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United Cacao Breaks AIM Rules

Indigenous, environmental, and rights groups call for removal from London Stock Exchange

Para leer este comunicado en español, haga clic aquí.

LONDON – Today over 60 indigenous organizations and NGOs from Peru, Europe, and the United States called for United Cacao Limited SEZC (ticker symbol: CHOC) to be removed from trading on the Alternative Investment Market (AIM) of the London Stock Exchange. As the basis for their demand, the groups cited the company’s breaches of AIM rules and illegal clear-cutting of Peruvian rainforests, claimed and depended upon by Indigenous peoples for survival. In a sign-on letter to the Exchange and UK market regulators, groups made clear connections between financing raised on AIM, the London Stock Exchange’s junior market, and at least 11,100 hectares of illegal deforestation in the Peruvian Amazon by United Cacao’s direct subsidiary, Cacao del Peru Norte, and two related companies, Plantaciones de Pucallpa and Plantaciones de Ucayali.

Each of these three Peruvian companies has derived significant financing from the AIM-listed company, United Cacao, which in addition to trading in London, is based offshore in the Cayman Islands, a British Overseas Territory. United Cacao began raising funds in London on AIM in December 2014, despite ongoing Peruvian government actions to sanction its subsidiary, related companies, and their employees for breaking Peruvian laws governing forests and agriculture. United Cacao’s CEO, Dennis Melka, controls a network of at least 25 corporate entities based in Peru.

“The illegalities, abuses, and forest destruction perpetrated by Dennis Melka’s companies in the Peruvian Amazon have been public for years now," said Julia Urrunaga, EIA´s Program Director in Peru, and Peruvian citizen. "In spite of the Peruvian government having ordered the companies to stop operations and comply with the law, they continue to systematically violate Peruvian laws and ignore the Peruvian authorities. A model of illegal forest destruction, violation of indigenous rights, and disrespect for the national authorities is not the kind of investment that Peru needs or wants.”

Alongside the letter, the Environmental Investigation Agency (EIA) also published a detailed evidence briefing, including dozens of primary source documents from Peruvian government entities which contradict claims made by United Cacao on AIM and surface serious omissions of relevant information. This is the second blow for United Cacao in a week, after the Roundtable on Sustainable Palm Oil ordered related company, Plantaciones de Pucallpa, to immediately stop operations through a preliminary resolution released on April 25, citing evidence that the company had violated indigenous rights and was in non-compliance with multiple Peruvian environmental standards.

“If AIM and UK financial regulators do not investigate and sanction United Cacao, they will be sending a signal that UK markets are a profitable place to bet against law enforcement, environmental sustainability, and human rights in countries like Peru,” said Rose Davis of EIA. “After the egregious non-compliances presented today, the only logical conclusion for AIM is to remove United Cacao from trading on the exchange, and to publicize these consequences to dissuade market actors from further abuses.”

The letter also calls upon UK regulators, like the Financial Conduct Authority, to investigate whether United Cacao’s breaches of AIM rules have violated other UK laws or regulations intended to prevent market abuse and misleading statements by corporations. Putting the focus squarely on London’s role in global finance, the letter represents a clear outcry by civil society against the abuses related to land acquisitions and plantation development of cacao, oil palm, and other agro-commodities at the expense of forests and community lands.

“In the Peruvian Amazon, 20 million hectares of land customarily occupied and owned by Indigenous Peoples still lack formal titling,” said Sedequías Ancón Chávez, member of the council of directors of the Interethnic Association for the Development of the Peruvian Amazon (AIDESEP), the largest organization of indigenous Amazonian communities in Peru. “Actions like this, with the participation of local, national, and international civil society, and supported by indigenous organizations like ours, are key to revealing the links between investments in large scale agro-industrial projects that foment illegal deforestation and their social and environmental impacts in countries like Peru, affecting and threatening our rights, territories, forests, and livelihoods.”

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Contact:
Maggie Dewane, +1 202 486 6621, mdewane@eia-global.org (Washington, DC)
Julia Urrunaga, +51 980731328, julia@eia-global.org (Lima)
Rose Davis, +1 404 488 6566, rosedavis@eia-global.org (London)

To read the briefing, click here.

To read the sign on letter, click here.

Para leer la carta firmada en español, haga clic aquí.

To access the Annexes containing primary evidence, click here.

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