Cambodia: Sugarcane land grabs
Phnom Penh Sugar Concessions
Inclusive Development International and our partner Equitable Cambodia are supporting nearly 700 families in Cambodia who were forcibly displaced to make way for a massive sugar plantation in Kampong Speu province.
In January 2014, two confidential social and environmental assessment reports leaked to Inclusive Development International revealed that ANZ Royal Bank provided significant financing to Phnom Penh Sugar Company, which owns and operates the controversial sugar plantation and refinery in the Cambodian province of Kampong Speu. ANZ Royal is a controlled entity of the Australia and New Zealand Banking Group Ltd. (ANZ), the third largest bank in Australia. ANZ confirmed its financing of Phnom Penh Sugar in a meeting with Inclusive Development International, Equitable Cambodia and community representatives on January 19th and the story was exposed several days later on the front pages of Australia’s The Age and Sydney Morning Herald newspapers.
At the time ANZ gave the green light for the deal, Phnom Penh Sugar and its sister company Kampong Speu Sugar Co. Ltd. were embroiled in a conflict with hundreds of families in the Thpong and Oral districts of Kampong Speu province, where their sprawling sugar plantation was established by seizing homes, rice fields, orchards, grazing land and community forests relied upon by local farmers in at least 21 villages.
Phnom Penh Sugar Co Ltd. received approval from the Cambodian government for an economic land concession of approximately 9000 ha in Thpong district in February 2010. On the same date, Kampong Speu Sugar Co. Ltd. was awarded an adjacent ELC of 9052 ha in Oral district. The adjoining concessions are registered to the notorious Cambodian Senator and tycoon Ly Yong Phat and his wife Kim Heang.On March 21, 2011, Prime Minister Hun Sen signed a sub-decree allowing land in the Oral Wildlife Protected Area to be reclassified and the Kampong Speu Sugar concession to be expanded by 4,700 ha. This brought the total landmass of the adjoining concessions to over 23,000 ha – more than twice the size permitted under the Cambodian Land Law.
The twin concessions were granted without adherence to other legal requirements under Article 4 of Sub-decree No. 146 on Economic Land Concessions, including:
- Prior classification and registration of the land as State private land in accordance with the relevant legal procedures.
- Assurances that lawful landholders would not be displaced and that access to private land would be respected.
- Prior public consultations on the proposed project.
- Prior completion an Environmental and Social Impact Assessment.
Beginning in February 2010, the company began illegally seizing and bulldozing farm and residential land belonging to more than 1500 families in Thpong and Oral districts. Crops, including rice, mango, jackfruit, banana and coconut trees, were seized and cleared. An estimated 100 families in Pis and Plourch villages were forcibly evicted from their homes.
Community forest, legally recognized by the Forestry Administration, and protected State forest in the Oral Wildlife Sanctuary was also illegally cleared by the company, including protected State forest beyond the boundaries of the additional concession granted to Kampong Speu Sugar on March 21, 2011.
The company used the police and the military, including the former Khmer Rouge “Battalion 313”, to intimidate people into accepting inadequate compensation for their losses, including infertile replacement land. Battalion 313 is officially sponsored by Phnom Penh Sugar and has worked as a private army to protect its concession.
As a result of the loss of farmland, grazing land, crops and access to forest resources, affected people have been pauperized and faced with food insecurity. Many affected families have pulled their children out of school and have had no choice but to work with them on the sugar plantation, which for many people has become their only livelihood option since losing their productive resources.
Working conditions on the plantation are harsh. Pay is low and work is hazardous due to lack of compliance with workplace health and safety regulations. These safety hazards caused the deaths of several workers who were killed by cane-cutting machines and other plantation equipment in 2013-2014.
