Banks Urged to Divest From Ratanakkiri-Based Rubber Firm
By | November 15, 2013

Environmental campaign group Global Witness on Thursday called on the International Finance Corporation (IFC) and Deutsche Bank to divest immediately from a Vietnamese firm whose rubber plantations in Cambodia are accused of rampant illegal logging and forced evictions of indigenous communities.

The call came exactly six months after Global Witness released the results of a lengthy investigation into several rubber plantations here tied to Vietnam’s Hoang Anh Gia Lai (HAGL) and the state-owned Vietnam Rubber Group (VRG).

In May, the campaign group recommended that Deutsche Bank and the IFC divest from both firms—which control at least a combined 180,000 hectares in Cambodia—if they did not show clear signs of addressing the allegations of illegal logging and evictions within six months.

Megan MacInnes, head of Global Witness land campaign, said VRG was making progress and that the group’s negotiations with the state-run firm were ongoing.

“VRG and its member companies have taken clear and definitive steps to address the environmental and social problems on the ground,” she said.

“The company is also putting [in] place a system to respond to and act on reports of problems relating to all of its concession holdings.”

Ms. MacInnes said similar efforts with HAGL, however, had made little headway.

“HAGL’s inaction so far leaves us no choice but to conclude that it has little intention of taking these problems or its responsibilities seriously,” she said.

“Villagers suffering every day as a result of HAGL’s concessions are all too aware of the environment and social risks the company is taking. We think its investors should be concerned, too, and as a result should divest.”

Neither Deutsche Bank nor the IFC replied to requests for comment Thursday.

At the time Global Witness came out with its report, in May, the IFC had nearly $15 million invested in a Vietnamese fund that owned a 5 percent stake in HAGL. At the time, the IFC said it would “take this research into consideration” as part of its ongoing monitoring.

Deutsche Bank was holding a further $4.5 million worth of HAGL shares through its DWS Vietnam Fund.

Denying responsibility for the firm’s plantations in Cambodia, Deutsche Bank said it was only holding the shares on behalf of other investors and that it was merely providing HAGL with “clerical trustee services.”

In its May report, Global Witness said HAGL and VRG had both flouted local laws that limit one land concession holder to no more than 10,000 hectares in Cambodia. Relying on satellite images and field visits, Global Witness accused the firms of illegally logging healthy, protected forest both inside and outside their concessions, sometimes pushing local families off their land or robbing them of the forest products they had depended on.

The report also found that few of the subsidiary firms on the land concessions had conducted the necessary environmental impact assessments or consulted locals before starting work.

In Thursday’s statement, Global Witness said HAGL in June promised a four-month freeze on clearing forest and planting rubbers trees, and to visit the villages affected by their plantations to address their problems.

Global Witness staff visited seven of the villages in August, but three said they had yet to receive a visit from HAGL and six said forest clearing in or around the plantations had continued, a claim backed up by satellite images commissioned by the campaign group.

And instead of the independent audit HAGL agreed to carry out on its plantations, Global Witness said the firm opted instead for social programs that were “little more than PR exercises.”

“HAGL had made a lot of verbal commitments, but done very little on the ground to address the essential concerns,” Ms. MacInnes said.

As it did in May, HAGL denied the allegations.

“We deny the allegations of Global Witness,” HAGL communications director Nguyen Tan Anh said via email Thursday. “Currently we are continuing to work with Global Witness about these issues.”

Mr. Tan Anh said HAGL medical staff would be conducting three days of medical exams in Ratanakkiri province—where most of the firms’ plantations are located—starting Friday, but he declined to elaborate or answer any more questions.

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The cabinet of Prime Minister Hun Sen on Wednesday accepted a petition from villagers from Kratie province’s Snuol district who are requesting intervention in a land dispute with a plantation owner.

Environment Minister Say Sam Al on Wednesday lauded the country’s controversial sugar industry and the jobs it has created, saying that companies operating in the sector need to be defended against the widespread criticism they have been receiving.

As the international community on Wednesday lauded the opposition CNRP’s agreement with the ruling CPP to take its seats in the National Assembly, some of the opposition’s most outspoken allies talked of treachery from a party that months ago was demanding a re-election or the resignation of Prime Minister Hun Sen.

In the aftermath of the covenant struck between Prime Minister Hun Sen and CNRP President Sam Rainsy on Tuesday, the opposition was fast to frame the deal as a grudging and rare concession from an authoritarian party deeply protective of its power.

Opposition leader Sam Rainsy, who was banned from running in last year’s national election, will now be sworn in as one of the CNRP’s 55 lawmakers, with Kompong Cham province lawmaker-elect Kuoy Bunroeun standing down to become an opposition member on the new bipartisan electoral commission.

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