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Admitting failure

Robert CarmichaelFebruary 10, 2014

The Asian Development Bank has released a damning internal review that concludes the bank’s staff significantly harmed some of Cambodia’s poorest citizens with an ill-conceived and mismanaged resettlement plan.

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Image: picture-alliance/dpa

The resettlement plan was the consequence of a deal struck with the Cambodian government in 2006 to upgrade the hundreds of kilometres of the country's railway network. Years of civil war and neglect had left the network in a woeful state.

The bulk of the 142 million USD rail upgrade was funded by the ADB and the Australian government, and directly affected 4,000 families living alongside or nearby the tracks. Around 1,000 were to be resettled, while others would have their land holdings reduced. All were to be compensated, and those compelled to move to resettlement sites were to receive further assistance.

Under the bank's own rules, no one affected by the project was to end up worse off - yet for years, rights groups complained that this was precisely what was happening. On Friday, February 7, the ADB's Compliance Review Panel (CRP) agreed, saying an undefined number of people "have suffered direct, adverse and material harm."

Passengers on the Phnom Penh - Battambang train ride on a flat car, July 1 2006.
Years of civil war and neglect had left Cambodia's railway network in a woeful state.Image: picture-alliance/dpa

"In particular, the CRP finds that the requesters have established harm from (i) insufficient compensation for loss of property and incomes; (ii) lack of electricity and water services at resettlement sites as well as from poor access roads; (iii) weak or ineffective grievance redress mechanisms; (iv) lack of timely assistance for income restoration; (v) indebtedness; and (vi) insufficient information and consultation,” the panel wrote.

The report noted that one of the many failings of the ADB's resettlement project was that compensation payments were fixed at 2006 prices with no account taken of inflation. That meant families paid out in 2010 and 2011 were significantly under-compensated. Another problem was that the property of others was short-measured or undervalued.

Wholesale failure

In its comprehensive 180-page report, the CRP lambasted their fellow ADB staff for failures at every stage of the project, and said the shortcomings were entirely avoidable.

"A substantial part of the [affected households] were worse off and impoverished as a result of the resettlement,” the report concluded, adding that the problems stemming largely from the ADB's failure to follow its own policies had "led to significant yet avoidable adverse social impact on mostly poor and vulnerable people."

Although implementing the resettlement process was the responsibility of the Cambodian government, the ADB was required to ensure that the process was properly managed, and admits it failed to do that. At the end of its 17-month long investigation, the CRP team concluded that the very design of the resettlement plan was deeply flawed, and said the ADB's culture towards resettlement must change.

The CRP team noted that the failures in the resettlement program were "particularly grievous" given that the ADB ought to have learned from similar failings in an earlier infrastructure project.

'A vindication'

Among the rights groups that welcomed the report were Equitable Cambodia and Inclusive Development International. Friday's report is the direct consequence of a complaint that the two NGOs filed with the ADB in late 2011 on behalf of the affected families.

Equitable Cambodia's Eang Vuthy described the report as "a vindication of years of struggle." "While it is very frustrating that it took this long for [the] ADB to accept responsibility, we are optimistic that the bank is now required by its board of directors to solve the many problems faced by affected communities," he said.

David Pred, who heads Inclusive Development International, said the CRP review was “the most damning report" in the history of the ADB's accountability mechanism. "It's findings are really scathing, and what it calls for isn't just bringing this project back into compliance, but a mind shift … in the way [the ADB] treat people affected by their projects, and the way they approach social and environmental safeguards," he told DW.

Pred pointed out, however, that it was not clear whether ADB's management had seized the report's full import. "In the final report a significant change was made – that the ADB should require the Cambodian government to set up a compensation deficit payment scheme to provide the remediation," Pred said. "And we think that's really inappropriate because the ADB made the mess and should be the ones who are forced to clean it up."

Pred added that as the primary beneficiary of the rail upgrade, Toll Holdings – the Australian company that won the concession to manage the railway – also "has a responsibility to contribute to the remediation."

Limited Accountability?

In its response to the report, the ADB's board of directors said it accepted most of its recommendations, including setting up a compensation fund worth as much as four million USD. However, their response indicated that this would be in the form of a loan that Cambodia would have to repay rather than a grant, a suggestion that has raised eyebrows among rights activists.

Logo Asian Development Bank (Copyright: ADB)
The bank said the next step was to determine how many families were affected and the level of compensation

The ADB said its next step was to determine how many families were affected and the level of compensation. In a reply to DW, ADB Cambodia country head Eric Sidgwick said the bank would consult with households and the government, among other involved parties, over the next two months "in order to determine a plan of action which can meet the CRP's stated need for a quick, transparent, and fair resolution of outstanding resettlement issues."

David Pred said it was "totally unacceptable" that to date nobody from the ADB appeared to have paid a price for designing and implementing a program that has caused verifiable harm to so many already poor people. The lack of services at two resettlement sites, he said, had led to the deaths of three children: two who had drowned, and a third who was killed by a car while walking several kilometres to school.

Despite laying the blame squarely on the ADB's staff, the report did not recommend whether anyone should be held accountable. When asked whether the bank planned to take action against any of its staff or consultants involved in the project, ADB country director Sidgwick refused to comment.