The World Bank indirectly fosters evictions, land-grabbing and environmental destruction by investing in conflict-driven projects in Cambodia through private equity funds and banks, a new report by the NGO Inclusive Development International argues.
Reckless Development: The IFC’s Dodgy Deals in Southeast Asia documents how the International Finance Corporation (IFC), the World Bank’s private-sector arm, invested in banks and other companies that then allegedly engaged in human rights violations.
For example, the IFC invested in several Vietnamese equity funds, which in turn invested in two companies – Hoang Anh Gia Lai (HAGL) and Gemadept – that have been implicated in forced evictions and environmental degradation.
According to the report, HAGL “grabbed land from indigenous communities and decimated ancient forests” in Ratanakkiri province, while rubber company Gemadept “has economic land concessions in Cambodia that were the site of forced evictions”.
Equitable Cambodia executive director Eang Vuthy said the World Bank’s investments have been a longstanding issue, for example in its previous involvement in financing a large-scale project to redevelop the Boeung Kak area, which led to mass evictions, and an extension of Pochentong International Airport, which was abandoned after protests.
Projects by HAGL, he said, “destroy the way of living and the culture and belief, especially that of indigenous people”.
Inclusive Development International managing director David Pred said by email that outsourcing environmental and social due diligence to commercial banks and private equity funds “has been a disaster for the communities”.
Until the system is reformed to hold investors accountable and improve the IFC’s oversight, he argued, the IFC should reduce the scale of its portfolio “considerably”.
According to the report, the IFC also indirectly invested in the Lower Sesan II dam project through its $307 million investment in Vietinbank, which signed a cooperation agreement worth $2.85 billion with Electricity Vietnam – a part owner of the hydropower project.
Bun Thann, a coordinator for the 3S Rivers Protection Network, said many residents around the dam in Stung Treng province have been forced to move from the river, causing them to lose their fishery-based jobs. “The World Bank should open their eyes wider to see what happens to the local communities,” he said, before calling on it to conduct an investigation.
The report also said the IFC indirectly invested in gold extraction through Mesco Steel, a company whose local partner, Angkor Gold, is allegedly “not respecting the free, prior and informed consent of indigenous communities”.
Transparency International executive director Preap Kol said via email that, although the World Bank does not intend to cause human rights abuses, it is “important that the Bank utilizes [its accountability mechanism] whenever their investment has caused significant harms”.
IFC spokeswoman Kea Kunthea said yesterday that the finance wing was aware of previous criticisms of financing and had created a team to work on addressing them. She declined to comment further and a representative of the team was unavailable.