French banks accused of money laundering linked to Amazon deforestation

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A coalition of NGOs has filed a criminal complaint against several French banks for allegedly financing meat companies driving deforestation in Brazil.
Between 2013 and 2021, the four French banks involved invested a total of nearly $70 million in bonds issued by leading meat companies in Brazil generating about $11.7 million in profits.
This is the first time that French banks have received a criminal complaint for money laundering, receiving stolen goods related to funding deforestation and profiteering from it.
An analysis of JBS and Marfrig slaughterhouses in Pará and Mato Grosso found that more than 50% and 40% of suppliers, respectively, showed evidence of irregularities, including deforestation and intrusion into Indigenous lands and protected forests.

On Nov. 8, an NGO coalition filed a complaint with the French National Financial Prosecutor’s Office (PNF) against French banks BNP Paribas, Crédit Agricole, BPCE and AXA, calling for a criminal investigation for money laundering and concealment, based on the banks’ financing of leading Brazilian meat companies JBS and Marfrig.

Deforestation is illegal in Brazil and France, and according to a recent European Union directive relating to money laundering, any benefit obtained from an environmental crime, such as money or commodities, may represent the proceeds of crime.

Clearing forests for cattle ranching is the leading driver of deforestation in Brazil and South America, and the coalition argued that the meat companies had not taken sufficient steps to prevent cattle from illegally deforested areas coming into their supply chains. By providing financing and making a profit from it, the banks also potentially would be criminally liable.

*A rancher herds cattle in Mato Grosso, Brazil. Image by Bernard DUPONT via Flickr (CC BY-SA 2.0).*

“You have an obligation to make sure that you are not enabling money laundering and you need to put in really strong mechanisms to make sure that you’re excluding actors that are profiting from illegal deforestation,” said Anahita Yousefi, founder and executive director of the NGO Harvest. “But clearly what we’re seeing is that the banks are not taking those obligations seriously.”

Harvest coordinates the NGO coalition, which includes Transparency International, Sherpa from France, the Center for Climate Crime Analysis (CCCA) in the Netherlands and Repórter Brasil.

Recognizing responsibility

Addressing the economic drivers behind deforestation has been a major shift in tackling the phenomenon, Yousefi said. This included the EU Parliament’s historic approval of regulations to ban agricultural commodities linked to deforestation earlier in June.

“Yet they’ve so far really failed to address the role of the European financial sector in facilitating and financing these activities,” said Yousefi.

The financial sector, however, has taken some actions to remedy noncompliance with environmental obligations. In 2020, Nordea, the largest bank in Northern Europe, withdrew $48 million invested in JBS because it failed to meet required ESG standards. Yet, between 2015 and 2020, major banks injected $ 43.5 billion in meatpacking companies in Brazil linked with deforestation.

Additionally, according to the coalition, between 2013 and 2021, the four French banks in the complaint invested in bonds issued by Marfrig and JBS valued at nearly $70 million, generating about $11.7 million in profits. Furthermore, BNP Paribas also acted as the global coordinator and sustainability adviser for the launching of Marfrig’s green bond.

*Cattle grazing in the Amazon. Image by Fabio Nascimento for Mongabay.*

Mongabay approached all four banks for comment. Crédit Agricole and BPCE did not respond. BNP Paribas said it has “no comment to make on this complaint, which we are not aware of.”

AXA made the following statement: “In line with its purpose, ‘Act for human progress by protecting what matters’, AXA Group regularly monitors and updates its internal policies on environment and human rights. AXA Group’s responsible investment policy, which is published on its website reflects our commitment to integrate ESG considerations into our investment processes and our ambition to have among the highest ESG standards of our industry.”

The French connection

In the EU, France was the first country to adopt mandatory human rights due diligence through its 2017 Duty of Vigilance Law. The law holds large companies legally accountable for human rights violations and environmental damages that have occurred in their supply chains and is regarded as one of the most advanced in the world.

The first lawsuit relating to duty of vigilance was heard in February this year, filed by Oxfam, Friends of the Earth and the climate justice NGO Notre Affaire à Tous, which accused BNP Paribas of giving loans to major oil and gas companies.