Phnom Penh Sugar’s activities have had significant environmental and health impacts on surrounding communities, including as a result of its dumping of waste water. Affected people claim that this dumping occurs once a year – most recently on January 19, 2014 – with the runoff flowing into community streams and other water sources, killing fish and affecting the health of villagers and their livestock
Affected people who have protested their dispossession have been jailed or otherwise subjected to legal harassment by the courts as a result of complaints filed by company staff. Others have been banned from working on the plantation along with their family members. There are currently 38 villagers facing criminal charges or court summons due to their protests.
ANZ’s Role and Social and Environmental Commitments
ANZ commissioned the consulting firm International Environmental Management Co, to prepare a “Phase 1 Environmental and Socio-economic Site Assessment” when it was considering financing Phnom Penh Sugar. The assessment report, dated November 23, 2010, could be described as a “whitewash”, in particular because it failed to mention the high-profile conflict that the company was having with local communities displaced by its land concessions, which had been reported extensively in the local English-language press in Cambodia throughout 2010. Nonetheless, the assessment did note a number of social and environmental concerns, such as encroachment of the land concession into the protected Phnom Aural Wildlife Sanctuary. Of particular significance was its recommendation to “conduct a detailed impact assessment in the project area according to the assessment guideline provided by the Equator Principles and IFC Performance Standards.” This recommendation was rated “high” in terms of “urgency to address impact.”
ANZ evidently proceeded with the financing of Phnom Penh Sugar without ensuring that such assessment would be conducted, or that social and environmental risks identified would be mitigated.
This significant omission, and the decision to proceed with financing of PPS despite the well-documented concerns, is at odds with the corporate image that ANZ is at pains to project of an ethical financial institution.
ANZ states on its website that it commits to “respect and promote human rights in the way [it] does business.” ANZ states that this commitment is “supported by clear ethical standards set in in the Code of Conduct and Ethics, Group policies and [its] support for globally-recognized standards which aim to help ensure [it] avoid[s] violating human rights or being complicit in human rights abuses.” These ethical standards are purportedly embedded into its business practices, including contracts, agreements and due diligence processes. ANZ states that it “take[s] measures to ensure that [it does] not become associated with or inadvertently support human rights violations by the organization or projects [it supports].”
In its Forestry and Forests Policy, ANZ states that “as a minimum, [ANZ] will work with [its] customers to ensure compliance with environmental laws and regulations.”
ANZ is a signatory to the Equator Principles (EP), a risk management framework adopted by financial institutions “to provide a minimum standard for due diligence to support responsible risk decision-making.” As such, ANZ commits to implementing the EP in its internal environmental and social policies, procedures and standards for financing projects, and to not providing Project Finance or Project-Related Corporate Loans to projects where the client will not, or is unable to, comply with the EP.
On October 6, 2014, IDI and Equitable Cambodia filed a complaint against ANZ to the Organization for Economic Cooperation and Development (OECD). The complaint was lodged on behalf of 681 families who were forcibly displaced and dispossessed by Phnom Penh Sugar. The complaint details widespread violations of human rights, including forced evictions, military-backed land seizures, destruction of crops and property, arbitrary arrests and intimidation of villagers and the widespread use of child labour. It argues that ANZ breached its responsibilities under the OECD Guidelines for Multinational Enterprises by contributing to these abuses through their actions and omissions and failing to take reasonable measure to prevent or remediate them.
ANZ severed its ties with Phnom Penh Sugar in July after the company was encouraged to repay its loan prematurely. The bank now asserts that, because it is no longer a financier to the sugar firm, it has no responsibility for remediating the impacts of the project to which it contributed between 2011 and 2014. However, Inclusive Development International and Equitable Cambodia argue in the complaint that ANZ contributed directly to Phnom Penh Sugar’s illegal actions and profited from those actions, so it has an ongoing responsibility to provide reparations to those affected.
