ANZ Royal financing 'blood sugar' plantation

Sok Mey, a 13-year-old child labourer, cuts sugarcane on land owned by the Phnom Penh Sugar Company in Kampong Speu in 2012. Vireak Mai

ANZ Royal financing 'blood sugar' plantation

Phnom Penh Post | 23 January 2014

ANZ Royal Bank has been financing a sugar plantation connected to child labour and forced evictions, documents received by the Post reveal.

Phnom Penh Sugar, owned by ruling party Senator Ly Yong Phat, has been at the centre of years-long land disputes following the forced eviction of hundreds of families from an 8,343-hectare land concession in Kampong Speu.

The bank’s involvement was outlined in two audits commissioned or instigated by the bank itself and obtained by the Post yesterday. 

The initial audit – which revealed ANZ Royal as a potential financier at the time – was carried out in 2010 by Bangkok-based International Environmental Management (IEM), which made dozens of recommendations ranging from environmental protection to workers’ health and safety, to the monitoring of relocation sites. 

A follow-up audit by the company in 2013 revealed the sugar company had obtained financing from ANZ Royal to help build a plantation and construct a sugar-processing refinery, while ignoring 60 per cent of recommendations made in the 2010 report.

According to IEM, Phnom Penh Sugar fell short on ensuring food-security monitoring for those relocated, management plans for workers handling dangerous chemicals and materials, and appropriate lining of wastewater treatment ponds to prevent leakage.

Asked about the findings, ANZ Royal’s chief executive officer said the bank, one of the largest in the Cambodia, would “continue to engage with this particular case”.

“Where we have found that a client does not meet our environmental and social standards and they are not willing to adapt their practices, ANZ has declined funding or exited the relationship,” CEO Grant Knuckey said.

Australian banking giant ANZ, 55 per cent owner of ANZ Royal Bank, is a signatory to the Equator Principles and has “specific standards in regard to the environmental and social implications of the projects they finance”, the 2013 audit document states.

“ANZ Royal has requested that Phnom Penh Sugar has a direct dialogue with community leaders, and it will continue to review the way the company addresses its social and environmental obligations,” Knuckey said.

Yong Phat told the Post yesterday that he was unaware of the ANZ-commissioned environmental audit, but stressed that he always operated within the law.

“Regarding the environmental assessment, we already did it. I myself escorted an official from the Ministry of Environment to check it. If we don’t, how can we operate? I definitely comply with the law with our investment,” he said.

In January last year, a Post investigation revealed that children as young as seven were being employed to cut sugar cane on the Kampong Speu sugar plantation. Less than a week later, Phnom Penh Sugar announced it would come down hard on any contractors employing child labour.

The audit claims this practice has ceased, but noted that children remain present on the work site.

The controversy surrounding land-use issues in Cambodia has resonated internationally as well.

In January last year, the European Parliament passed a resolution calling on the European Commission “to act, as a matter of urgency, on the findings of the recent human rights impact assessment of the functioning of the EU’s Everything But Arms (EBA) initiative in Cambodia”.

Cambodia benefits under the EBA from trade preferences on exports to Europe.

Yong Phat also holds an adjacent 9,052-hectare concession to the Omlaing plantation in Oral district and two other concessions practically adjacent.

Military units have repeatedly been deployed to the sugar plantation, resulting in ongoing tensions between authorities and villagers.

The IEM audit states that general worker “health and safety practices upon observation appear to be poor”, citing a lack of appropriate protective equipment used by workers.

Perhaps even more damning is the fact after almost three years, the project still has “no formal management plans for environmental and social issues”.

The 2013 audit concludes by noting the implementation of these recommendations were “critical to the success of the project”. The same audit shows 40 per cent of the local population as having lost land or been relocated. Of those who received compensation, 89 per cent did not believe it was fair.

Those relocated by the project are facing “major potential food security issues” due to the land they’ve been relocated to. This is despite the 2010 audit calling for monitoring of “resettled households on presence of food security risks and for households with children, consider nutrition supplements”.

The report notes these risks are most evident in the Pis village resettlement community, where an inspection found no rice has been grown due both to lack of land and lack of water for irrigation.

Vann Sophath, the land reform project coordinator at the Cambodian Centre for Human Rights, said he hoped the company would now address the issues raised in the audit.

“Companies rarely do carry out such social and environmental impact assessments, and when they do, they disregard them,” he said. “Those assessments often remain dead letter and are never implemented.”

Yong Phat is one of Cambodia’s richest tycoons, controlling a vast empire of companies that span construction, electricity, tobacco, resource extraction, tourism, car sales and sugar. He is also known by the Thai name Pad Supapa.

ANZ’s partner in Cambodia, Royal Group, is also owned by another of Cambodia’s richest tycoons, Kith Meng, who has a similarly expansive portfolio of companies and strong affiliations with the Cambodian People’s Party.