Honduras court finds mayor, deputy guilty of ignoring indigenous rights when approving Agua Zarca Dam

Last Updated on July 9, 2025

Raúl Pineda, former mayor of San Francisco de Ojuera in western Honduras, and his deputy Plutarco Mejía Cardona were found guilty last Monday of abusing their authority in granting construction permits for the Agua Zarca Dam in 2010 without considering the rights of Indigenous peoples. The two officials will be sentenced on 4 August.

The Agua Zarca project gained internationally notoriety following the 2016 murder of indigenous leader Berta Cáceres who became a figurehead for Lenca opposition to the dam. The organization that she had co-founded, the Council of Popular and Indigenous Organizations of Honduras (COPINH), released a statement at the onset of the latest trial: “At COPINH, we firmly denounce that the imposition of the Agua Zarca project was illegal, illegitimate, and violated the fundamental rights of Indigenous peoples… This trial is an opportunity to reaffirm a historical truth: without prior consultation, there is no legitimacy or legality in any project that affects Indigenous territories.”

Stay Informed!

Enter your email to receive a weekly round-up of our best posts.

Your Email Address

The ruling was passed unanimously by the Court in Santa Bárbara, in the west of the country, and according to a statement from the Honduran Public Prosecutor’s Office in the wake of the decision, saw “the Special Prosecutor’s Office for Ethnic Groups and Cultural Heritage present testimonies, documents, and the reports of international experts to demonstrate the responsibility of the ex-functionaries for the irregular approval of the project on the Gualcarque River, in ancestral territory protected by the Lenca community.”

Location of the dam project on the Gualcarque River. (C) Google Maps

The dam project on the Gualcarque river was initiated by the national electricity board (ENEE), but in 2009 its employee, West Point graduate David Castillo, used his insider knowledge to establish the company Desarrollos Energeticos (DESA) to advance the project, using proxies’ names to hide his conflict of interest. With involvement from the Chinese hydroelectric company SINOHYDRO, the world’s largest dam builder, and involvement by the powerful Honduran Atala family, DESA moved into the Lenca area.

The communities affected lay in the municipality of San Francisco de Ojuera along the Gualcarque river where it passes from the department of Intibuca into that of Santa Barbara. The Pineda Madrid family from Santa Barbara, which had been attempting to gain control of the fertile river banks from Lenca communities through forced purchases of communal “ejidal” lands, were reportedly employed by DESA by 2012 and released cattle to destroy Lenca crops.

Community opposition escalated rapidly [see timeline below], and in 2013 Lenca protester Tomas Garcia was shot by the Honduran military, causing SINOHYDRO to pull out of the project. In stepped the Central American Development Bank (CABEI) with a loan of US$24.4 million, and an agreement to administer an additional US$20 million from Dutch development bank FMO and Finnish financing company Finnfund.

Become a Patron!

This isn’t charity — it’s solidarity. Supporting IC on Patreon fuels frontline truth-telling so Indigenous resistance can’t be ignored, twisted, or stolen.

Two years later Berta Cáceres was murdered, leading FMO and Finnfund to withdraw and construction at the dam site to stop. While the Honduran police initially treated the murder as a crime of passion, local and international pressure forced the justice system to respond, and in November 2018 seven men were convicted for murdering Cáceres on behalf of executives within DESA.

Berta Cáceres was a recipient of the Goldman Environmental Prize in 2015. Photo: www.goldmanprize.org

In court last week the defense team of Raúl Pineda attempted to deny that there were any Lenca or other indigenous communities within the bounds of the municipal area of San Francisco de Ojuera. Honduran news site Criterio reported the lawyer Edy Tábora, representing COPINH, reply that the Lenca People’s concept of their territory goes beyond the imposition of borders imposed by the municipalities, and that the “State must, and is obligated to, design an appropriate mechanism for consultation based on this concept of territory of the Lenca People”.

The Court also heard from Guatemalan indigenous anthropologist María Jacinta Xon, who said the failure to recognize the right to exercise free, prior, and informed consent (FPIC) was a racist act, and that the territory of “the Lenca indigenous people transcends the territorial divisions of the State of Honduras” and that its extension cannot be understood “based on the municipal political divisions of Honduras.”

At least on the surface the decision cements indigenous rights as integral to the development of projects on indigenous lands: the judges ruled that the mayor and his deputy “illegally approved the Agua Zarca project without securing the free, prior, and informed consent (FPIC) of the Lenca community, as established by Convention 169 of the International Labour Organization [ILO 169] and the United Nations Declaration on the Rights of Indigenous Peoples [UNDRIP].”

The ruling follows a 3 May 2024 conviction of Pineda for usurping functions and falsifying documents related to the project. In that “Fraud on the Gualcarque” case the former DESA CEO David Castillo and former national electricity board official Carolina Castillo had also been convicted, the latter two on fraud charges. It was the first time that the indigenous Lenca community was recognized as a victim and had the opportunity to act as a victim in the trial.

But COPINH observed that “Raúl Pineda did not act alone. He represents a cog in a system of corruption that has operated with impunity in Honduras to benefit companies like DESA, responsible for the plundering of our common goods and the repression of organized communities. We demand that the Honduran justice system act impartially and swiftly and appropriately punish those who have violated the rights of the Lenca people. [We also demand] That the Honduran State fulfill its obligation to fully and immediately implement Free, Prior, and Informed Consent (FPIC), in accordance with international jurisprudence, without excuses or delays… [and] That the criminalization and dispossession of Indigenous peoples through extractive projects imposed without consent be halted once and for all.”

