The Federal Prosecutor (Ministerio Publico Federal) in the Amazon state of Pará sued the banks for breaching "the Constitution, environmental laws and regulations of the Central Bank and the National Monetary Council, as well as international agreements to which Brazil is a signatory," according to a statement released by the prosecutor's office. INCRA, Brazil's agrarian land reform agency, was also named in the suit for failing to control illegal deforestationn.
The prosecutor said their investigation shows that Brazilian taxpayer money directly financed deforestation in the Amazon because of lack of sufficient oversight by INCRA and financial institutions. Banco do Brazil approved at least 55 suspect loans worth nearly $5 million, while Banco da Amazonia gave 37 loans worth $11.2 million. The loans broke a 2008 law that prohibits the lending of public funds to companies that break environmental laws.
If the charges are upheld by courts, the prosecutors say the institutions will need to "pay reparations for damages to the community" and implement "substantial changes" in their policies for financing activities in the Amazon. Read the full report here.
Source: Mongabay.com.
