| CASE FILE | |
| Location: | Cambodia |
| Project: | Railway restoration |
| Key concerns: | Physical and economic displacement without adequate compensation |
| Key financiers: | Asian Development Bank (ADB), Australian Agency for International Development (AusAID) |
| Our partners: | Equitable Cambodia |
| Outcomes: | Multi-million dollar reparations package for affected communities, improved conditions at resettlement sites and increased employment opportunities. |
In 2006, the Asian Development Bank (ADB) approved a loan to the Cambodian government aimed at rehabilitating the country’s railway system. The Rehabilitation of the Railway in Cambodia Project was financed primarily through this USD 84 million concessional loan, as well as by the Australian Agency for International Development (AusAID), which contributed USD 23 million in aid. The project resettled thousands of families living alongside the railway, leaving them with unmanageable debt, loss of income, inadequate housing and lack of access to basic services.
In 2011, Inclusive Development International began working with the involuntarily resettled families who had been made to bear the externalized costs of this major infrastructure project, to demand reparations for their losses and hardship. Working closely with our partner Equitable Cambodia, Inclusive Development International supported the communities to advocate for the full respect of their rights under ADB safeguard policies, Cambodian law and international human rights law. This included filing complaints with ADB’s Accountability Mechanism and the Australian National Human Rights Commission in 2012.
In February 2014, 17 months after finding the complaint eligible, the ADB Accountability Mechanism’s Compliance Review Panel published its final report, which found serious noncompliance with ADB policies and called on the bank to “undergo a mind shift in the treatment of resettlement, environment, and public disclosure and consultation.” The Panel recommended establishing a $3-4 million compensation deficit payment fund and several other remedies to bring the project into compliance. Although ADB management objected, after intensive lobbying by community representatives with support from Inclusive Development International and Equitable Cambodia, the ADB Board approved the findings and ordered management to develop a remedial action plan to implement the Panel’s recommendations. The Panel monitored implementation for five years, publishing annual reports to track the bank’s progress. By the end of the whole process, the Panel found that community members were significantly better off than when the complaints were filed.
The complaint also forced ADB management to reckon with systemic issues that had contributed to its failure to ensure a rights-respecting resettlement process as part of the original project.
The railway restoration was a major infrastructure project funded by the Asian Development Bank and AusAID, beginning in 2006. More than 4000 families whose homes and small businesses stood in the path of the rail lines and planned railway stations we involuntarily resettled as a result of the project.
As part of its loan agreement, the ADB and the Cambodian Government were required to resettle the families in accordance with the ADB’s Safeguards Policy Statement (2009), including its Policy on Involuntary Resettlement in relation to these families. The central principle of the ADB’s involuntary resettlement policy is to provide sufficient compensation and assistance to ensure that displaced people are made at least as well-off after resettlement as compared to their previous living standards, with poor and vulnerable people supported so that their lives are improved. The Cambodian government was also bound by international law to ensure the project fully respected and protected the human rights of these families. It was and is obliged to use development projects such as this as an opportunity to improve the standard of living of affected people who were previously living in sub-standard conditions. This obligation includes guaranteeing that people have access to adequate housing, including all basic services and facilities, upon resettlement. As financiers of the project, the ADB and the Australian Government had a duty to monitor, supervise and support the resettlement process to ensure compliance with the policy and human rights obligations.
The reality, however, was that the Cambodian Government, the ADB and AusAID, routinely ignored these policy and legal obligations, as well as the warnings and evidence provided by affected communities and NGOs. As a result of these transgressions, many resettled families faced destitution.
The report, DERAILED, published by NGO Bridges Across Borders Cambodia (now Equitable Cambodia) in February 2012, which was authored by Inclusive Development International Legal Director Natalie Bugalski, found that affected families faced threats and intimidation during the resettlement process and that compensation amounts were well below the cost of a basic adequate house in Cambodia. Some of the resettlement sites were too far away from former residences, urban centers and livelihood opportunities. This economic displacement of resettled families led to a drop in household incomes, exacerbating the financial stress caused by the payment of inadequate compensation. Promised income restoration support programs only commenced months after resettlement took place and were piecemeal and ineffective. Families were forced to assume unmanageable debt burdens to cope with their displacement and faced the threat of losing their plots of land at resettlement sites to creditors as a result. Many said that despite knowing the risks of indebtedness they felt they had no choice but to borrow to meet the basic needs of their families, including food.
