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ANZ Bank accused of abandoning farmers after splitting with sugar firm

21-Jul-2014
Last updated on 21-Jul-2014 at 09:00 GMT - By Marta Kasztelan
ANZ Bank accused of abandoning farmers after splitting with sugar firm
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Early this month, in what looks like a failed attempt to save its reputation, Australia‘s ANZ Bank severed its ties with Phnom Penh Sugar, a company accused of a range of human rights abuses linked to its plantations in Kampong Speu province, Cambodia.

The move triggered widespread outrage among local and international rights groups, who claimed ANZ was ignoring its responsibilities towards the communities in service to the firm it had financed since 2010—and promises the bank had subsequently made to them following a visit.

While a specific amount has never been disclosed, ANZ is believed to have lent tens of millions of dollars to Phnom Penh Sugar through its Cambodian subsidiary, ANZ Royal Bank.

When pressed by FoodNavigator-Asia, an ANZ spokesperson declined to provide any concrete information about this development, saying he could merely “confirm that PPS has paid out its loan and is no longer a customer of ANZ.

We understand they were able to get finance cheaper when all the compliance costs required by ANZ were factored in.“

Similarly, Seng Nhak, the managing director of Phnom Penh Sugar, refused to comment on any details regarding the firm's decision, and only confirmed that it is is no longer relying on financing from ANZ.

A plethora of allegation

Phnom Penh Sugar is owned by one of Cambodia’s richest and best connected men, Senator Ly Yong Phat. A member of the ruling Cambodian People’s Party, he is a close friend of Prime Minister Hun Sen and is a leading business and political figure in the country.

Ly Yong is accused of using his connections to send a group of armed military police to force hundreds of families off their land by destroying their homes and burning down their crops in 2006.

The farmers were each allegedly paid US$100 in compensation for the loss of their land.

Some families were reportedly moved to relocation sites on infertile land, rendering it near to impossible for them to grow crops, leading to food shortages and abject poverty in many of the displaced communities.

But the string of human rights allegations does not end there.

According to an investigation carried out last year by non-governmental organisations, Equitable Cambodia and Inclusive Development International, school-aged children worked on the sugar plantations owned by the company—an accusation Phnom Penh Sugar vehemently denied at the time.

The list of concerns grew even bigger in September 2013, when the sugar producer requested that a Bangkok-based company, International Environmental Management, conducted an audit of its operations.

The audit revealed that the firm failed to carry out any checks to determine whether the resettled families had enough food, with one community being described as having a “potential food security risk.”

According to the audit, the firm had not established any worker health and safety policies. Nor had it implemented any of the environmental, health and social management plans it was recommended to establish in an audit commissioned by ANZ Royal back in 2010.

Communities left high and dry

This sudden end of the commercial relationship between the bank and Phnom Penh Sugar comes as a shock, mainly because only a few weeks ago ANZ Australia sent a senior staffer to Cambodia to talk to the affected communities and discuss conducting an independent human rights assessment.

This step, according Eang Vuthy, executive director of Equitable Cambodia, gave hope to the affected families and was crucial in bringing justice closer to the dispossessed farmers.

Talking to FoodNavigator-Asia, Eang said those meetings saw ANZ promise the community it would make sure that those who had lost their land and means of livelihood would receive a substitute plot and a fair compensation.

Eang then expressed his disappointment with the bank’s decision to move on, saying “it bears the responsibility in resolving this issue because of its financing”.

Oxfam Australia, another NGO monitoring the case, was equally critical of the financier.

In a statement posted on the organisation's website, Oxfam Australia chief executive Dr Helen Szoke underlined the bank still bears responsibility to ensure that affected communities receive suitable compensation.

Families are still without adequate food, denied access to their land and are highly vulnerable to violence and intimidation,” Szoke wrote

“There are concerns by groups working closely with the community that ANZ cutting and running will make people more vulnerable to the abusive practices of Phnom Penh Sugar and less likely to get justice for the human rights violations in which it is involved.”

It is unfortunate that having come this far in its efforts to behave like a responsible financier, ANZ seems to be only too concerned with distancing itself from a “bad company“ in an effort to save its reputation.

In fact, it seems like an opportunity missed for both the bank and the Cambodia sugar firm to set an industry example of good practice for others to follow—a move that would have improved the images, and hence the long-term profits, of both enterprises.

  • Each week, the Insight column looks at cases of alleged poor practice by Asia-Pacific companies involved in food production and processing.

Related topics: Supply chain, Business, Traditional and staple foods, Australia - New Zealand, South East Asia