New Report: Corporate Assault on Honduras Is Worsening Its Economic, Environment, and Human Rights Crises

Washington, D.C. and Tegucigalpa – U.S. and European investors are leading a corporate assault on one of the most impoverished and embattled countries in the western hemisphere: Honduras. 

On October 3, the Institute for Policy Studies, the Transnational Institute (TNI,) TerraJusta, and the Honduras Solidarity Network (HSN) released a vital new report,“The Corporate Assault on Honduras: Mafia-style investments and the Honduran people’s struggles for democracy and dignity”, which exposes the cynical profit-driven motives behind an avalanche of corporate lawsuits aimed at draining Honduras and blocking much-needed environment and human rights protections. If these investors succeed, the economic burden will only deepen the displacement crisis driving Hondurans to migrate. 

These claims against Honduras rely on exclusive privileges that enable companies to sue entire national governments when they believe their profitability has been affected by those governments’ laws, via a system called Investor State Dispute Settlement (ISDS). 

Combining fact-based in-depth analyses of the circumstances that have enabled corporate powers to undermine the political will of local communities, together with on-the-ground evidence and testimony from Honduran organizations and community leaders, the report paints a clear picture of how ISDS has become the main legal and political mechanism through which powerful corporate interests are attempting to undermine, reverse, or overrule key government reforms and community protections in Honduras. 

The report exposes how a little-known tribunal in Washington, D.C. called the International Centre for the Settlement of Investment Disputes (ICSID), part of the World Bank, has become the main forum for such efforts. 

Within the last 18 months alone, investors have brought 14 arbitration claims against Honduras to the ICSID. Including a fifteenth ongoing suit that began in 2018, Honduras faces at least $14 billion total in claims from foreign and domestic corporations. U.S. law firm White & Case is defending the investors in 9 of these claims. 

The lawsuits amount to roughly 40% of the country’s GDP in 2023 and nearly four times its public investment budget for 2024. U.S. and European investors are involved in six of the fifteen pending lawsuits, with claims of at least $11.5 billion dollars, which is 82% of the known amount claimed. 

“Transnational companies benefited from increasing privatization and rampant corruption in Honduras following the 2009 U.S.-backed coup. There were multiple warning signs that investing in such a context was risky both economically and socially, particularly as violent state repression cracked down on opponents of both the post-coup governments and many of the projects linked to the current claims against Honduras” said Karen Spring, co-coordinator of the Honduras Solidarity Network (HSN). “Between 2014-2022, Honduras turned into a narco-dictatorship under former president Juan Orlando Hernández, who was recently sentenced in the Southern District of New York for drug trafficking and weapons possession and use.” 

The report finds that a majority of the powerful corporate investors bringing claims are revolting against Honduran efforts to repeal or renegotiate some of the most outrageous policies passed during the period from 2009-2022, many of which led to social conflict and repression against people opposing harmful projects. The report highlights the evidence and impact of human rights violations, violent repression, corruption, and influence peddling related to these investment deals. 

Honduras has been one of the top three most dangerous countries for land and environment defenders since 2010, leading to the forced disappearances and assassinations of leading environmental defenders such as Berta Cáceres. Most recently, renowned environmental activist Juan López, an outspoken critic of open pit mining and a member of the Municipal Committee in Defense of Common and Public Goods of Tocoa (Comité Municipal de Defensa de los Bienes Comunes y Públicos de Tocoa -CMDBCP) was murdered after leaving church. 

Key findings of the report include: 

1. The US-based Próspera group has brought the largest claim against Honduras, for $10.8 billion after the Honduran National Congress repealed a 2013 law permitting charter cities inside Honduran territory. These privately-run areas promoted as “Employment and Economic Development Zones” have sparked widespread local and national opposition across Honduras for over a decade for their violation of national sovereignty, sole benefit to foreign investors, and negative impacts on affected people.
2. Seven investors have filed claims for at least $1.3 billion since the Honduran Congress approved a 2022 Energy Law, which proposes to rescue the national energy company and renegotiate a better price for electricity. Local communities in southern Honduras have faced legal persecution and threats since 2017 for standing up to harm from Norwegian-owned solar energy parks. Communities fear the arbitration claims could influence contract renegotiations to allow the project’s expansion against their will.
3. Two more investors have brought $190 million in claims over public private partnerships deleterious to the public interest and plagued with irregularities. In the case of a highway maintenance deal, involving JP Morgan Chase Bank and two Goldman Sachs funds, local Honduran residents camped out on the highway for 421 days to protest paying tolls, given that their tax dollars paid for the highway to be built and worried over how it would increase an already unbearable cost of living. The toll booths were known as a “monument to corruption” and the project failed in 2018. 
4. Brothers Ernesto and Juan Carlos Argüello, of Miami, are suing Honduras for $100 million plus $2 million in “moral damages.” Meanwhile, their company, HOLA Realty, built a gated community that was sold to maquiladora (factory) workers who say the homes were made of shoddy materials. Tropical storms Eta and Iota devastated the community in November 2020, and residents are still fighting for reparations and cancellation of the Argüellos’ environmental permits, calling attention to the lack of disaster contingency plans and other protections that should have been in place.
   

“These findings are a wake-up call to end extreme corporate privileges in U.S. trade agreements and address the harm from investments plagued with irregularities and corruption under the narco-dictatorship. As our report shows, it is unconscionable that the Honduran people must now pay millions just to fight corporate claims, let alone to possibly ‘compensate’ transnational corporations for their relentless greed,” said Jen Moore, Associate Fellow of the Trade and Mining Program at the Institute for Policy Studies and a lead author of the report. “Rather, Honduran communities should receive reparations and redress for the harms that these transnational corporations have caused.”

The report underscores calls for concrete measures to:

1. Reverse the harms exacerbated by U.S. trade and international policy agreements and the 2009 Honduran coup.
   
2. Establish strong safeguards in new guidelines and frameworks for future international agreements that prioritize Honduran sovereignty and communities’ self-determination. 
3. Remove the investor-state arbitration system that enables such corporate lawsuits against governments from existing international investment agreements and prevent its inclusion in future agreements, as called for by more than 30 Members of Congress. 
4. Remove the ISDS mechanism from the Central America – Dominican Republic Free Trade Agreement (CAFTA-DR), as called for by 45 Members of Congress, led by Congresswoman Linda T. Sánchez (D-CA) and Congressman Lloyd Doggett (D-TX). 
   
   

Full report: https://ips-dc.org/report-corporate-assault-on-honduras

Shorter summary: https://ips-dc.org/summary-corporate-assault-on-honduras

Press contacts: 

• Karen Spring, Honduras Solidarity Network, karen@hondurasnow.org 
• Jen Moore, Institute for Policy Studies – Mining and Trade Project, jen@ips-dc.org
• Luciana Ghiotto, Transnational Institute, l.ghiotto@tni.org
• Aldo Orellana, Terra-Justa, aldo@terra-justa.org

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