A complaint against six microfinance institutions and banks in Cambodia that are funded by the International Finance Corporation (IFC) will move into the Compliance stage, an important step toward a much-needed investigation into years of abuses and violations of IFC performance standards by microloan providers in Cambodia.

The Compliance Advisor Ombudsman (CAO) of the IFC has announced that the complaint, filed in February this year by LICADHO and Equitable Cambodia (EC) on behalf of affected Cambodian borrowers, will move to Compliance following the decision of some complainants, and after other complainants and financial institutions did not reach a mutual agreement to enter into dispute resolution.

“This is an important step toward accountability, after years of neglect and lack of oversight by the IFC, and years of abuses by these MFIs and banks” said Naly Pilorge, outreach director of LICADHO. “Cambodian borrowers are suffering every day, as demonstrated by recent German government-funded research which found a debt-driven land sale occurs once every 16 minutes in Cambodia. It is long past time for the IFC to undertake an independent investigation into the scale of these abuses, and to create a plan to rectify the harms caused by their investments.”

The IFC clients include ACLEDA, Hattha Bank, Sathapana, Amret, LOLC, and Prasac. The complaint demonstrates these clients violated the IFC’s “Exclusion List” of prohibited investments involving child labour and violations of the land rights of Indigenous Peoples without informed consent, as well as infringing on the following IFC performance standards:
▪ Performance Standard 1: Assessment and Management of Environmental and Social Risks and Impacts
▪ Performance Standard 2: Labour and Working Conditions
▪ Performance Standard 4: Community Health, Safety and Security
▪ Performance Standard 5: Land Acquisition and Involuntary Resettlement
▪ Performance Standard 7: Indigenous Peoples

“We believe that the first ever CAO investigation into the MFI sector in Cambodia will lead to real relief and compensation for borrowers who have been harmed by the IFC’s investments here in Cambodia,” said Eang Vuthy, executive director of Equitable Cambodia. “Millions of Cambodians are still drowning in debt, and real reform is needed to put an end to predatory practices and human rights abuses in the sector.”

The Compliance stage begins with an appraisal, determining whether further investigation is warranted. If warranted, an investigation is conducted by the CAO, which then issues findings and recommendations to the IFC and monitors any remedial action plans created by IFC management.

For more information, please contact:
▪ Eang Vuthy, Executive Director of Equitable Cambodia, on Signal at (+855) 12 791 700 (English and Khmer)
▪ Am Sam Ath, Operations Director of LICADHO, on Signal at (+855) 10 327 770 (Khmer)
▪ Pilorge Naly, Outreach Director of LICADHO, on Signal at (+855) 12 214 454 (English)

PDF: Download full statement in English - Download full statement in Khmer
MP3: Listen to audio version in Khmer