Important lessons: Sinohydro, the Agua Zarca dam and the murder of Berta Cáceres

The Agua Zarca dam in Honduras is one of the unique cases in which a Chinese company withdrew from a project and publicly cited doing so because of “unpredictable and uncontrollable” resistance from the community and the inability of the project owner to acquire the environmental and social licenses to operate. As details related to this project continue to unfold eight years later, they present a grim reminder that conducting proper due diligence is not just a matter of ticking boxes.

This week, Roberto David Castillo, the former head of the Honduran hydroelectric company Desarrolladora Energética S.A (DESA), was sentenced with the maximum aplicable penalty of 25 years in jail for masterminding the 2016 murder of Berta Cáceres, a world renown indigenous environmentalist. Berta was the co-founder and leader of COPINH, the National Council of Popular and Indigenous Organisations of Honduras. She had spent twenty years defending the territory and rights of the Lenca people in a country where destructive megaprojects are built primarily to enrich elites who act with great impunity.

Berta Cáceres’ leadership in community resistance and opposition to the construction of the Agua Zarca dam convinced Sinohydro, the world’s largest dam builder and the lead contractor for this project to terminate its contract with DESA in 2013. Sinohydro cited ‘conflicts of interest between DESA and local communities’ and DESA’s inability to acquire the environmental and social licenses for this project. That same year, the International Finance Corporation, a key financier for the project cited concerns about human rights violations related to Agua Zarca and also pulled out. 

Despite the strong community opposition, losing the main contractor and a key financier for the project, DESA continued efforts to build the dam, proving that their primary motivation was enrichment. DESA leadership continued to harass and intimidate Berta Cáceres, her family and her colleagues at COPINH. This culminated when their plan to murder her was sucessfully orchestrated in March 2016. In the months that followed, two of Berta’s colleagues, Nelson García and Lesbia Urquia, were also killed. Public outrage then convinced other international funders, the Dutch development bank FMO and FinnFund, to suspend their involvement in the project.

The seven hitmen associated with killing Berta Cáceres were found, arrested and sentenced to 30 to 50 years in jail. Five years later, the Honduran high court has formally ruled that David Castillo, the president of DESA was central to the elaboration of plans to monitor, intimidate and murder Berta Cáceres.

Berta’s family and COPINH have tirelessly worked to raise attention to this case, honor Berta Cáceres and her legacy to stand up against irresponsible development. An immense network of supporters say that Berta has multiplied and become thousands.

This case is a reminder to  all companies and investors of the importance of conducting proper due diligence and of including indigenous peoples in any discussions that impact their lands, territories and sovereignty. Sinohydro withdrew from Agua Zarca after heeding advice from NGOs that  indigenous communities firmly opposed and had not been consulted about the project. 

These events add urgency for the China Banking and Insurance Regulatory Commission (CBRIC) to implement a Grievance Mechanism that will apply to all Chinese banks. In Latin America, many  projects are financed by Chinese Banks, many of which do not  respect the rights of local communities and result in high levels of  social unrest. Without clear Grievance Mechanisms, Chinese banks miss the opportunity to hear from local communities early on so that they can avoid future conflicts that lead to loss of lives and economic damages such as the case of Agua Zarca and Berta Cáceres.