In a first for the financial sector, ANZ Bank provides remedy to families displaced by a Cambodian sugar project

In 2011, the Cambodian branch of Australian and New Zealand Banking Group Limited (ANZ) provided partial financing to the developer of a sugar plantation and refinery project in Cambodia, Phnom Penh Sugar, for the construction of a refinery. In 2014, civil society organisations Equitable Cambodia and Inclusive Development International brought an instance on behalf of Cambodian villagers against ANZ before the Australian OECD National Contact Point (NCP). (As I explain elsewhere, OECD NCPs are particularly interesting since they are quasi-judicial mechanisms that look at whether companies have met human rights-related expectations under soft law. OECD NCPs have the ability to assess whether companies are putting relevant policies and processes in place to meet their responsibility to respect human rights, as expected under the UN Guiding Principles on Business and Human Rights (UNGPs) and the OECD Guidelines for Multinational Enterprises.)

The plaintiffs state that 681 families living in the south-west of Cambodia (in Kampong Speu province) had been forcibly displaced and dispossessed of their land through this project. (Other concerns raised included arbitrary arrests and intimidation of villagers, the use of child labour and dangerous working conditions which have resulted in death). ANZ’s response was to end its relationship with Phnom Penh Sugar, a response which was criticised at the time. Oxfam Australia noted that this case “had become an emblematic case study, it exemplifies that reputational risk for banks exposed to land grabs remains ongoing until a fair outcome is reached.” Stakeholders remarked on the need for the bank, following soft law expectations, to stay engaged and seek to use its leverage to improve the situation for displaced villagers.

In 2018, the Australian NCP found that “it is difficult to reconcile ANZ’s decision to take on [Phnom Penh Sugar] as a client with its own internal policies and procedures—which appear to accord with the OECD Guidelines—as the potential risks associated with this decision would likely have been readily apparent.”

Following this, the Australian NCP’s newly-appointed Independent Examiner facilitated a conciliation meeting between the parties, which resulted in a unique agreement in February 2020. In this agreement, ANZ:

• acknowledges that its initial due diligence, before making the loan, was inadequate
• recognises the hardships faced by the affected communities caused by the land concession granted for the project
• agrees to contribute the gross profit it earned from the loan to help alleviate the hardships faced by the affected communities and support their efforts toward rehabilitation
• commits to reviewing and strengthening its human rights policies, including its customer social and environmental screening processes, and specific grievance mechanism accessible to affected communities

ANZ makes these commitments, while making clear that it is not legally liable for the adverse impacts arising from the land use concession and sugarcane project. This is another interesting example of a company making the distinction between legal liability and soft law responsibility when communicating publicly.

“ANZ agreeing to contribute the gross profit it earned from the loan to the affected families has created an important precedent for the banking sector and we congratulate ANZ on becoming a global leader regarding an agreement of this kind”                  

Australia Lyn Morgain, Chief Executive – Oxfam, ‘Important precedent’: ANZ pays Cambodian families hurt by project it funded (February 2020, The Sydney Morning Herald)

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