French banks face criminal complaint for money laundering over illegal Amazon deforestation

For the first time, three major French banks and a large insurance group face a criminal complaint for alleged money laundering linked to the deforestation of the Amazon. The complaint has been deposed against banks BNP Paribas, BPCE and Crédit Agricole and insurance firm Axa. The Paris-based advocacy and litigation association behind the move, Sherpa, say that these financial institutions “cannot have been unaware that they were financing illegal activities”. Jade Lindgaard reports on this ground-breaking action.

Jade Lindgaard, 13 November 2023 à 19h12

For the first time, three major French banks and a giant insurance firm are the object of a criminal complaint for the alleged laundering of the proceeds of illegal deforestation in the Amazon. On November 8th a formal complaint was lodged with Paris prosecutors by the non-governmental organization Sherpa against banks BNP Paribas, BPCE and Crédit Agricole and insurance firm Axa for “aggravated money laundering”, “complicity in aggravated money laundering” and the “aggravated receipt of proceeds” from illegal activity.

In the complaint, seen by Mediapart, the four financial institutions are not only accused of having contributed to funding the destruction of the Brazilian forest, but also of having profited from it. Between 2018 and 2022 they invested more than 70 million dollars in two giants of the Brazilian agribusiness sector, the groups JBS and Marfrig.

In addition, BNP Paribas subscribed to three bond issues by Marfrig, which took place in 2013, 2019 and 2021. This year they also had a leading role in a massive bond issue by the agribusiness group totalling 1.5 billion dollars, according to supporting documents in the complaint.

A bond is a form of debt security issued by a body - a state or public or private corporation - which receives a sum of money from those who subscribe to it. It is a form of loan but its difference is that it offers a fixed rate of return over its term and that it is available in a market that is supposedly more closely supervised, and thus less exposed to the media, than more classic banking activities.

In payment for its services relating to the bond issue BNP Paribas received a total of 948,000 dollars, according to the documents supporting the complaint. For its part, Crédit Agricole made 6.5 million dollars in profit from their bonds, Axa made 1.3 million dollars and BPCE 3.8 million dollars, according to the complainants' estimates. Overall, the profits made by these institutions from these financial transactions amounted to 12 million dollars.

When contacted by Mediapart last week, BNP Paribas said they had no comment “about a complaint of which we have no knowledge”. Crédit Agricole indicated they would study the contents of the complaint before commenting. Insurance giants Axa said the group “monitors and updates its internal policies concerning responsible investment, particularly when it comes to the environment and human rights” and insisted that it had “one of the strictest policies on the issue and complies with current laws and international laws”. BCPE did not respond.

These business transactions contrast with the refusal of other institutions to finance JBS and Marfrig because of lingering suspicions over their activities. For example, in 2022 the Inter-American Development Bank (IDB) declined to loan 200 million dollars to Marfrig because of the risk to deforestation associated with its activities.

This is one of the strongest elements of the criminal complaint made by the litigation and advocacy NGO Sherpa: it shows the extent to which the environmentally-damaging impact of cattle raising in the Amazon has been known about, and it lists the public reports and investigations by journalists that have been published, some several years ago, which directly point the finger at JBS and Marfrig. The legal complaint says that a “very large number” of public reports show the “systematic and massive nature of the use of deforestation in the supply chain” of the groups whom the French banks have funded. The banks “cannot have been unaware that they were financing illegal activities” concludes Jean-Philippe Foegle, in charge of litigation and advocacy at Sherpa.

Targeting financial flows

This is not the first time that banks have faced legal proceedings over alleged links with deforestation. Last February several non-governmental organisations – including the Brazilian association Comissão Pastoral da Terra and the French group Notre Affaire à tous - filed a complaint against BNP Paribas, accusing it of financing Marfrig.

But that was civil action. This complaint by Sherpa is a criminal complaint concerning offences punishable by law, and has been deposed with France's financial crimes prosecution unit the Parquet National Financier (PNF). Jean-Philippe Foegle calls it “strategic litigation with the aim of obtaining tougher penalties, and that's never been tried before: we're targeting financial flows and it's based on solid jurisprudence”. The banking groups targeted are also under an obligation to show vigilance and to publish each year their commitment to respecting the environment.

The two Brazilian groups targeted are major players in the global agribusiness sector. Marfrig is the second biggest meat packaging firm in Brazil while JBS is the largest meat processing company in the world.

For the offence of laundering to be established, there must first have been an initial infraction committed. In this case, Sherpa says these offences concern the slaughtering and sale by JBS and Marfrig of cattle from illegally-deforested areas, and also land grabs harming local peoples, plus the idea that everyone involved in such deals must have known that forced labour had been used. These accusations are based in particular on an investigation by the Center for Climate Crime Analysis (CCCA), an investigative and legal research NGO which tracks illegal greenhouse gas emissions in the world.

Mediapart has seen the CCCA's report. It indicates that around 50% of suppliers to JBS's slaughterhouses in the northern State of Pará display irregularities, as do 40% of those who supply both it and Marfrig in the state of Mato Grosso in the centre-west. Some of the cattle that they buy and slaughter come from farms built on lands where land clearance is in fact officially forbidden by the Brazilian Institute of Environment and Renewable Natural Resources (IBAMA). Some of these cattle breeders have been convicted for having broken forest protection rules.

One farm that supplies JBS is also accused of taking land from the Manoki people. Cases of enforced labour and violations of human rights linked to working conditions have meanwhile been recorded at several of JBS's and Marfrig's suppliers. The scale of deforestation between 2018 and 2021 linked with the suppliers of five abattoirs belonging to the two Brazilian groups is considerable, according to the CCCA analysis. As an example, just one of these facilities in the State of Pará is suspected of having caused the destruction of 400,000 hectares of forest.

That is why those behind the legal complaint believe that the funding of these meat sector firms by the four French groups is likely to constitute “support for an operation of investing, concealing or converting the direct or indirect proceeds of a crime or an offence”, part of the legal definition of money laundering in France.

In theory, the Parquet National Financier now has three months to react to the criminal complaint and to decide whether or not to open an investigation.

• The original French version of this article can be found here.

English version by Michael Streeter