Inclusive Development International and Equitable Cambodia submitted a complaint to the Australian Human Rights Commission (AHRC) in October 2012, on behalf of 30 affected families. The extra-territorial complaint alleged that the Australian Government failed to uphold its international human rights obligations by providing significant funding to the railway project without taking sufficient measures to safeguard against breaches of human rights. In addition to the direct reparations for breaches of human rights of affected persons, the complaint called upon AusAID to adopt human rights safeguard policies and practices including a requirement to conduct human rights impact assessments for all projects to which it is considering providing support. The Commission declined to conduct an inquiry into the complaint because it found that the complainants were not subject to the Commission’s jurisdiction due to the lack of effective control by Australia over those alleging human rights violations resulting from the Railway project in Cambodia. In our opinion, the Commission took a conservative and outmoded view of jurisdiction, which failed to reflect the current and prevailing jurisprudence on extra-territorial human rights obligations.
The complaint did serve, however, to raise the profile of the case in Australia, and placed significant pressure on the Australian government to do more to remediate the harms that the affected families had experienced. Following the complaints, AusAID provided a two million USD grant to bolster the project’s Income Restoration Program.
We also submitted a request for investigation of the resettlement process to ADB’s internal accountability mechanism, the Compliance Review Panel (CRP), in August 2012 on behalf of affected families. The complaint described a litany of problems and non-compliance with the ADB’s resettlement safeguards in both the design and implementation of the Railway Rehabilitation Project that inflicted hardships on thousands of poor families, including the drowning death of two children at a poorly equipped resettlement site in Battambang. It called for a number of remedies from the ADB directly, including reimbursement for the actual costs of replacing lost assets and incomes, at least enough compensation to build an adequate home and meet basic needs, debt relief, adequate basic services at the relocation sites, effective livelihood restoration programs and support to get the displaced children back into school.
After a 17-month investigation, the CRP issued a scathing report, which found that the ADB failed to comply with its policies and procedures, leaving a substantial number of affected households worse off and impoverished. The panel concluded that there were:
The CRP found that the material harm that was created from these circumstances were the direct result of ABD’s failure to comply with its relevant operational policies and procedures. Specifically, it concluded that ADB’s “inadequate attention to addressing the resettlement, public communications and disclosure requirements of its own policies… led to significant yet avoidable adverse social impact on mostly poor and vulnerable people.” The Panel emphasized the need for an “urgent, firm, and clear message to ADB Management that resettlement, environmental, and public disclosure issues should be taken seriously and accorded the priority consideration they deserve.” It found that in this case, as in other cases that it had reviewed, these issued were treated by ADB as “mere add-ons.” The Panel concluded that: “ADB operational, sectoral, and regional staff must undergo a mind shift in the treatment of resettlement, environment, and public disclosure and consultation. Their perspective must be based on the recognition already existing in ADB’s safeguard policies that involuntary resettlement is a development opportunity, intrinsic to achieving the developmental goals of projects.”
To redress the harm caused to affected households, in January 2014, the CRP issued their findings to the board along with seven substantial recommendations to bring the project into compliance with ADB policies, including:
In January 2014, ADB’s Board of Directors approved the Panel’s findings and slightly modified recommendations (the Board did not adopt the final recommendation regarding safeguards for the development of a freight facility because of a pending change in project scope that was requested by the borrower). Inclusive Development International, Equitable Cambodia and the affected communities who brought the complaint welcomed the CRP’s report and the Board’s decision and lobbied ADB Management to develop and implement a robust remedial action plan to operationalize the decision.
