Cambodia: Financial Intermediaries 01-03

Date Filed
11 Jun 2018
Status
Open
Phase
Compliance
Country
Cambodia

Case Tracker

Eligibility
June 11, 2018-July 10, 2018
Eligibility
Assessment
July 11, 2018-June 30, 2021
Assessment
Dispute Resolution
Compliance
Appraisal
July 01, 2022-November 18, 2022
Investigation
Case under compliance investigation December 08, 2022
CURRENT Status
Investi3gation (COMPLIANCE)
Case under compliance investigation December 08, 2022

Complaint Overview

Complainant

Confidential

Concerns

Social and Environmental Impacts

Cross-Cutting Issues
Risk Management

Project Information

Region
East Asia & the Pacific
Institution
IFC
Name & Number
Financial Intermediaries 01-03
Company
ABBank; IFC Banking Client in the Region
Sector
Financial Markets
Department
Finance and Markets
Category
FI
Commitment

ABBank: up to $75m; IFC Banking Client

Synopsis

Project Overview

IFC has an active equity investment with An Binh Commercial Joint Stock Bank (ABBank). Specifically, a $50 million quasi-equity and $25 million A loan through an IFC project (no. 29745). The project proposes to forge a long-term partnership between IFC and ABBank by providing long-term financing to the bank, both structured as senior and convertible debt instruments. According to IFC, its investment aims to allow the bank to maintain a healthy capital adequacy ratio while growing its loan portfolio. The loan will be geared towards supporting climate change initiatives and enhancing financing for eligible energy efficiency and cleaner production projects. The complainants have also alleged that IFC is exposed to the project via Vietinbank, another IFC banking client in the region.

Complaint

In June 2018, CAO received a complaint regarding IFC Financial Intermediary clients, ABBank and Vietinbank —in relation to a range of social and environmental impacts regarding the Lower Se San Dam 2 project in Cambodia. These include concerns related to community resettlement, impacts on livelihoods, threats against community members opposing the project, damage to socioculturally significant sites such as ancestral graves and spiritual forests, and impacts on the fish population of the Mekong, Sesan, and Srepok Basins.

CAO Action

CAO found the complaint to be eligible for further assessment in July 2018 and began an assessment. The assessment period was extended several times due to the need to establish contact with additional stakeholders whose views were deemed relevant and also due to challenges from the COVID-19 pandemic and travel restrictions after March 2020.

After an initial extension to the assessment period to January 2021, CAO extended the assessment again through January 2022 in order to ensure that the potential for dispute resolution was fully explored with all parties concerned. Ultimately, the parties did not reach a consensus to participate in a dispute resolution process. Details from the assessment are available in reports in English and Khmer, accessible via the “Case Documents” section below this page. Based on CAO Policy, the case was transferred to CAO’s Compliance team in July 2022 for appraisal.

On November 18, 2022, CAO completed its appraisal report, concluding that the complaints merit a compliance investigation in relation to IFC’s investment in ABBank, but not in relation to IFC’s investment in Vietinbank.

Regarding IFC’s investment in ABBank, CAO concluded that: i. There are preliminary indications of harm related to the Lower Sesan 2 project, particularly in regard to the affected communities’ living conditions, livelihoods, cultural sites, and safety; ii. IFC may not have complied with its environmental and social policies, specifically those related to conducting a pre-investment review and monitoring the E&S commitments contained in IFC’s legal agreement with ABBank, as ABBank was required to apply IFC’s environmental and social requirements to its investment in EVNI and consequently to the Lower Sesan 2 hydropower project.; iii. The Alleged harm to the complainants is plausibly linked to IFC’s potential non-compliance.

Regarding Vietinbank, CAO found there was not sufficient evidence to conclude that IFC’s financial relationship with Vietinbank provided a basis for a compliance investigation regarding the Lower Sesan 2 hydropower project.

The Compliance Appraisal report is available under the “Case Document” section of this page.

CAO Compliance Function will conduct a compliance investigation of IFC’s investment in ABBank related to the issues raised in the complaint.

Status

The compliance appraisal process has been completed. The case is now under compliance investigation.

Status as of December 08, 2022.

Case Documents

  • Assessment

    Assessment Report(s)
    Assessment Report - Cambodia FIs
    Jul 06, 2022
    English
    Assessment Report - Cambodia FIs
    Assessment Report - Cambodia FIs
    Jul 06, 2022
    Khmer - ខ្មែរ
    Assessment Report - Cambodia FIs
  • Appraisal Report (s)
    Compliance Appraisal Report - Cambodia: Financial Intermediaries 01-03
    Nov 18, 2022
    English
    Compliance Appraisal Report - Cambodia: Financial Intermediaries 01-03
    Compliance Appraisal Report - Cambodia: Financial Intermediaries 01-03 (Khmer)
    Nov 18, 2022
    Khmer - ខ្មែរ
    Compliance Appraisal Report - Cambodia: Financial Intermediaries 01-03 (Khmer)
    Terms of Reference
    Terms of Reference - Compliance Investigation - Cambodia: Financial Intermediaries 01-03
    Dec 08, 2022
    English
    Terms of Reference - Compliance Investigation - Cambodia: Financial Intermediaries 01-03
    Terms of Reference - Compliance Investigation - Cambodia: Financial Intermediaries 01-03 (Khmer)
    Dec 08, 2022
    Khmer - ខ្មែរ
    Terms of Reference - Compliance Investigation - Cambodia: Financial Intermediaries 01-03 (Khmer)