Bangladesh, Dec. 15 -- Paraguays banking sector has spent recent years presenting itself as a responsible partner in the fight against climate change and environmental destruction. Major lenders have publicly committed to sustainability principles, pledged to avoid financing illegal deforestation, and joined initiatives aimed at protecting one of South Americas most threatened ecosystems. Yet newly revealed loan documents tell a far more troubling story-one that exposes a stark gap between public rhetoric and private practice.

According to documents obtained by the Organized Crime and Corruption Reporting Project (OCCRP) and the Dutch newspaper Het Financieele Dagblad, two prominent Paraguayan banks, Sudameris and Banco Continental, exte...