In October 2018, Australia’s National Contact Point for the OECD found that ANZ had violated its own policies and the OECD Guidelines by financing Phnom Penh Sugar. In a rare rebuke of a commercial bank, the National Contact Point said the human rights risks of doing business with the sugar company “would likely have been readily apparent” to ANZ. The Australian government body called on the bank to strengthen its due diligence systems and instigate “methods to promote and demonstrate internal compliance with its own stated corporate standards with respect to human rights.” It also recommended that ANZ establish a grievance resolution mechanism “as a way of demonstrating that its actions are consistent with community expectations around the accountability of multinational enterprises in this area.” ANZ was requested to report back to the Australian National Contact Point on its actions in response to each of these recommendations in 12 months.
The complaint can be found here.
The National Contact Point’s findings can be found here.
Mitr Phol Concessions
Inclusive Development International, together with Equitable Cambodia and Licadho, have been supporting 799 families in Oddar Meanchey province, who were forcibly displaced and dispossessed to make way for sugar plantations owned by Thai sugar giant, Mitr Pohl Group. We have assisted the communities to file complaints against Mitr Phol with the Thai National Human Rights Commission and the Complaint Resolution Mechanism of Bonsucro, a multi-stakeholder sustainability initiative for sugarcane to which Mitr Phol belongs.
In late 2013, the Coca Cola Company disclosed that Mitr Phol was one of its top three global suppliers. At the same time, Coca Cola has committed to “zero tolerance for land-grabbing” in its supply chain. We have called upon Cola Cola to honor its pledge to use its leverage with Mitr Phol and take concerted action to bring about redress for those affected.
In March 2015, all three Mitr Pohl land concessions were cancelled and the company withdrew from its operations in Cambodia. It has yet to compensate and rehabilitate the families whose lives were destroyed as a result of its business activities in Cambodia between 2008-2015.
In January 2008, the Ministry of Agriculture, Forestry and Fisheries (MAFF) granted three 70-year economic land concessions (ELCs) for industrial sugarcane production in the Samrong and Chongkal districts of Oddar Meanchey province. The concessions were granted to three companies directly linked to Mitr Pohl: (1) Angkor Sugar Co. Ltd., (2) Tonle Sugar Cane Co. Ltd., and (3) Cane and Sugar Valley Co. Ltd.
The three concessions together total more than 19,700 hectares and are all clearly connected. Conscious of the illegality of owning concessions larger than 10,000 hectares, the company issued a statement in 2012, explaining that “Mitr Phol owns one company and is partnering with two other companies not owned by Mitr Phol.” Nevertheless, all three companies applied for the concessions on the same day, received approval from the Council of Ministers on the same day (and in the same letter), and signed the concession contract on the same day. The directors of each of the three companies are or were all senior figures in Mitr Phol:
- Buntoeng Vongkusolkit (Managing Director),
- Krisda Monthienvichienchai (President), and
- Tat Wanakornkul (Vice-President).
According to a letter issued in 2007 by provincial authorities, 31 villages occupying an area of 4,500 hectares in three communes were located within the boundaries of the proposed concessions. Community representatives report that in May 2007, the land concessions were demarcated and villagers were warned to stop using the land that overlapped with the concessions. In April 2008, the company started clearing the land.
Throughout 2008-2009, more than 800 smallholder families in Kon Kriel commune were forced to give up their land for the Angkor Sugar concession. Affected households lost extensive rice fields, plantation/orchard land, and grazing land as well as the associated crops that sustained their livelihoods. Crops including rice, watermelon, fruit, vegetables, maize, cassava, sweet potatoes, and soybean were lost. Sampled households interviewed by Equitable Cambodia lost five hectares of rice fields on average. Annual market-related losses from rice crops averaged $1,570 per family. Compensation provided for these losses was generally a plot of inferior land that was much smaller than what they lost and often already owned by others.
Common property resources, including community-managed forests, were also lost or degraded as a result of Mitr Phol’s plantation development. The Angkor Sugar concession effectively reduced the size of the pending Ratanak Rukha / Rattanak Sambak Community Forest from 28,772 to 12,872 hectares, affecting the livelihoods of thousands of people in 16 villages. The company has engaged in extensive illegal logging of old growth, high-value timber within the concession.
