Development funds from European governments have helped to
rescue a Canadian company that pays workers as little as $1 per day to toil on
some of Africa's largest palm oil plantations in the impoverished Democratic
Republic of Congo (DRC). Government-backed investment funds from Britain,
France and Spain, designed to help poor countries develop, stepped in to buy 60
percent of Toronto-listed Feronia Inc for about $35 million in two separate
investments in 2012 and 2013. The investments came after shareholders fled the
Cayman Islands-registered company as its share price fell about 95 percent. Feronia was set up by Canadian hedge fund
TriNorth Capital Inc and venture capitalist Ravi Sood in 2008 to buy three
plantations in the DRC and is now one of the country's largest employers with
more than 3,500 workers.
When Feronia and Sood initially promoted the purchase of the
three DRC plantations to investors, they sold it as a potentially high-yield
deal in a country emerging from five years of civil war, which ended in 2003. Memories
of record-high food prices were still fresh in investors' minds and the future
initially looked bright for Feronia, a company incorporated in the Cayman
Islands to avoid "double taxation" in Canada and the DRC.
But rights groups question whether the investment in the DRC
is a suitable use of public funds, with the cash propping up a loss-making
company shunned by private investors that has done little to help workers,
paying them about half the minimum wage. "Workers are living in crumbling homes,
in severe disrepair. There is malnutrition in the communities near the
plantations," said Jean Francois Mombia, a campaigner with RIAO-RDC, a
non-governmental organisation that works with labourers at Feronia's
operations.
Devlin Kuyek, a researcher with GRAIN, a Spain-based land
rights organisation following the DRC, raised similar concerns. "Feronia
has not brought improved working conditions on the plantations or improved
living conditions for the local communities, or even decent returns for the
people whose money was used for the investment," Kuyek said.
Scrutiny of Feronia follows a wave of foreign investment in
African farmland that has raised ethical questions about "land grabs"
and led to unrest on some projects. Badly devised investments can harm or
displace local people, according to US-based non-profit Landesa that works to
secure land rights for the world's poorest farmers, but development agencies have
in some cases backed hedge funds with projects considered ethically dubious by
some activists.
Activists resent that Feronia's purchase of the plantations,
partly with public funds, has not led to improved conditions for workers beyond
maintaining their jobs. Most are poorly paid, often earning just more than $1 a
day.
Sood, Feronia's CEO, agreed that wages are "too
low" but stressed it was challenging to get the company into the black.
Mombia said unions are currently negotiating with the
company over wages and benefits. "They are not taking care of the workers
... None of the schools [for the children of employees in the remote area] are
functioning," he said.
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