Naomi Roht-Arriaza, Distinguished Professor of Law (emeritus), University of California Law, San Francisco, and author of what this writer called an indispensable guide to combatting corruption, contributes the following post. As with her book, it shows the often close link between corruption and human rights violations.

On the night of March 2, 2016, armed men broke into Berta Cáceres’ home, shot her dead, and wounded her house guest.  Cáceres was well known in Honduras and globally for her opposition to a proposed hydroelectric project damming the Gualcarque river, sacred to her Lenca indigenous people.  The triggermen and the project president were eventually convicted of the murder, but not the masterminds and financial backers, thought to include military officers and powerful families.  After long delay, the fraud behind the dam project, known as Agua Zarca, did finally go to trial, and some (but not all) of those responsible were convicted of fraud, falsification of documents and abuse of authority. 

After years of insisting on a full accounting, victims’ groups working with the Inter-American Commission on Human Rights convinced the Honduran government to ask for technical assistance in the form of an expert committee to look at the interplay of corruption, rights violations and corporate irresponsibility surrounding the dam and the murder.  That expert committee has now issued its report (in Spanish only, with English Executive Summary here).

The investigation and report break new ground. 

The Interdisciplinary Independent Expert Group (known as GIEI in Spanish) combined human rights expertise with knowledge of anti-corruption, organized crime, money laundering and financial crimes.  It used phone intercepts, geolocation, financial records and other tools to trace how the erstwhile dam builders set up multiple corporate entities and diverted money into paying off actors to surveil, discredit, intimidate and eventually kill dam opponents.  It connected the dots between systemic corruption and human rights violations in a concrete case.  It showed how powerful families like the Atalas used connections at the top of the government to manipulate project documents, attack indigenous representatives, provide security for the dam, and cover up their connections to the killers of Cáceres and other Lenca leaders.  And it highlighted the role of international consultants and banks, despite elaborate due diligence regimes, in negligently (or worse) funding a project that should never have gotten off the ground.

Among the most important findings:

Financing division, intimidation and assassination

The report details direct links between the attacks on Cáceres and her colleagues and financial crimes.  The company set up to run the dam project, known as DESA, used several corporate entities to confuse financial transactions and allow cash to be extracted and used without controls.  One of those entities, an offshore company, received a number of large deposits that the researchers could not trace to a legitimate source.  The intertwined entities lent to each other, bought each others’ stock shares, paid debts back, and otherwise sloshed money around so that it became harder to track, and potentially so they could cover up expenses not allowed under the project’s finance agreements.  They then used low-level employees (like drivers) to ferry cash to a wide range of state and private actors, including paying for land acquisition, favorable journalists, informants within civil society groups opposing the dam, ostensibly grassroots pro-dam individuals and organizations, legal fees to defend a paramilitary member accused of murder, and lots of cash spent with unknown destination and no receipts; DESA even paid for the government to travel to Washington to defend Honduras before the Inter-American Commission.  The report also details phone records connecting the gunmen who killed Cáceres to high level corporate officers, government officials and members of the Honduran oligarchy, and proving that the government had to have known about the assassination plans in advance and did nothing to warn or protect Cáceres.

The report confirms that the authorization for the dam was based on irregular permits, unlawful administrative contracts, and individual land titling that ignored collective land rights.  The permits were obtained, as detailed in part by the 2024 fraud conviction, by individuals who while working for the state electricity company and natural resources agency were simultaneously being paid by DESA. 

Consultants and banks complicit

As has been true elsewhere, international auditors, consultants and banks conveniently ignored obvious red flags.   The report’s scathing critiques of these actors, based in the global north, bolsters calls from anti-corruption groups to hold enablers of corruption accountable. 

International auditing firm KPMG audited DESA-related companies for several years, found irregularities each year but never insisted on explanations or raised alarms with those financing the project.   Engineering consultant Pöytry (a branch of a Finnish company) was hired to ensure that the project was actually moving forward according to standard engineering practice, but “its omission of information regarding the true state of the works – delayed because of opposition from some community members– allowed project funds to be released” even though the conditions for release were not met.  These funds were then diverted to unauthorized uses.  The local consultant on community acceptance also misrepresented the degree of opposition and ended up mostly doing security trainings with pro-dam forces.

Two banks were major funders of the dam:  the Central American Bank for Economic Integration (CABEI) and the Dutch Entrepreneurial Development bank (FMO).  Both ignored obvious red flags, accepted assurances of community support for the project at face value, and failed to meet basic standards of due diligence in a region and sector known to be highly conflictive.  The report found that “the funds supplied were used to finance a corruption network and money laundering linked to the irregular obtention of the concession and bribes to public officials.”( p.301)

CABEI is known for its questionable loans, including financing Odebrecht to pay kickbacks in Guatemala and highways to nowhere elsewhere in the region.  According to the report, in an internal audit on the dam CABEI investigators found that DESA had no experience in energy production, the environmental and social plans were weak, and there was no documentation of consultation and agreement with affected communities despite the known existence of complaints to the World Bank’s Compliance Advisor (CAO).  Nonetheless, it financed the project until 2019.

The Dutch development bank FMO also continued to fund the project despite Cáceres informing bank personnel that no valid consultation with the indigenous inhabitants had taken place.  When the bank pulled out of the project after her killing, they in effect wrote off the loan to DESA.  Neither bank has taken any responsibility for the harms caused, despite the fact that FMO has had an Independent Complaints Mechanisms since 2014 and purports to follow the UN Guiding Principles on Business and Human Rights, which requires attention to remedy for affected communities.

A Broad View of Reparations

The last chapter of the report details the many levels of reparations needed in cases of overlapping human rights violations and systemic corruption.  It describes harms at the individual level – the losses to Cáceres herself and her family members – but also harms to the organization she led and the Lenca community generally, including stigmatization, criminalization, material losses, tears in the social fabric, and internal conflict.  It also recognizes that the murder of Berta Cáceres and of other leaders of her organization, the dam project and the surrounding corruption and fraud harmed Honduran society as a whole.  Remedy for those harms requires action at the individual, collective and societal levels.

The report begins with the idea of cessation of the harm as a foundational remedy, grounded in international law.  In this case, cessation would mean cancelling the concession for hydro projects on the Gualcarque River that have not been agreed to after legitimate consultations.  As the report recognizes, cancelling contracts might open Honduras up to investor-state liability even if the contracts were unlawfully procured or the result of corruption, and the mechanism to cancel such projects is complex and contested.  Demarcation and collective title for the community of Río Blanco over their ancestral lands, long held up by a byzantine and biased land titling system, is the central demand of the community, and should be part of any reparation. The report details the efforts to obtain such title and the difficulties involved, including delay and stonewalling by the government that persists until today.  As a corollary, local authorities should be unable to grant individual titles in areas with indigenous populations, as was done here.  A third type of reparation involves opening up military intelligence archives to document the monitoring, harassment, threats and intimidation against Berta and her organization, COPINH. 

The report concludes with a reparations plan, detailing the potential harms, beneficiaries and public and private actors who would need to be involved.  It proposes that funds be used  for medical and psychological attention, scholarships, economic revitalization and community dialogues as well as allowing individuals and collectives to apply for damages.  It recommends a public memorial ceremony, creation of a monument and school curricula, and a range of legal reforms.  The plan serves as an example of what reparations for the intertwined violations of basic human rights and of anti-fraud, corruption and abuse of authority norms might look like.  Those reparations are not only, or even principally, about money, but rather reestablishing the citizenship and dignity of the individuals, families and communities who were harmed and transforming their lives for the better.