Water has also become less available – and more dangerous to human health – as local water resources have been blocked, polluted, or covered over with earth to meet plantation requirements. Fish are now scarcer and residents can no longer find edible water plants such as morning glory and lily that used to grow locally.
The most grave human rights violations occurred in O’Bat Moan village in Kon Kriel commune, which was entirely destroyed to make way for Mitr Phol’s plantations. In April 2008, 154 homes in the village were forcibly demolished by Angkor Sugar Company staff under the guidance of local authorities. Further evictions occurred in October 2009, when around 100 homes were burned to the ground by approximately 150 police, military police and hired demolition workers. Most affected families lost all of their possessions during the evictions and were left landless and homeless. Even their rice crops, which they were about to harvest, were reportedly looted by company staff and security forces, leaving them without essential food and income in the immediate aftermath of the evictions. These forced evictions were preceded by arrests and an assault on the former village chief. Two community leaders were sentenced to two years in jail on charges of ‘clearing State forest’, while two others were released after serving over six months in pre-trial detention. One was pregnant at the time and gave birth during her eight months of imprisonment.
Only 14 families from O’Bat Moan village received compensation in the form of a 1 ha plot of forested land in a remote area. The shelters that these families have rebuilt there are rudimentary and do not provide sufficient protection against the elements. They lack access to sanitation and drinking water. Transportation is difficult to arrange, time consuming, and costly due to the remote location and poor conditions of the access road. Thus, access to health care, education and the outside community is severely limited. The closest school, for example, is 10 kilometers away.
Many affected people resorted to illegal migration to Thailand after they lost their land to the sugar concessions. Those who remained have had no choice but to work as day laborers on the sugar plantations, where work is irregular, conditions are poor and pay is generally insufficient to enable households to make ends meet.
The facts indicate that Mitr Phol colluded with Cambodian authorities to breach a host of Cambodian laws and regulations, including the Constitution, Land Law, Forestry Law, Sub-Decree on Economic Land Concessions, Labor Law, Penal Code and Civil Code, as well as Cambodia’s international human rights treaty obligations.
The company’s acts and omissions also violate the UN Guiding Principles on Business and Human Rights, which hold that businesses must respect the Universal Declaration on Human Rights, ensure they are not involved in violations of human rights, and provide an effective remedy to people whose rights have been violated as a result of their business activities. These responsibilities apply to business activities no matter where they occur, and include a responsibility to conduct human rights due diligence, particularly in situations where there is a significant risk of human rights violations, such as involvement in economic land concessions in Cambodia.
Coca-Cola’s Commitments on Land Rights and the Mitr Phol Case
In November 2013, the Coca-Cola Company issued a statement in response to Oxfam’s Behind the Brands Campaign, acknowledging its responsibility to take action and use its influence to help protect the land rights of local communities affected by its sugar suppliers. The soft drink giant committed to zero tolerance for land grabbing in its supply chain. Specifically, the company committed to the following steps:
- Conduct third-party social, environmental and human rights assessments of its suppliers, beginning in Brazil, Colombia, Guatemala, India, Philippines, Thailand and South Africa.
- Disclose within three years all sourcing countries for cane sugar and the names of all its direct cane sugar suppliers (Mitr Phol was disclosed at the time as one its top three cane suppliers globally).
- Adhering to the principle of Free, Prior and Informed Consent across its operations and requiring its suppliers to adhere to this principle.
- Requiring respect for and prohibition of the violation of the land rights of communities and traditional peoples in its Sustainable Agriculture Guiding Principles.
- If a supplier fails to uphold any aspect of the SGP requirements, the Coca-Cola Company will “work with the supplier on corrective action. If such action is not taken, the supplier relationship will be terminated.”
