Helen Szoke CEO Oxfam Australia writing in the Sydney Morning Herald

Australia's big four banks have a duty of care to the community, whether in Australia or overseas.

Illustration: Jim Pavlidis 

Nineteen-year-old Christophilda Milik stands with her fishing spear in a lifeless mangrove swamp in Papua New Guinea’s East Sepik province. She has stood here many times looking for dinner. The swamp once teemed with fish, before representatives of a company connected to Malaysian logging giant WTK Group allegedly forced or tricked community members into signing over 116,840 hectares of their precious land, which abuts this swamp and its water system.

“Now almost all the fish have disappeared because water was polluted by oil from machines,’’ she says. The oil comes from the machinery used in questionable logging operations on the once community-owned land. Pollution from the operations has killed fish and prawns, damaged the reef, and caused health problems in the community. 

If two multinational giants can commit to revealing where they do business, and demonstrate no tolerance for land grabbing, why can’t our banks? 

Established food gardens have been destroyed and violence has increased as families struggle with worsening poverty. There has been little compensation for the community. This is despite estimates of the value of the logs leaving this community being $7million in 2012 alone. 

This is not WTK’s first controversy in PNG; a previous review by the PNG Department of National Planning and Monitoring recorded allegations that the company frequently used police to threaten villagers with guns, employed local women as domestic servants who were expected to provide sexual favours to expatriates in logging camps, and had caused river systems to dry up.

Despite WTK’s record, one of Australia’s major banks, Westpac, has had a financial relationship with the company in PNG for 19 years. And this is not a solitary case. Far from it. Oxfam Australia’s report published today, ‘‘Banking on Shaky Ground: Australia’s big four banks and land grabs’’’, implicates Australia’s big four banks – Westpac, ANZ, NAB and the Commonwealth Bank – in backing companies responsible for ‘‘land grabbing’’, large land deals in which those living on or using the land are not consulted or properly compensated by the company acquiring the land. 

The big four banks have financial relationships with companies working on projects in PNG, Cambodia, Indonesia and Brazil that have destroyed crops, demolished houses and forced communities to work as cheap labour on land that had been in their families for generations. 

Oxfam’s investigations show the banks are also on shaky financial ground, risking asset write-downs and the possibility that foreign governments and courts will shut down land deals, resulting in significant losses and diminishing shareholder value. 

That Australians’ savings may have been put at risk while assisting the forced removal of families from their land is no doubt galling. But even more galling is that there is seemingly no excuse for our banks’ ignorance of the risk. It is widely acknowledged that land grabbing is a massive issue in developing countries, particularly in the agricultural and forestry industries.

Over the past 13 years, nearly 36 million hectares of land - an area almost the size of Germany - has been snapped up in such deals. In some cases, foreign investors are paying yearly ‘‘lease’’’ fees of as little as seven cents per hectare. 

As food prices have spiked, large-scale land deals have accelerated rapidly, especially on our doorstep; South-East Asia leads the world as the target region. And with our banks identifying the Asia-Pacific as central to growth, and with billions of dollars invested in the agricultural industry overseas, it is astounding that they do not have in place adequate due diligence processes to avoid involvement in land grabbing.

This is especially so when other global corporations have been tackling the issue. After an Oxfam report last October that outlined the perilous condition of communities forced from their land to make way for sugar plantations, Coca-Cola and PepsiCo committed to tough policies demonstrating no tolerance for land grabbing in their supply chains. They also took steps towards disclosing major actors, and high-risk countries in their supply chain.

If two multinational giants can commit to revealing where they do business, and demonstrate no tolerance for land grabbing, why can’t our banks?

Oxfam’s report provides a warning to all investors including banks, superannuation funds and the Australian government. We all have an interest in stable and ethical financial relationships between Australia and other countries, particularly our near neighbours. The evidence in Oxfam’s report demonstrates significant gaps between the policies and the practices of the big four banks. While each has signed up to a patchwork of various principles regarding human rights and responsibilities, no bank has implemented a clear policy framework to guide their operations. NAB made a sizable loan to controversial palm oil giant Wilmar after Newsweek had ranked Wilmar, for two years running, as the least environmentally sustainable company in the world. Wilmar later moved to tackle the issue of land grabs but the NAB still hasn’t.

And the evidence is just the tip of the iceberg. Companies hide their financial relationships in databases that are very expensive, and time-consuming, to access, making it difficult to ascertain just how far-reaching the problem is.  

Investment in agriculture is vital to reduce global hunger. But it has to be sustainable and respect the rights of communities. Given the evidence, it is clear that the call for action must come from customers, who surely expect their banks to invest responsibly.

The majority of Australian companies sourcing clothing from Bangladesh signed an historic safety accord because of public pressure following the tragic Rana Plaza factory collapse last year. And many more thousands across the globe pressured Coca-Cola and PepsiCo on the issue of land grabs once they learned of their devastating consequences, leading to their much-strengthened policies. 

When people get a glimpse of the workings of big business, they usually act. Now it is up to the banks to listen. The livelihoods of people like Christophilda depend on it.