The Agua Zarca dam construction site in Honduras. Photo: COPINH

In June 2022, COPINH filed a criminal complaint in the Netherlands against FMO for “complicity in corruption, embezzlement, money laundering and violence” during its involvement in the Agua Zarca project. According to FMO an attempt to find a settlement is ongoing.

The issue of how FPIC can be realized in deliberations over renewable energy projects on indigenous lands without suffering from falsification, fraud, division, and violence, is being explored by several organizations. The Sirge Coalition, for example, offers a guide for indigenous communities to develop effective FPIC protocols when their territories are affected by “energy transition” projects.

The World Bank is returning to funding large-scale hydroelectric dams, and while public banks and international financial institutions increasingly pay lip service to inclusivity and human rights, the extent of real change is questioned.

International Rivers, an international NGO working with river-dependent and dam-affected communities, attempted to engage with the world’s public development banks at the Finance in Common Summit in Cape Town in February 2025 (FiCS 2025). But Genny Ngende, of the International Rivers Africa Program, was unimpressed by the attitudes evident at the event. She wrote: “Despite its theme, “Fostering Infrastructure and Finance for Just and Sustainable Growth,” FiCS 2025 overwhelmingly prioritized financial and institutional interests. Environmental and social issues were relegated to a few sessions. Key discussions took place behind closed doors, with civil society organizations largely shut out, underscoring a systemic pattern where development is designed without those who must live with its consequences. While framed as a contribution to the Sustainable Development Goals – focused on ensuring communities have access to affordable, reliable, sustainable, and modern energy – the summit ultimately revealed who truly benefits: banks and project developers, and not communities.”

An FMO-commissioned document from 2016 notes that “It is the responsibility of the state to ensure that consultations are held prior to the commencement of a project that may impact indigenous peoples… there is no regulatory arrangement in the country for the application of ILO 169 and FPIC. The absence of a regulation makes the implementation of the convention more complicated for non-state actors.” The document further notes that according to the consultants contracted by FMO, an “adequate consultation was undertaken with community-based organizations in the absence of any traditional authorities such as councils of elders and this therefore served the same purpose.”

Speaking through the megaphone: Berta Zúñiga Cáceres (daughter of Berta Cáceres). Photo Daniel Cima (CC)

This contrasted strongly with the words of CABEI President Dante Mossi, who described his bank’s lending money to Agua Zarca (prior to his term of office) as a “disgrace”. He told the Organized Crime and Corruption Reporting Project (OCCRP) that “If I were president [at the time] this project would never have been accepted because I know this is communal land, you cannot buy a plot of land in that region.”

But in CABEI exiting the Agua Zarca project, Mossi recommended that the bank’s board sell their debt in the project (DESA had stopped repaying its loan shortly after the Cáceres assassination) and donate the US$500,000 they gained to the Honduran government’s socialization campaign to gain indigenous support for a draft law that would reactivate the Honduran energy sector. The draft law limited FPIC, overcoming the limitations imposed by ILO 169, and received intense opposition from Honduran indigenous groups.

The debt sale passed control of the dam concession to Guillermo Bueso, a former friend of Mossi, and CEO of powerful Honduran bank Banco Atlantida, threatening the reactivation of the Agua Zarca project, the concession for which was granted for 50 years. According to Contracorriente, the OCCRP partner in Honduras, “the banking group headed by Bueso is known for having obtained concessions for 14 river sub-basins in Honduras for the development of energy generation and water collection for private consumption”. As the Lenca communities along the Gualcarque remain poised for the potential return of dam-building, the Lenca community of Reitoca also faces the potential return of another stalled hydro-dam project.

A Honduran arrest warrant that was issued for Daniel Atala Midence, Chief Financial Officer of DESA, for alleged involvement in the murder of Berta Cáceres remains pending as he remains in hiding, allegedly in El Salvador. Neither the influential Atala family nor the international banks have yet been held to account, and the ignoring of FPIC in the “green transition” remains a global phenomenon.

A March 2025 meeting in Indonesia of 32 indigenous leaders from 13 countries saw delegates conclude that despite indigenous peoples’ rights being “increasingly embedded into the certification standards, in practice, certification schemes covering commodities such as palm oil, timber, minerals, carbon credits, and renewable energy are routinely failing Indigenous Peoples.”

The leaders produced a declaration with recommendations for states, businesses, NGOs, UN bodies, financial institutions, certification schemes, and to buyers and sellers in supply chains, including the key demand that auditors be “financially decoupled from the entities they are auditing”. Robeliza Halip, Coordinator of the Right Energy Partnership With Indigenous Peoples which helped convene the meeting, said “In too many cases, these certification seals are being used as rubber stamps for human rights abuses. While companies display these badges of honor, our communities face increasing violence, land grabs, and the destruction of our sacred sites.”

On the ground in Honduras, river defenders continue to confront a coalition of international finance, Honduran military and ex-military actors, and hired assassins. When his organization was awarded the Moffit Letelier Human Rights Award for attempting to protect the rivers of northeastern Honduras, the activist Juan Lopez consciously echoed Berta Cáceres, telling the audience in Washington: “Humanity, we are out of time!” He was assassinated in September last year. The intellectual authors of his killing remain at large.