Inclusive Development International and other members of the Clean Sugar Campaign coalition wrote to Coca-Cola to applaud the company on its commitment and urge it to implement the pledge with respect to Mitr Phol by taking the following steps:
- Conducting a credible and transparent third-party social, environmental and human rights impact assessment of Mitr Phol’s operations in Cambodia.
- Working with Mitr Phol to develop a time-bound remedial action plan, based on the findings of this assessment, meaningful consultation with the affected people and in accordance with IFC Performance Standard 5.
- Notifying Mitr Phol that if it does not cooperate in this process, the supply relationship will be terminated.
While Coca-Cola took some initial steps to investigate the allegations and engaged with Mitr Phol on the concerns, it has failed to use its leverage to compel the company to provide redress to the victims in Cambodia. More than three years after bringing the issue to Coke’s attention, the beverage giant has still not announced a termination of its supply relationship with Mitr Phol and the company has ignored letters requesting an update from Inclusive Development International.
On January 31, 2011, a complaint was submitted on behalf of affected communities to Bonsucro, a multi-stakeholder ‘sustainability initiative’ for sugarcane that Mitr Phol had joined. The complaint details widespread violations of Cambodian law, human rights and the core principles of Bonsucro’s Code of Conduct. The complaint was accepted as within the remit of Bonsucro’s Complaints and Grievances Committee (CGC) and the organization attempted to establish a Complaints Resolution Mechanism to “resolve the complaint in a manner that is mutually agreeable to all parties involved.” However, rather than engaging in the complaint resolution process, Mitr Phol withdrew from its membership in Bonsucro in June 2011.
In May 2013, local NGOs filed a complaint with the Thai National Human Rights Commission on behalf of 602 families alleging that Mitr Phol’s Cambodian subsidiaries are implicated in serious human rights violations in relation to its land concessions in Oddar Meanchey. The complainants called upon the Commission to recommend appropriate remedies, including return of forcibly seized lands and payment of damages to victims for abuses they suffered due to the company’s actions or negligence.
In October 2015, the Thai National Human Rights Commission issued its investigation report, finding Mitr Phol Group in serious breach of its responsibility to respect human rights under the United Nations Guiding Principles on Business and Human Rights. Importantly, the Commission found that, although MPG has since ceased its operations in Cambodia and relinquished its economic land concessions there, the company has an ongoing responsibility to provide compensation and other appropriate remedies for the losses and human rights impacts suffered by people in Bos, O’Bat Moan, Taman, Trapaing Veng and Ktum villages as a direct result of its previous business activities
In June 2015, Mitr Pohl quietly rejoined Bonsucro but was not required to reengage in the complaint resolution process, despite an express written commitment in 2012 by the then-chair of the Complaints and Grievances Committee that engagement in the resolution process would be a condition of readmission should the company choose to join Bonsucro again.
In light of this development, in February 2016, IDI, Licadho and Equitable submitted a new complaint to Bonsucro on behalf of 799 families from five affected villages. The complaint requests that Bonsucro appoint a competent and impartial mediator to attempt to bring about a resolution of the case through the provision of adequate compensation to affected households, and if such a resolution cannot be reached, to expel Mitr Phol from the organization for breaching its Code of Conduct. This complaint is currently pending.
In April 2018, frustrated by Bonsucro’s inaction, the families filed a landmark class-action lawsuit against Mitr Phol in the Thai courts. Filed by two plaintiffs representing a class of approximately 3,000 people from five villages, the complaint was the first ever class-action lawsuit filed in the Thai courts by plaintiffs from another country for abuses committed by a Thai company outside of Thailand. In September 2018, the Thai court ordered the parties to attempt mediation. This failed, because Mitr Phol refused to engage with the process. The case is now set to enter formal litigation.
Media and Updates
Inclusive Development International and Equitable Cambodia file OECD complaint against ANZ Bank for financing massive land grab – Inclusive Development International and Equitable Cambodia, October 7, 2014
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