In August 2015, 22 representatives of families remaining along the railway tracks filed another complaint to the CRP with support from Inclusive Development International and Equitable Cambodia. The complaint presented new evidence of ADB acts and omissions that threaten material harm to the complainants which were not previously addressed by the CRP in its earlier investigation. After conducting an initial assessment, including a site visit, the panel found that the second complaint was not eligible for further investigation because the issues had already been considered by the panel in its previous compliance review report. However, the panel stated the “complainants grievances are real and persistent” and that “they need to be – and can be – adequately and urgently addressed.” According to the panel, there was still “prima facie evidence of noncompliance with ADB’s operational policies and procedures and prima facie evidence that this noncompliance with ADB policies has led to harm or is likely to lead to future harm.” The panel called for these grievances to be dealt with under the existing remedial action plan that was adopted by ADB’s board following the previous investigation.
The case was processed under the ADB’s 2003 Accountability Mechanism policy, which empowered the Compliance Review Panel (CRP) to make those recommendations. (This power was revoked under the 2012 Accountability Mechanism Policy, which places the responsibility to define remedial actions squarely in the hands of Management and requires the agreement of the borrower on those actions.)
The CRP’s recommendations, which were informed by its deep and impartial examination of the harms and areas of non-compliance and then approved and made binding by the ADB Board, provided a critical high-level framework for remedial action. Given ADB Management’s extensive denial and pushback on the CRP’s findings (as demonstrated in its Management Response to the CRP investigation report), it is clear that Management would have never proposed such robust remedial measures if left to its own devices. This was further apparent in the remedial action plan that Management developed in response to the CRP recommendations, which was developed in close consultation with the Cambodian government, but reflected almost no effort to consult with the Complainants and affected people. The plan that Management produced was therefore inadequate on many different levels.
The CRP reviewed the Management’s proposed action plan and provided feedback before it was submitted to the Board for approval. Following the Management’s submission of the action plan to the Board, the CRP sent further comments to the Board Compliance Review Committee, noting , “several aspects of the plan that fell short of the Board-approved recommendations.” Inclusive Development International and Equitable Cambodia also conducted a detailed analysis of the action plan and found that it would not fulfill the Board-approved-recommendations and bring the project into compliance.
The CRP’s recommendations not only created a framework within which Management and the borrower were required to formulate the remedial action plan, but it also formed an impartial and authoritative benchmark on which that action plan could be assessed and revised.
The CRP’s recommendations, and the subsequent opportunity for the Panel and the Complainants and their NGO advisors to comment on Management’s action plan and then to monitor its effectiveness against the CRP recommendations, led to the implementation of remedial actions that in all likelihood would never have occurred had the CRP not been able to issue recommendations in the first place. This resulted in extensive material improvements in the well-being of affected households through additional compensation payments, debt relief and enhanced livelihood improvement programs, and improvements to the infrastructure, services and conditions at project-sponsored resettlement sites.
Following the commencement of this corrective action plan, the CRP conducted an annual review to assess the implementation status of each recommendation. By the 5th and final monitoring period, the CRP found that its 1st and 2nd recommendations regarding establishment of a $3-4 million compensation deficit payment scheme and improving facilities at resettlement sites, had been fully implemented. Notably, the CRP found that affected households had all received supplementary compensation to close the gaps that the Panel found between their entitlements and what they had received at the time of displacement. The CRP also found that significant improvements had been made to the infrastructure and basic services at the five project-sponsored resettlement sites, including access to piped water, which was a major deficiency at the time of resettlement, though there were ongoing concerns about regarding solid waste management at the Phnom Penh site.
The panel was unable to confirm whether the 3rd recommendation, on project-level grievance mechanisms, had been fully put in place because the project had already closed by this time, but it found that recommendation 4, regarding capacity-building for the Cambodian authorities responsible for resettlement, had been fully implemented.
The panel’s 5th recommendation calling for an ADB-supported debt workout scheme for households who became indebted as a result of the flawed resettlement process was only partially implemented in the CRP’s opinion. A debt workout scheme was implemented through an ADB Technical Assistance contract and it provided some debt relief to the families, but it excluded all housing construction debt from scheme, which the CRP found was unreasonable.
