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Report Finds Vietnamese Rubber Companies Behind Land Grabs

A screenshot of the Global Witness website on May 13, 2013, shows the release of the new report "Rubber Barons."
A screenshot of the Global Witness website on May 13, 2013, shows the release of the new report "Rubber Barons."
Two Vietnamese companies supported by the World Bank’s International Finance Corporation and by Deutsche Bank are behind many of the land grabs in Cambodia that have led to forced evictions and insecurity, the investigative watchdog Global Witness reports.

The two companies, Huang Anh Gia Lai and state-owned Vietnam Rubber Group, have worked with the government officials of both Cambodia and Laos who are “orchestrating the land-grabbing crisis that is doing so much damage in the region,” Megan MacInnes, head of Global Witness’ land team, said in a statement. “This report completes the picture by exposing the pivotal role of Vietnam’s rubber barons and their financiers, Deutsche Bank and the IFC.”

The 52-page “Rubber Barons” report is the result of a year-long investigation by Global Witness, which ran afoul of the Cambodian government in 2003 when it began reporting on illegal logging in the country. Global Witness has since reported extensively on the close ties between top government officials and the illegal timber trade, as well as corruption in Cambodia’s natural resources industry.

In the latest report, Global Witness says both Huang Anh Gia Lai, or HAGL, and the Vietnam Rubber Group, or VRG, must “urgently be held accountable” for leasing “vast tracts of land for plantations in Laos and Cambodia, with disastrous consequences for local communities and the environment.”

The Vietnamese companies are working in partnership with powerful business interests in Cambodia, Global Witness says. HAGL is working with a Try Pheap, in Ratanakkiri province, while two member companies of VRG—Dong Phu and Dong Nai—are working with the Seng Khieng company, according to the report.

Representatives from both companies denied the report’s findings, Global Witness said.

“Close ties to corrupt political and business elites provide them with impunity, deals are cloaked in secrecy and they are bankrolled by international finance such as Deutsche Bank and the International Finance Corporation,” according to the report. “Deutsche Bank has multi-million dollar holdings in both companies, while the IFC—the financing arm of the World Bank—invests in HAGL. These investments contrast starkly with both institutions’ public commitments to ethical and sustainable practices, as well as the World Bank’s core mandate to end poverty.”

The IFC has nearly $15 million invested in a Vietnamese fund that holds “nearly five percent equity in HAGL,” Global Witness says. Deutsche Bank has $4.5 million in shares in HAGL through a separate fund. It also has 1.2 million shares in a member company of the Vietnam Rubber Group, worth $3.3 million, the group says.

The two Vietnamese parent companies, through smaller subsidiaries, have amassed huge tracts of concession land, Global Witness says.
“HAGL and VRG’s ultimate ownership of these companies lies behind an intricate web of shell companies,” the group said in a statement. “This allows them to disguise the fact that they have massively exceeded Cambodia’s legal limit on land holdings.”
Deutsche Bank officials could not immediately be reached for comment. But in a response to Global Witness, quoted by the UK newspaper the Guardian, the bank said it was not “financing” the rubber companies but holds shares on behalf of investors.

IFC spokesman Hannfried von Hindenburg told VOA Khmer the IFC would study the Global Witness report carefully “and see what we can possibly do about it.”

“If something needs to be done, we would encourage the investment fund to do something,” he said.

VRG representatives in Phnom Penh could not be reached for comment. A HAGL representative immediately turned off the phone when asked for a reaction to the report.

Hean Vanhorn, deputy general of the agricultural department of the Ministry of Agriculture, said that the government so far has withdrawn economic land concessions from up to 30 companies for their failure to comply with investment conditions and laws.

He referred direct questions about the report to Chay Sokun, head of the planning and statistics department at the ministry. Chay Sokun turned off his phone when asked about the report.

Economic land concessions in rural areas have left many impoverished Cambodians without their lands or homes, leading to demonstrations, protests and violent clashes with security forces.

Meanwhile, the companies continue to make land deals that are harmful to local residents, Global Witness said.

“None of the villagers were consulted before the concessions were allocated,” MacInnes said. “In some cases villagers told us that their village chiefs or the commune chiefs or the local authorities were asked or were informed, but often times the communities were told about these concessions only after the contract had been signed.”

Taken together, land concessions exceed the legal limits of the Cambodian Land Law, which is only supposed to allow one company to have one concession of 10,000 hectares. But added together, HAGL has been granted nearly 50,000 hectares, while VRG has nearly 160,000 hectares, the report says.

All told, economic land concessions in Cambodia total more than 2.6 million hectares, mostly for rubber plantations, or about 73 percent of arable land, the report says. Satellite images provided by Global Witness show massive deforestation inside and outside land concession boundaries.

Global Witness recommends that the IFC and Deutsche Bank withdraw their investments in both parent companies within six months if the companies continue to engage in illegal logging.