The court declared the action inadmissible, as the plaintiffs had not formally notified the companies and urged them to comply with their obligation of vigilance before summoning them before the court, a requirement of the Duty of Vigilance Law.

*The link between illegal deforestation and cattle ranching, like in this area of the Mato Grosso state, has already been proven by many studies. Image by Rhett A. Butler for Mongabay.*

Jean-Philippe Foegle, Sherpa’s advocacy and litigation officer, told Mongabay that as a civil law, the Duty of Vigilance has a major limitation: It requires victims to prove in court the relationship between the damage suffered and the role played by the companies.

Foegle said that Sherpa spent the past three years collecting evidence and doing additional case law research to prepare the money laundering complaint. Approaching it through a criminal law lens, he said, provided much greater investigative powers, such as performing searches and seizures.

“To our knowledge, it’s the first time in Europe and maybe in the world that an NGO is using money laundering as a legal basis against a bank that finances the agro-industry,” Foegle said.

Earlier this year, the French Prosecutor’s Office raided the offices of five French banks for suspected tax fraud, including BNP Paribas and the investment bank arm of BPCE, both of which were included in the coalition’s complaint. Foegle said this was positive, as it showed the PNF’s willingness to use its investigative powers.

Mongabay approached the PNF for comment. It said it did “not have a particular comment to make on this complaint, which we simply confirm to have received and that it is currently being analyzed.”

The PNF has three months to respond to the coalition’s complaint, after which, if no answer has been received, Sherpa can continue the process as a civil party complaint. Either way, given the complexity, Foegle said they expected the case would take at least 2-3 years to conclude.

If found guilty, the banks could be blacklisted from working with the French state, and their directors could be held personally liable.

Data on the ground

“There is overwhelming data on what JBS and Marfrig are doing,” said Foegle. “We’re not talking about one or two farms, we are talking about a systematic issue of the supply chain that is deeply involved in deforestation.”

CCCA used a sample of more than 60,000 properties in the supply chain of JBS and Marfrig slaughterhouses in the states of Pará between 2018 and 2021 and in Mato Grosso between 2018 and 2019.

The sample of suppliers of three JBS slaughterhouses in Pará found evidence of irregularities such as deforestation or intrusion into Indigenous lands and protected forests in more than 50% of those suppliers. Similarly for Mato Grosso, analyzing two JBS and Marfrig slaughterhouses, the team found irregularities in approximately 40% of the suppliers examined.

*Workers butcher livestock in a Marfrig slaughterhouse facility. Marfrig is the world’s fourth largest beef trader. Image © Ricardo Funari / Lineair / Greenpeace.*

Heron Martins, data analyst at CCCA, explained that they used a robust methodology for mapping the cattle supply chain in the Amazon that has already been used in various contexts, including work with Brazil’s Federal Public Prosecutor’s Office.

CCCA obtained and cross-referenced a wide range of data from the rural environmental register, the federal environmental protection agency, IBAMA, federal government satellite monitoring of deforestation, and information on animal supplier farms, protected and public areas in the Amazon.

The analysis also cross-referenced geolocation to review three different supplier levels. This included properties that sent cattle to the slaughterhouse (direct suppliers), properties sending cattle to those direct suppliers (first-tier indirect suppliers) and those sending cattle to the first-tier indirect suppliers (second-tier indirect suppliers).

Maria Eduarda Mury, CCCA legal analyst, said there were already several reports that pointed out the misconduct of meat companies in Brazil, and statements from the companies themselves, such as JBS, which said it was unable to monitor its cattle chain.

JBS global chief Gilberto Tomazoni recently defended his company’s position. This comes as JBS, which is responsible for more annual emissions than oil giant Exxon, is currently pursuing a listing on the New York Stock Exchange, which could give it more capital and allow it to continue expanding. Environmentalists are trying to block it, citing the company’s weak environmental record and problematic corporate governance practices.

“We’re not just pointing to the misconduct of the companies, but to the funding that turns a blind eye to this misconduct,” said Mury. “The banks’ regulatory measures can have an impact on the way meat companies supervise their own chain.”

Banner image: Aerial view of an area in the Amazon deforested for cattle ranching in Lábrea, Amazonas state on Sep 15, 2021. Photo © Victor Moriyama / Amazônia em Chamas (Amazon in Flames Alliance)