Row between Peru and UK-listed cacao company turns bitter amid calls for trading halt

RIO DE JANEIRO (Thomson Reuters Foundation) - A row between the Peru government and a UK-listed cacao producer accused of illegally destroying Amazon rainforest has prompted land rights campaigners to call for the removal of the company from trading on the London stock exchange.

United Cacao Ltd is seeking to become the world’s largest single producer of cacao through its plantations in northern Peru, billing itself as a leading ethical producer both in labor and environmental terms.

However Peru’s forestry ministry, SERFOR, says the Cayman Islands registered company does not have approved certification for its plantations that span several thousand hectares in the Iquitos region by the Amazon.

But the company says its Peruvian subsidiary, Cacao del Peru Norte, is in compliance with all Peruvian laws, operating on freehold land zoned for full agricultural purposes by the relevant national authorities.

The competing claims have promoted an investigation by the London Stock Exchange’s Alternative Investment Market, that allows smaller companies to raise capital for expansion, amid calls for trading in United Cacao to be suspended.

“This case is important for Peru but it’s time for stock exchange authorities to start taking interest in the impact of these companies around the world,” said Julia Urrunaga, from the Environmental Investigation Agency, a campaign group which has been following the case.

“Companies doing illegal operations should not be raising money in Europe,” she told the Thomson Reuters Foundation by phone from Lima, Peru’s capital.

The row dates back to 2013 when the company submitted details for environmental reporting documentation requested by authorities querying its agricultural activities.

Employing more than 500 workers in Peru and running programs to support small-scale farmers, the company says on its website it is seeking to become the world’s largest and lowest cost corporate grower of cacao when it completes the planting of its existing 3,250 hectare estate in 2017.

In the ongoing row, Peru’s Supreme Court said in February this year that United Cacao had the correct zoning and environmental permissions for its plantations.

But in May the Forestry Ministry released a statement accusing the firm of violating land use regulations.

A spokesman for United Cacao said this came out of the blue as the company is in regular correspondence with Peru’s Agriculture Ministry and received no advanced warning about the critique of the environmental impact of its plantations.

Regulators with the Alternative Investment Market said they were looking into whether United Cacao broke any trading rules in Britain, but could not comment on specifics of the case. United Cacao floated on London’s junior AIM in 2014.

The company is also listed in Peru on the Lima Stock Exchange (BVL).

Officials from the BVL did not respond to phone calls or emails from the Thomson Reuters Foundation requesting comment.

As Peru prepares for a second round of presidential elections on June 5, more than 200 land and resource related conflicts are ongoing in the country, according to government figures.