New FOIA Release Shows U.S. Agency Ignored Warnings While Investing Millions in Failed Project in Liberia

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Co-authored by Kindra Mohr, Policy Director and Lani Inverarity, Associate at Accountability Counsel

In a stunning display of recklessness, newly released State Department documents reveal that the U.S. Overseas Private Investment Corporation (OPIC)—the government’s development finance institution—blatantly disregarded red flags as it continued to pour millions into a risk-laden biofuels project in Liberia. This news coincides with a flurry of criticism involving the agency’s failed investments in Afghanistan.

Between 2008 and 2011, OPIC approved $217 million in “development” financing for Buchanan Renewables’ biofuel project in Liberia. Instead of rejuvenating smallholder rubber farms and converting the old trees into biofuel, Buchanan Renewables perpetrated livelihood destruction, severe worker injuries, water contamination, forest degradation, and facilitated sexual abuse of local women. Then it abandoned the project. OPIC too walked away, leaving local communities worse off and ignoring their pleas for remedy.

<p>Injured worker with a photo of his injuries</p>

Injured worker with a photo of his injuries

Accountability Counsel

The documents, released under the Freedom of Information Act (FOIA), show that OPIC was fully aware of the project’s many flaws, later documented by the Liberian organization Green Advocates and its partners (including Accountability Counsel), but inexcusably funded an expansion of the project regardless.

State Department officials within the U.S. Embassy in Monrovia wrote to OPIC prior to its approval of the expansion project expressing “significant concerns” about its viability and sustainability. Officials raised concerns about Buchanan’s uncertain supply relationships that could be detrimental to smallholder rubber farmers, many of whom were eventually left without a source of income. The State Department cable noted that Buchanan’s rate of rubber tree replanting was also lower than projected, suggesting that it would “fall far short” of its rejuvenation commitments to those farmers (it did).

Damningly, the cable expressly called out the risk that Buchanan’s activities could have negative impacts on local charcoalers, particularly women and other vulnerable groups for whom rubber tree charcoal has been a historically important source of income. That risk too eventuated, with some women being forced to trade sex for wood in order to survive.

The cable also noted that a local farmers association, with whom Buchanan said it consulted, denied that contact, raising doubts about the accuracy of the information OPIC was receiving from its client. For these, and other reasons, the Embassy concluded that, without further information, “it [could not] support this project.”

OPIC ignored these warnings, with tragic consequences.

The FOIA documents also give some insight into why this might have happened. It was a “hot” project, with strong support within OPIC management. And we now know that the CEO of and key investor in Buchanan Renewables—a former OPIC consultant—effectively ghost-wrote a letter from the President of Liberia to the President of OPIC to “help ensure that there are no problems with [project] approval.”

To add insult to injury, Green Advocates has faced ongoing and unwarranted intimidation by the Liberian government as a result of its advocacy on this and other projects. OPIC ignored this as well, staying silent as Green Advocates suffered frequent verbal attacks from the Liberian government and Buchanan Renewables. With government harassment left unchecked, repression escalated and, over the last month, Green Advocates staff were forced into hiding in response to imminent threats of arrest.

Although it is too late to protect the communities in Liberia, OPIC now has an opportunity to learn from its mistakes and incorporate more transparent and responsible development finance practices across its operations.

OPIC is currently undergoing revisions to its Environmental and Social Policy Statement. Together with 17 other organizations, we provided specific recommendations to OPIC to ensure that it institutes practices that will protect against such harmful, insider deals and abandoned projects that don’t fulfill their development goals. These recommendations include provisions for proper human rights due diligence, regular site visits, independent verification of client reporting, and strengthened accountability for harms caused by OPIC-supported projects. Importantly, OPIC also needs to take steps to protect the people who raise concerns about harmful projects. The agency’s failure to do so in this case contributed to the vulnerable situation of Green Advocates. OPIC should adopt a provision expressing a zero-tolerance approach to threats against human rights defenders like Green Advocates and should commit to using its leverage and relationships to try to minimize and remedy those threats.

There’s clearly no justification for a U.S. agency to have substandard development finance practices. OPIC must implement changes in order to ensure that communities are protected and that it makes more lasting, fruitful investments. This would be a win for everyone—OPIC, businesses, and, most importantly, the communities these projects aim to benefit.

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