Lies, money and violence are the typical makings of a Hollywood blockbuster movie, and yet the same elements also comprise a new film released Monday uncovering the shady involvement of Deutsche Bank and the International Finance Corporation (IFC) with two Vietnamese rubber companies’ land grabbing operations in Laos and Cambodia.
The film, Rubber Barons, produced by Global Witness, a London-based organisation focused on resolving natural resource-related corruption and conflict in developing countries, is based on their report of the same name. Both film and report allegedly reveal the story of the controversial rubber industry in Vietnam and the air of secrecy and impunity that allows corporations to run destructive practices with the support of Lao and Cambodian government officials and international institutions recognised for ethical and sustainability standards.
According to Rubber Barons, “the International Finance Corporation and Deutsche Bank are financing the operations of Hoang Anh Gia Lai and the Vietnam Rubber Group, in violation of their own social and environmental commitments.”
Hoang Anh Gia Lai (HAGL), a private Vietnamese company valued at US$258 million on March 2013 by the Ho Chi Minh Stock Exchange, was originally a small furniture factory in 1990. But the company quickly grew and diversified “into timber and granite processing, and later into real estate and tourism.”
“However, it is the company’s investment in rubber plantations, projected to bring in annual profits of US$299 million from 2012, where it has opted to prioritise its investments,” the 49-page report adds.
Rubber is a prized commodity in Vietnam. In 2012, the country’s rubber plantations amounted to 834,000 hectares, making it the third biggest producer of natural rubber in the world, according to the report.
So far, as the report notes, HAGL has a total allocation of 81,919 hectares of land beyond Vietnam’s borders. “Of this, 47,370 hectares are in Cambodia, which has a legal limit of only 10,000 hectares per company.”
Similarly, state-backed Vietnam Rubber Group (VRG) and its affiliated companies, appear to have been allocated a total of 200,237 hectares of land, of which 161,144 hectares are in Cambodia. This suggests that VRG and its affiliates’ collective holdings are over sixteen times the legal size limit, says the report.
Global Witness explains that these exceeding amounts of land are in fact licensed economic land concessions (ELCs) from the Lao and Cambodian governments who have issued far more than their laws allow.
Without a culture of transparency and public social and environmental impact assessments, the two companies have been able to clear large tracts of intact forest areas, encroach on national parks, remove spirit forests and burial grounds of indigenous communities, and evict local residents without warning or consultation.
One of the villagers interviewed in Rubber Barons recounts: “I told the bulldozer driver not to clear my land and he stopped. The next day I returned to check and all of my land had completely disappeared. I went to meet the company people to complain, they said they do not know where my land is located.”
Such an incidence and activities go against the environmental and social standards of the IFC, the financing arm of the World Bank, whose investments require the application of these measures. It also violates the stance Deutsche Bank has taken in being a signatory to the UN Principles of Responsible Investing, the UN Global Compact and the Banking Environment Initiative.
In spite of this, Global Witness says, “The International Finance Corporation currently invests US$14.95 million in a Vietnamese fund which holds nearly five per cent equity in Hoang Anh Gia Lai.” And Deutsche Bank has 3.4 million shares in HAGL and 1.2 million shares in VRG member company Dong Phu.
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We’ve known for some time that corrupt politicians in Cambodia and Laos are orchestrating the land grabbing crisis that is doing so much damage in the region. This report completes the picture by exposing the pivotal role of Vietnam’s rubber barons and their financiers, Deutsche Bank and the IFC
Megan MacInnes, head of the land team at Global Witness
The report further implicates the IFC in stating it “denied any knowledge of HAGL’s public admission of illegality in its operations in Cambodia and Laos, when listing on London’s PSM [or Professional Securities Market] in 2011.”
A reason for this denial or the lax upholding of its sustainability framework is “because the performance standards were only introduced in April 2006 and because the IFC does not apply them retrospectively.” IFC has been involved with HAGL since 2002.
Investments made after 2006 are, thus, subject to “previous weaker safeguards” as part of a continuing agreement between the two parties, says the report.
This practice and other glaring evidence culled by Global Witness have not dissuaded HAGL and VRG; nor has the attempts of the international watchdog to seek resolution by presenting its report to the two companies in 2012. Land grabs by HAGL and VRG persist in Cambodia and Laos.
The operations of both HAGL and VRG have led to many communities suffering food and water shortages, impoverishment, poor employment conditions, livelihood loss, and human rights abuses due to violence. Rubber Barons cite press articles like those of the Phnom Penh Post describing villagers threatened and beaten up in a series of protests after losing their land to one of VRG’s rubber concessions.
Converting lands into rubber plantations has also contributed to the environmental devastation of forest ecosystems, especially with the alleged partnership with an illegal logging syndicate. The report says, “In April 2012, environmental activist Chut Wutty was murdered by members of Cambodia’s armed forces while investigating illegal logging.”
Global Witness, through its film Rubber Barons, is now calling for substantive action. They want the respective governments to be responsible and hold the two companies accountable before the law, as well as the financiers supporting their operations.
Megan MacInnes, head of the land team at Global Witness, says, “We’ve known for some time that corrupt politicians in Cambodia and Laos are orchestrating the land grabbing crisis that is doing so much damage in the region. This report completes the picture by exposing the pivotal role of Vietnam’s rubber barons and their financiers, Deutsche Bank and the IFC.”
One of the recommendations included in the report is to have G8 leaders pledge at the upcoming 39th G8 Summit in June “to regulate the overseas land-based investment activities of companies registered within their own countries.”
To learn more of the report and see the trailer of Rubber Barons, click here.
