Logo of Phnom Penh Post newspaper Phnom Penh Post - IFC criticised for abusive investments

IFC criticised for abusive investments

An excavator works in a section of deforested land on an economic land concession belonging to the privately owned Hoang Anh Gia Lai company in Ratanakkiri province in 2013
An excavator works in a section of deforested land on an economic land concession belonging to the privately owned Hoang Anh Gia Lai company in Ratanakkiri province in 2013. GLOBAL WITNESS

IFC criticised for abusive investments

Rights groups yesterday took aim at the private-sector arm of the World Bank for investing money into companies that are responsible for human rights abuses around the world, highlighting a Vietnamese rubber firm accused of illegal logging and land grabbing in Ratanakkiri province as a prime example.

In a report titled The Suffering of Others, Oxfam, along with other NGOs including Global Witness and Equitable Cambodia, say the International Finance Corporation (IFC) has “little accountability” for billions of dollars of investments into banks, hedge funds and other financial intermediaries that are awarded to projects responsible for such abuses.

“The IFC’s flawed system of measuring development impacts of financial intermediary (FI) lending means that it has little proof of positive development outcomes,” the report explains.

“The crux of the issue is whether, by channelling funds through third parties, the IFC loses control over how the money is eventually spent,” it says.

“If, as the Bank’s own watchdog claims, the IFC often does not know where its money ends up, and cannot therefore guarantee that it does no harm … what does this mean for the people on the ground”?

The report uses Hoang Anh Gia Lai (HAGL), which operates rubber plantations on economic land concessions in the northeast, as an example of such issues.

In Ratanakkiri, “at least 18 villages, home to some 15,000 people, have been adversely affected or threatened by HAGL’s plantation development,” the report notes.

The confiscation of land and destruction of forests, it explains, has led to a drop in living standards and created food insecurity in some areas.

One affected villager, 57-year-old Dan Leam, said that in Chey Odam commune, while villagers have held onto the majority of their community forest, the loss of more than 200 hectares to HAGL would have long-lasting effects. “We can only live on it now, but not use it for farming,” he said.

Since filing complaints with the IFC last year, villagers said yesterday that the situation with HAGL has improved, with efforts currently being made to reach a resolution by the end of the year.

But Eang Vuthy, executive director of Equitable Cambodia, said more needs to be done by the IFC. “We see clearly the impacts on this case. [Villagers] filed complaints to the IFC, now they are in dialogue with the company … [but] what about many other projects we don’t know about?

“There must be more transparency. [The IFC should] disclose all projects they’ve been financing, including sub-projects.”

In a statement, the IFC said it was taking the findings of the report “very seriously”.

“These cases show we must continually improve our approach to supervision,” it said, adding that it remained “committed to working through financial intermediaries to reach more entrepreneurs and small businesses than we can on our own”.

HAGL did not respond to requests for comment.

ADDITIONAL REPORTING BY PHAK SEANGLY

MOST VIEWED

  • All Covid restrictions for inbound travellers lifted

    Cambodia has apparently taken the final step towards full reopening of the country without Covid-19 restrictions by removing all requirements for inbound travellers, who until now had to show health certificates indicating that they have tested Covid-19 negative in the past 72 hours as well as

  • Typhoon Noru brings flash floods – 16 dead

    An official warned that that the 16th typhoon of the season, Noru, had brought heavy rains to areas the Mekong River and flooded thousands of homes in the provinces bordering Thailand. As of September 27, the death toll from the flooding had risen to 16. National Committee

  • Cambodia stands firm on 5PC: No invite for Myanmar to ASEAN Summit this year

    Cambodia has not invited Senior General Min Aung Hlaing, chairman of Myanmar’s ruling State Administration Council (SAC), to the 40th and 41st ASEAN Summit and related meetings scheduled for next month in Phnom Penh. The government will instead invite a non-political representative from Myanmar

  • Mushrooming borey projects and home financing – a cause for concern?

    A spurt in housing developments is typically a sign of a growing economy but underneath all that might lay some anxiety of credit growth as developers offer financing to buyers at higher rates, an activity the central bank identifies as ‘shadow banking’ Earlier this year,

  • Thai Senate delegates in Cambodia to discuss anti-graft co-op

    A delegation from Thailand's Senate was in Phnom Penh on September 28 to meet their Cambodian counterparts to discuss strategies for fighting corruption and enhancing cooperation. The Thai delegates were from its Senate’s Committee on Studying and Inspecting Corruption, Misconduct and Strengthening Good Governance. They

  • Scholarship winner tells secrets to success

    Chhim Chaknineath was awarded the Chevening Scholarship for one year of postgraduate study in the UK for the academic year 2022-2023 along with a group of 10 other outstanding students who applied. She spent more than a year researching and studying – as well as consulting with