks are financing companies accused of land grabbing, child labour and illegal logging, according to an Oxfam report released today.
The report, Banking on Shaky Ground, identifies four cases in Cambodia, Papua New Guinea, Indonesia and Brazil where Australia's biggest banks have funded - directly or indirectly - companies accused of improperly or illegally acquiring land from local people.
Oxfam chief executive Helen Szoke said the big four - National Australia Bank (NAB), Commonwealth (CBA), Westpac and ANZ - were not living up to their image as global leaders in sustainable banking.
"There is a gap between what the big four banks say they do and what they actually do," she said.
"We think there is a real problem around due diligence - around them actually focusing on their investment practices and making sure they put their money where their mouth is, in terms of ethical and sustainable investment practices in these agricultural businesses overseas."
According to Dr Szoke, Oxfam's research shows that the banks' exposure to companies in the agricultural commodities industry is in excess of $20 billion.
"It's in the banks' best interests to know that when they invest in a company that has an agricultural business that the company is actually producing what it says it's going to produce, that it's actually acquired the land legally and then it looks after the communities that are impacted by that investment," she said.
The chief executive of the Responsible Investment Association of Australasia, Simon O'Connor, says the report raises some serious questions about how the banks manage risk as they continue to expand into Asia and other developing markets.
"This is very much a changing world for them. What we as investors hope is ... there are strict due diligence processes and that they are understanding these risks before diving into these markets," he said.
Westpac linked to company accused of illegal logging: report
The report links Westpac's Papua New Guinea operations to the Malaysian logging giant WTK Group, which has been accused of illegal logging in PNG.
Corporate records reveal that Westpac's PNG subsidiary has had a 19-year relationship with the company.
Oxfam alleges that WTK Realty in PNG has an interest in a number of controversial special agricultural and business leases (SABLs) across the country.
In 2013, a commission of inquiry established to investigate the leases found that the vast majority had been improperly obtained and should be revoked.
Oxfam says WTK Realty is the sole shareholder in Vanimo Forest Products Ltd, which the commission of inquiry "observed to be engaging in selective logging operations" at the 139,909 hectare Bewani Oil Palm Development Project Bewani in West Sepik province.
The commission found that landowners had not given informed consent for the development and recommended the lease be revoked.
The chief commissioner of the land scandal inquiry, John Numapo, said the SABL scheme was being used by Malaysian logging companies to access parts of the country's pristine forest that would otherwise be off-limits and that the operations were coming at the cost of local landowners.
"We found the majority of SABLs were being used basically as a guise to go into full-scale logging operation, which it's not intended for," he said.
"There have been a lot of abuses as we discovered through our inquiries. We found that basically the whole process had been hijacked."
Commissioner Numapo urged Westpac to reconsider its relationship with WTK if their link to SABLs was confirmed.
"If Westpac has taken a position that it's going to support retaining the rainforest, then obviously if they are funding a company that is cutting down trees and causing damage to the environment generally then they should rethink providing funding to companies like that," he said.
Westpac declined to confirm or deny their link to WTK, but the bank's head of sustainability, Siobhan Toohil, said it had exited funding arrangements in the past where clients had not lived up to the bank's environmental and social standards.
"In circumstances where we do not believe that customers are adhering to appropriate standards and do not believe they are prepared to address this responsibly, we will continue to exit those relationships," she said.
WTK's lawyer in Port Moresby rejected accusations the company was linked to any of the agricultural leases.
"If WTK Realty was involved in SABLs it would have been summonsed to give evidence in the commission of inquiry," said lawyer Robert Bradshaw.
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