The Enhanced Income Restoration Program, which was implemented to address the CRP’s 6th recommendation, included a vocational training program and vocational placement strategy program, support for establishment of community micro-enterprises and individual small businesses, and ongoing support to community savings groups. The final evaluation of this program indicated that affected households had been achieve an overall 69% increase in their average incomes between 2018 and 2019. The CRP found that there had been “substantial improvements in affected household circumstances for a very significant majority of affected households” over the implementation period of the Enhanced Income Restoration Program, which it attributed to the ADB technical assistance contract.
Unfortunately, despite fulfilling many of the requirements set forth in the CRP report, remedial actions still fell short. In many cases, this was a result of ADB relying on the Cambodian government to take action, including compensating affected households for their income losses and relieving debts incurred by families in order to build adequate replacement housing, which the government failed to do.
In its draft report, the CRP had boldly recommended that a remedial compensation fund be set up by ADB directly, but the final report was changed at the behest of ADB’s General Counsel and replaced with a recommendation that “ADB require [the Government of Cambodia]” to establish such a fund. We found this change to represent a troubling disconnect in the compliance review process. While the CRP’s investigation revealed that ADB had significantly contributed to the harms experienced by affected people, because of its extensive non-compliance with ADB safeguard polices in the design, appraisal, monitoring and supervision of the project, the recommendations now placed the onus of remediation entirely on the borrower. This effectively meant that that ADB and its staff faced no consequences for the gross negligence that it had displayed, and that it did not share the burden of rectifying the harms that resulted from that negligence with the Cambodian government.
Unsurprisingly, the Cambodian government balked at the first recommendation and initially only agreed to review the detailed measurement survey and contracts for each affected household and pay compensation deficits for property losses and transition allowances. The government refused to pay affected households compensation for additional income losses. With respect to recommendation 5, the government rejected the proposal to set up a debt workout scheme but agreed that the ADB could develop an alternative scheme with other actors. The community and NGOs put a lot of effort into lobbying for action on these two points, in accordance with the Board’s directives, and eventually the government agreed to pay additional compensation to relocated households, but it still refused to endorse the debt workout plan, leaving the ADB to work with a microfinance institution to put the plan into practice, which was only partially effective.
Had the ADB accepted responsibility for its role in contributing to the harms and contributed a commensurate amount of money toward remediation, this critical relief may have reached affected people more quickly and effectively.
Railway Families File Separate Complaint Against ADB Bank — The Cambodia Daily — August 31, 2015
Aus called out on railway — The Phnom Penh Post — May 16, 2014
We can't ignore Cambodia's railroaded poor — Inclusive Development International — May 14, 2014
ADB Says Aid Plan for Railway Evictees Still Under Negotiation — The Cambodia Daily — May 1, 2014
Government Agrees to Review of Railway Evictees — The Cambodia Daily — April 30, 2014
Railway leaves area in limbo — The Phnom Penh Post — February 12, 2014
ADB's failings in Cambodian resettlement plan — Deutsche Welle — February 12, 2014
ADB Waters Down Plans to Amend Mistakes in Cambodia — The Cambodia Daily — February 10, 2014
ADB Railway Project Made ‘Major’ Mistakes — The Cambodia Daily — February 8, 2014
Worse off than before — The Phnom Penh Post — February 7, 2014
ADB Admits Fault in Rail Project, Pledges Compensation — The Cambodia Daily — February 3, 2014
AusAID project 'abusing rights' — The Age — October 11, 2012
AusAID defends human rights concerns over Cambodian railways project — The Age — October 10, 2012
Rebuilding Cambodia's troubled railways — Australian Broadcasting Corporation — October 9, 2012
Propaganda mill at full tilt — Inclusive Development International — July 2, 2012
Toll Royal derails regional projects — Cambodia Trainspotter — May 1, 2012
PP Post: ADB Petition Response Provokes Villagers — Cambodia Trainspotter — April 19, 2012
Cambodian woman threatened with death: Ros Bopha — Amnesty International — April 13, 2012
Cambodian rail line to displace country's poor — Australian Broadcasting Corporation — May 13, 2011
Two child deaths linked to AusAID Cambodia project — The Age — November 1, 2010
