Open letter on Socfin's proposed divestment from SRC in Liberia

The IFC’s internal reporting and communications with Socfin flagged numerous violations of the IFC’s environmental and social standards between 2008 and 2019, including cases of company employees forcing women to engage in sexual activities to keep their jobs. Image & caption by Ashoka Mukpo for Mongabay.

We, the undersigned, are Liberian, West African, and international civil society organizations, communities, and individuals concerned with the legacy of harm that the operations of the Salala Rubber Corporation (SRC) have foisted on local communities in and around Weala, Liberia. We are alarmed by news that SRC’s parent company, Socfin, is seeking to divest its shares in SRC without first settling its social, environmental, cultural, financial, and economic debts to affected communities. We therefore address this open letter to the Liberian government, Liberia’s development partners, the public, Socfin, and, particularly, all prospective purchasers of SRC.

Any purchaser will inherit extremely significant liabilities connected to the widespread land, environmental, and human rights violations associated with SRC’s rubber plantation. The purchaser will also receive a concession based on insecure title to the land on which the plantation sits. We therefore call on all stakeholders – SRC’s parent company, Socfin; investors; financiers; the Government of Liberia; and all prospective buyers – to desist from any sale or assignation of rights until the complaints against SRC are resolved and the rights to the land upon which the concession for the rubber plantation was granted are conclusively determined.

Background

SRC, an indirectly owned subsidiary of Luxembourg-based agricultural giant Socfin since 2007, is the owner of an 8,000-hectare rubber plantation near the town of Weala. The plantation operates according to a Concession Agreement concluded in 1959 and enacted by the Liberian legislature in 1960, which granted Socfin’s predecessors the rights to develop a rubber plantation on unencumbered, public land in what is now Lofa, Margibi and Bong Counties in the Republic of Liberia. Since that time, the plantation has undergone several waves of expansion – most recently in 2015 – and has been associated with a wide range of violations of the rights of Indigenous Peoples and local communities, including land grabbing, destruction of cultural sites, and sexual and gender-based violence.

In its 2023 annual report, Socfin announced that a “sign of impairment” exists for SRC, assessed that impairment value at 7.5 million euros, and reclassified the plantation as an “asset for sale.”[1] According to the Article XI of SRC’s Concession Agreement, any assignment of rights to a third party must be approved by the Government of Liberia.[2] Under Liberia’s 2018 Land Rights Act, local communities must have the opportunity to contribute their views to ensure that their rights and interests are protected when an existing concession is reviewed.[3] That same law also provides that upon the termination of any concession on customary land, the land reverts to the local communities who are its original owners.[4] The SRC concession will terminate on August 1, 2030.

Serious Human Rights Impacts

As the plantation has grown, it has engulfed the farmlands of at least 37 villages, miring their residents in poverty, food insecurity, and cultural dislocation. Some communities, like Jorkporlorsue, are now a mere enclave surrounded by a sea of rubber, cut off from the graves of their ancestors and any form of self-sustenance. Others, like Sayee Town, were burned when the plantation took over, sending their residents fleeing. SRC did not pay compensation for the loss of land, and many testimonies from several communities attest that the company underpaid for the loss of productive and cultural assets. Women are often harassed by workers and security guards when they cross the plantation for any reason, and many have been extorted for sex when they seek employment with the company.[5]

These allegations were first reported by Green Advocates International in 2013[6] and confirmed in a 2019 report by Swiss NGO Bread for All.[7] They are the subject of a 2019 complaint to the ombudsman’s office of the International Finance Corporation (IFC), the private sector financing arm of the World Bank, which partially funded Socfin’s rehabilitation of the SRC plantation after Liberia’s civil war and is currently finalizing an investigative report focused on how the IFC enforces its environmental and social safeguards.[8] When Socfin engaged a consultant – Earthworm Foundation – to review its social and environmental performance in lieu of cooperating with the IFC’s investigation, the resulting report concluded that most of the communities’ complaints were, in fact substantiated and had not been properly addressed.[9]

Land Rights Questioned 

The plantation itself is the object of a lawsuit currently pending in the Liberian courts, in which residents of the affected communities claim that the land SRC took was not eligible for plantation development because it was neither public nor unencumbered. The land was, in fact, under customary use and is part of the traditional territory of the local Kpelle communities. The outcome of this lawsuit may decide whether the concession was validly granted or whether it should be recognized as customary land.

