The World Bank’s private investment arm, the International Finance Corporation (IFC), hit back yesterday at allegations by the NGO Inclusive Development International (ID) that it indirectly contributed to land grabbing, environmental destruction and rights violations through its funding of regional banks, which in turn have funded controversial projects, including in Cambodia.
The IFC’s head of communications for East Asia and the Pacific, Tina Taheri Moayed, said in an email on Tuesday that there were “many factual inaccuracies” in the report, which she said were “misleading”.
“Many of the sub-projects mentioned either pre-date or fall outside the scope of IFC’s investment with the financial institution mentioned,” she said.
However, IDI’s managing director David Pred maintained in an email that his organisation stands by its findings “100%”.
“IFC should have never made those investments in the first place, or it should have required remedial action as a pre-condition of its investment,” he said.
But IFC spokesman Frederick Jones on Wednesday night countered that the controversial investments made by banks and private equity funds had preceded IFC involvement. “Performance standards do not apply retroactively to a bank’s portfolio,” he said.
Among the investments criticised was the IFC’s funding of Vietinbank, which is accused in the report of having funded the controversial Lower Sesan II dam project, a hydropower project in Stung Treng province that has involved forced evictions of residents.
Jones insisted Vietinbank – which the IFC funded to the tune of $307 million in 2011 – did not finance the project.
However, according to documents on Vietinbank’s own website, it has been providing credit services to Electricity Vietnam (EVN) since 2006. The following year, EVN signed a memorandum of understanding with the Cambodian government, becoming a major stakeholder in the dam project. It publicly claimed to have divested from the dam in 2012.
Jones said that the IFC’s investment in equity fund Dragon Capital, which was linked to land grabbing in the northeast of Cambodia, predated the IFC’s Sustainability Policy requirement that came into effect in 2006.
“We have strong and robust accountability mechanisms, like the CAO [compliance advisor ombudsman], that can help address issues as well,” he said.
Pred, however, was not convinced by IFC’s accountability mechanisms, saying that the money the IFC has invested in banks and equity funds has been found by its own internal watchdog to only be traceable in “10 percent” of cases.
According to Jones, Dragon Capital, a fund that drew IFC investment, pulled support in 2015 from the company Hoang Anh Gia Lai (HAGL), which is accused of grabbing land and clearing forests in Cambodia.
But Equitable Cambodia director Eang Vuthy said Dragon Capital having pulled out did not relieve the IFC of its responsibility for prior conflicts, noting that while some cooperation had been “very fruitful . . . The problem has not been solved”
He added that his NGO had submitted a complaint related to HAGL to the CAO, which now serves as an intermediary in negotiations.