Global Witness: IFC and Deutsche Bank Support Vietnamese Land Grabs

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Global Witness: IFC and Deutsche Bank Support Vietnamese Land Grabs

A new report reveals corruption in the Indochinese rubber industry.

Indochinese governments have faced fierce criticisms from their own people and abroad over land grabbing in recent years. But the response from leaders in Vietnam, Cambodia and Laos has been collective lip service while big corporations were allowed to go about their business.

Complex corporate structures layered by a myriad of red tape and rigid bureaucracies have conspired to hide the inner and sometimes illegal dealings that have resulted in thousands of farmers losing their land or being forced to sell at a pittance.

However, Rubber Barons, a report and film released this morning by the London-based environmental watchdog Global Witness, has gone a long way towards unraveling some of the corporate mysteries surrounding land grabbing by rubber producers in Vietnam.

According to the report, privately owned Hoang Anh Gia Lai (HAGL) and state-owned Vietnamese Rubber Group (VRG) acquired more than 200,000 hectares of land through a series of deals with the Lao and Cambodian governments that lacked transparency.

This deal was backed by the World Bank’s International Finance Corp (IFC) and Germany’s Deutsche Bank, resulting in widespread devastation to the environment and livelihoods of locals. The report noted these investments stand in stark contrast to both institutions’ public commitments on ethics and sustainability, as well as the World Bank’s core mandate to end global poverty.

“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,” said Megan MacInnes, Head of the Land Team at Global Witness. “This report completes the picture by exposing the pivotal role of Vietnam’s rubber barons and their financiers, Deutsche Bank and the IFC.”.

“Both companies are having severe impacts on the human rights of ordinary Lao and Cambodian citizens,” she added. “Often, the first time people learn of a plantation is when the company bulldozers arrive to clear their farms.”

HAGL was established in 1990 by Doan Nguyen Duc as a small furniture-producing factory at Pleiku in Vietnam’s Central Highlands during a logging boom. It soon diversified into timber and granite processing, real estate and tourism.

Nguyen Duc set up his own football club – HAGL FC – partnering with Arsenal FC from the Premier League. The company is Vietnam’s second largest property developer.

According to the report, Vietnam’s domestic rubber plantations covered 834,000 hectares in 2012, making it the third largest global producer of natural rubber, exporting to 50 countries, with China providing the biggest market for unprocessed rubber while the majority of processed rubber is shipped to the United States and Japan.

As a result, the economic reach and influence of HAGL and VRG had grown significantly, alongside the complaints.

“Local people’s testimony, detailed in Rubber Barons, describes the impact of these activities on their communities – increased food and water shortages, loss of livelihood without compensation and poor employment conditions are commonplace, while indigenous minorities have lost burial grounds and sacred forests to the bulldozers,” reads a Global Witness report on the release of the report and film.

It adds, “Those who protest face violence, intimidation and even arrest, often by state authorities who are meant to protect them but instead protect the Vietnamese companies.”

“These cases are shocking, but they are far from unique,” said MacInnes. “Until governments bring in and enforce regulations to end the culture of secrecy and impunity that is driving the global land grabbing crisis, international banks and financial institutions will continue to turn a blind eye to the human rights abuses and deforestation they are bankrolling.”

According to Global Witness, HAGL and VRG‘s operations are characterized by a lack of consultation with communities, non-payment of compensation and use of armed security forces to guard plantations. Further, the group claims that large areas of supposedly protected intact forest have been cleared, in violation of forest protection laws, apparently in collusion with Cambodia’s corrupt elite. Global Witness has called for HAGL and VRG to be prosecuted and for the cancelation of their plantation concessions.

The 49-page report and accompanying video are available through the Global Witness website. Global Witness has carved itself a reputation for tackling corruption at the highest levels. It recently produced another report on corruption, exposing alleged illegal activities by the leaders of Sarawak in East Malaysia. The report has been well received by authorities investigating money laundering.