Risks of Acquisition

Socfin’s prospective divestment of SRC is a risky deal for all involved except Socfin itself.

• For affected communities, it could mean trading an international company that has committed – at least, on paper – to high standards of social and environmental responsibility and the resources to make good on them for a prospective purchaser whose willingness and capacity to protect community well-being is unknown. Communities in Nigeria’s Niger Delta are currently facing a similar situation, as international oil companies with global reputations are seeking to divest their onshore operations to poorly known companies with little experience and few resources, without first resolving their environmental liabilities.[10]

• For the Republic of Liberia, as the purported owner of the land on which the plantation is located, it could mean being stuck with the social and environmental liabilities left behind by SRC under Socfin.

• For any prospective buyer, the purchase of the plantation would entail exposure to as-yet unquantified liability for claims for land, crop, cultural, and environmental damage and sexual and gender-based violence from thousands of individuals in 37 villages, as the Earthworm report and IFC assessment process clearly demonstrate.

• The buyer’s right to operate the plantation could also be affected by a potential finding from the Liberian courts that the Liberian government never had the authority to grant a concession over the land on which the plantation sits.[11] According to Article XI of the Concession Agreement, any assignee will have the same “rights, privileges, immunities and obligations” of the original concessionaire. But given the uncertainty around Socfin’s outstanding liabilities to the communities and the validity of the concession itself, the rights transferred may be significantly less valuable than they appear, and the obligations may impose heavy, unforeseen costs on the purchaser.

Recommendations

In light of the above, Socfin’s planned divestment from SRC should not proceed without taking into account the following.

To the Republic of Liberia:

• Ensure that process to seek the free, prior, and informed consent of affected communities with respect to any proposed assignation of rights by Socfin is respected, as it reviews the proposed sale, pursuant to Article 48(2) of the Land Rights Act of 2018 and general principles of international law with respect to the rights of indigenous peoples when their traditional land and natural resources are at risk.

• Immediately disclose to affected communities any request from Socfin to dispose of or assign its interest in SRC to any other party.

• Decline to approve any proposed assignment of rights by Socfin until the pending litigation over ownership of the plantation land and all other disputes regarding control of the land are resolved.

• Order a comprehensive forensic audit of SRC’s operations covering the entire concession period, focusing on production, environment, revenue, labor, and social obligations, as well as compliance with the terms and conditions of the concession agreement.

• In addition, decline to approve any proposed assignment of rights by Socfin unless a) Socfin has first deposited in a trust account in Liberia, under the joint control of community and government trustees, an amount adequate to cover all SRC’s potential environmental, social, cultural, and economic liabilities; and b) the purchaser has signed a community benefit agreement with the affected communities in which it commits to respecting the highest environmental and social standards and confers enforceable rights and benefits on the communities. It is encouraging to note that in Nigeria, the government is taking seriously the need to ensure that exiting oil companies first pay for environmental cleanup;[12] nothing prevents Liberia from following suit.

To prospective buyers:

• Refrain from completing any purchase until Socfin and SRC have settled all potential outstanding social, environmental, cultural, and economic liabilities with the surrounding communities.

• Prior to any engagements or negotiations with Socfin/SRC, commission a comprehensive risk assessment covering all potential, outstanding, and existing social, environmental, cultural, and economic liabilities toward the surrounding communities, private vendors/contractors, and the Government of Liberia.

To Socfin:

• Refrain from seeking to divest from SRC until all potential and outstanding social, environmental, cultural, and economic liabilities with the surrounding communities are settled.

To local communities:

• Exercise the right to submit comments and input to the government through the Community Land Development and Management Committee on Socfin’s proposed divestment, with a view toward protecting their human, environmental, cultural, and economic rights.

Signed,

Notes