HSBC loaned cash to company accused of slave-like conditions

Publicação: The Guardian (31/07/2007)
www.guardian.co.uk

The high street bank HSBC has come under the spotlight in Brazil after it emerged that it loaned money to a local ethanol producer accused of making workers labour for 13-hour days in appalling conditions.

Last month a government anti-slavery taskforce freed 1,108 workers from a sugarcane plantation owned by Para Pastoril e Agricola in the Amazon state of Para.
Local reports claimed that the workers, recruited from Brazil's impoverished north-east, were being kept in "slave-like conditions", working more than 13 hours a day, and being paid as little as £2.50 a month.

Arias Roma Pereira, one of the freed sugarcane cutters, said the workers were undernourished and often had no access to water. "It was like being in a prison," he told the government news agency Agencia Brasil shortly after being freed from the plantation in the rural municipality of Ulianopolis, 250 miles from the state capital, Belem.

Shortly after the raid it emerged that the company had received loans from several banks, including the Brazilian branch of HSBC, which passed on money from the country's development bank, BNDES. The size of the loan was not revealed, but according to reports in the Folha de Sao Paulo newspaper it was taken out in 2005 and ran until 2010.

According to Brazil's anti-slavery laws banks must suspend all loans to any company found guilty of employing workers in near slave-like conditions. If Para Pastoril e Agricola is found guilty it is likely to be placed on a blacklist, also losing the right to government funding.
In a statement the company directors denied using slave labour, labelling the accusation "an act of violence".

Gustavo Pimentel, a director of the Amigos da Terra (Friends of the Earth), which campaigns for ethical investment in Brazil, said banks such as HSBC needed to re-examine their loans policies particularly to "potentially high-risk" markets such as ethanol production.
"Historically ethanol has links to very bad working conditions," he said. "It is not just about [the bank] looking into the business when giving the loan, it is about following the actions of the business to see if it continues 'clean'," he said.

Mr Pimentel said that while there was no question of any breaches of the law at the moment, the raid posed ethical questions about loans to Amazonian agricultural companies. While HSBC did have ethical lending policies, the bank needed "to show that it is capable of putting them in place", he said.

None of the banks involved has so far commented on the case, citing client confidentiality rules.