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Brazil’s national development bank found guilty of driving Amazon deforestation

BNDES, Brazil’s national development bank, contributed to Amazon deforestation by lending billions of dollars to commercial meatpackers, driving expansion of cattle ranching across the world’s largest rainforest, ruled an audit by the Federal Audit Court.

The ruling, reported by the O Estado de São Paulo, concluded that some of the meatpackers that benefited from nearly $10 billion in loans between 2008 and 2010 were supplied by ranches involved in slave labor and illegal deforestation. BNDES, which lent 137 billion reais ($69 billion) in 2009 alone—more than the World Bank, apparently disregarded internal safeguards in its rush to extend Brazil’s position as the world’s largest beef exporter.

The Federal Audit Court’s findings are consistent with those presented in reports published in 2009 by Amigos da Terra – Amazônia Brasileira and Greenpeace.

Mato Grosso. Photo by Rhett A. Butler

“The audit states that the [President Lula] proved responsible for failed coordination and guidance in this respect and that, as a consequence of this, public funds were invested into illegal deforestation and slave labor,” Roberto Smeraldi of Amigos da Terra – Amazônia Brasileira told “The audit expressly highlights how mere compliance with legislation by the bank does not help in avoiding deforestation, unless standards are implemented towards changing the pattern of production.”

Smeraldi says the audit shows the need for BNDES to focus financing on a transition towards a more productive and sustainable type of ranching, rather than unregulated expansion of the industry. Embrapa, Brazil’s agricultural research agency, has shown that beef production in Brazil can be expanded substantially without deforestation through better pasture management, improve genetic stock, and other intensification techniques.

Pressure for reform in the sector is now being driven by major beef buyers — including Walmart Brasil and Pão de Açúcar — and public prosecutors, including Daniel Avelino, the prosecutor for the state of Pará.

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