ADB Admits Fault in Rail Project, Pledges Compensation

The Asian Development Bank (ADB) has for the first time admitted to major flaws in its efforts to protect the roughly 4,000 families losing land to a $143 million project it is funding to rehabilitate Cambodia’s dilapidated railway system.

On Friday, the ADB said it would work with the Cambodian government to come up with a plan within 60 days to bring the project into full compliance with its safeguard policies, meant to prevent anyone affected by its work from ending up worse off.

“While more than 90 percent of all affected households have been compensated, and more than 80 percent of households entitled to relocate have received their plots of land, ADB acknowledges that proper compensation has been an issue in some cases,” it said in a statement.

“Resettlement is a process, and ADB is fully cognizant that this process is not yet complete, particularly in terms of ensuring all affected households are compensated and assisted in accordance with ADB’s policies.

“ADB also recognizes there is a need to strengthen project monitoring. Consultations with affected households should have been more frequent to ensure their views were better reflected in the resettlement process.”

Housing rights groups have been complaining for years that families losing land to the project—in some cases, all the land they owned—were not being fairly compensated and that far-off resettlement sites for evictees lacked potable water, nearby schools, and comparable job opportunities to what they were losing. In an impact assessment the ADB commissioned in 2012 and then tried to keep from the public, a noted expert on relocation said the evictees were facing a debt crisis because of the project.

The ADB and AusAID—the Australian government’s foreign aid arm, which is also funding the railway project—offered piecemeal aid on top of their original plans to help the families. They disavowed responsibility for the evictees and placed responsibility on the government—officially in charge of the relocation sites—which in turn pointed the finger at the donors.

Until Friday, neither donor had accepted responsibility for the difficulties the families were facing.

In its statement, the ADB admits to inadequately compensating families, failing to properly consult affected families, deficiencies with the resettlement sites, an inadequate grievance process, delays in helping evictees make a living and to weak monitoring.

The Bank’s about-face is the result of a recent review of the project by the ADB’s compliance review panel. The Bank said it would release the panel’s full report by Friday.

David Pred, managing associate of Inclusive Development International, met with the ADB’s board of directors in Manila last week and has seen the report. He called it the “most damning” compliance review in the history of the Bank’s accountability system.

“Once it is released…the public will finally learn the extent of ADB’s malfeasance, which has caused so much suffering to so many poor people,” he said. “The message we heard from the executive directors we met was crystal clear, that ADB has breached its policies and must bring the project into compliance as soon as possible.”

Eang Vuthy, executive director of Equitable Cambodia, who also met with the board, said he hoped the ADB did not repeat the recent experience of the World Bank. In 2011 it admitted that one of its own projects had failed thousands of Phnom Penh evictees but blamed a lack of cooperation from the government for not being able to help them.

“With lessons learned from the World Bank, we hope that all relevant parties will work together to provide proper remedies to the people,” he said.

Khuon Prum Sarith lost his Phnom Penh home to the railway project two years ago and received an empty plot of land in another district in return and $700, barely enough to cover his moving expenses. He borrowed $6,000 to build a new home on the land and wants the ADB to cover the $2,600 he still owes.

“With $700 I could not do anything, so I had to borrow money from the bank and a private money lender. I hope the ADB will give me fair compensation so I can pay off my debt,” said Mr. Prum Sarith, a motorcycle taxi driver.

“The ADB should help not only me but the other people in the village,” he added. “How can other people who were given only $300 survive?”

Uon Song, an undersecretary of state at the Ministry of Public Works and Transportation, deferred questions about the pending action plan to Nhean Leang, an undersecretary of state at the Ministry of Finance.

Mr. Leang, who is also a member of the Inter-Governmental Resettle­ment Committee, which has final say over the resettlement sites for evictees, could not be reached.

While work on the southern line of the railway from Phnom Penh to Sihanoukville is complete, the $142.6 million originally budgeted for the project is not enough to cover repairs on the much longer northern stretch from Phnom Penh to the Thai border at Poipet. At least $75 million more is needed to finish the work.

(Additional reporting by Phorn Bopha)

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