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The great rubber rush

4 global witness 002

A Vietnamese company operating in Cambodia is in possession of 16 times the legal amount of economic land concessions (ELC), while another has nearly five times what it should – and both are logging illegally, an international investigation released today reveals.

In Rubber Barons, the UK-based NGO Global Witness accuses state-run Vietnam Rubber Group (VRG) and privately owned Hoang Anh Gia Lai (HAGL) of destroying lives and the environment in Cambodia and Laos in their quest for rubber, a commodity that nets about $200 million in exports from the Kingdom each year.

Under Cambodian law, an individual can hold a total of 10,000 hectares of ELC land. But according to the Global Witness report, VRG possesses 161,344 hectares of rubber plantations in the Kingdom, spread across seven provinces.

HAGL, the subsidiaries of which have been accused multiple times in the past three weeks of illegal logging in Ratanakkiri’s Lumphat Wildlife Sanctuary, holds at least 47,000 hectares of ELC land.

“Cambodia and Laos are in the grip of a land-grabbing crisis, driven by Vietnamese ‘rubber barons’,” the report says. Of 2.6 million hectares of land leased by the government to private companies up until the end of 2012, 1.2 million hectares were for rubber plantations, Rubber Barons continues.

“[HAGL] and [VRG] . . . have leased vast tracts of land for plantations in Laos and Cambodia, with disastrous consequences for local communities and the environment.”

Such consequences included food and water shortages, loss of livelihoods without compensation and the destruction of burial grounds and sacred forests.

For those who protested against eviction or forest clearing, intimidation, violence and arrests were common.

“Often, the first people know about either company being given their land is when the bulldozers arrive,” the report says. “The indigenous ethnic minorities of Cambodia and Laos appear to be disproportionately bearing the brunt of these land grabs.”

Global Witness, which was expelled from Cambodia in 2005 for its activism, also accuses both companies of illegally logging outside their concession areas – an allegation rights groups and villagers have also made to the Post in the past month.

“HAGL is alleged to have contracted a powerful Cambodian tycoon to clear and process timber from its concessions,” the report says.

Villagers have told Global Witness that HAGL subsidiaries had struck this deal with tycoon Try Pheap, it continues.

“Member companies of VRG appear to have high-level connections with Cambodian government officials and have partnered with a notorious illegal logging syndicate.

“[Officials] have licensed concessions in contravention of their own laws and failed to take action when HAGL and VRG openly ignore these same laws.”

Uk Sokhun, secretary of state at the Ministry of Agriculture, and Ith Nody, his undersecretary of state in charge of ELCs, hung up on a reporter yesterday when asked about the claims. Try Pheap could not be reached for comment.

Veil of secrecy

Another reason the two companies have been able to get away with breaking the Land Law is because of “corporate secrecy”, the report claims.

“The ability of both companies to exceed the legal threshold for concession holdings in Cambodia appears to be as a result of hiding their beneficial ownership behind complex layers of shell companies.”

HAGL owns companies such as Hoang Anh Andong Meas, Hoang Anh Oyadov and Heng Brothers, all in Ratanakkiri province.

Headed by Doan Nguyen Duc, HAGL is one of Vietnam’s biggest private companies. According to Global Witness, Nguyen Duc holds 48 per cent of the company, which also deals in property, hydropower and mining.

It is believed that VRG owns numerous companies including Dong Phu and Dong Nai in Kratie province.

Leng Rithy, president of the Vietnamese Rubber Enterprise Federation, is the Cambodian representative for VRG.

Global Witness called on Cambodia and Laos to cancel concessions of known firms owned by the two Vietnamese companies.

Hidden backers

Megan MacInnes, head of the land team at Global Witness, said regulations were needed to deter financial backers of companies involved in illegal concessions or logging.

“Until [this happens] . . . international banks and financial institutions will continue to turn a blind eye to the human rights abuses and deforestation they are bankrolling,” she said.

Elaborating on this, Global Witness accuses the International Finance Corporation (IFC) – the financing arm of the World Bank – and Deutsche Bank of funding the two companies in question.

“Deutsche Bank has significant holdings in both companies, while the IFC invests in HAGL,” its statement says.

“Deutsche Bank and the IFC should take urgent steps to ensure that HAGL and VRG comply with the financial institutions’ legal and corporate environmental and social requirements,” the report continues.

Hannfried von Hindenburg, head of communications for IFC East Asia and the Pacific, said his company had a stake in the investment firm Vietnam Enterprise Investment Limited (VEIL), which is managed by another Vietnamese company, Dragon Capital. This firm, von Hindenburg said, had an investment in HAGL.

“IFC will carefully study the findings of the Global Witness research, and taking this research into consideration is part of our ongoing monitoring of our investments in Dragon Capital and VEIL,” he said.

The Post understands that Dragon Capital representatives, who could not be reached yesterday, recently visited the Lumphat Wildlife Sanctuary to examine claims of illegal logging.

According to Global Witness, Deutsche Bank “holds 1.2 million shares in Dong Phu, a member of VRG”.

But a spokesman for the bank said it did not provide any financing at all to HAGL, Dong Fu or VRG and should not have its name associated with any of these allegations.

“The DWS fund [an asset management branch of Deutsche Bank] shares referred to are held on behalf of investors,” he said. “Deutsche Bank provides clerical trustee services to HAGL as it does to many thousands of listed companies globally.”

In the past month, the Post has reported multiple times on alleged illegal logging within the Lumphat Wildlife Sanctuary.

Chhay Thy, a provincial investigator for rights group Adhoc, has estimated that as many as 16,000 trees have been felled in the wildlife sanctuary alone.

Neither HAGL nor VRG could be reached for comment.

Additional reporting by Phak Seangly, Cheang Sokha and Abby Seiff

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