From 2010 to 2024, IFC had an active equity investment with An Binh Commercial Joint Stock Bank (ABBank). Specifically, a US$50 million quasi-equity and US$25 million A Loan through an IFC project (no. 29745).The project proposed to forge a long-term partnership between IFC and ABBank through long-term financing to the bank, structured as both senior and convertible debt instruments. According to IFC, its investment aimed to allow the bank to maintain a healthy capital adequacy ratio while growing its loan portfolio. The loan was geared towards supporting climate change initiatives and enhancing financing for eligible energy efficiency and cleaner production projects. IFC exited the investment in May 2014. The complainants have also alleged that IFC is exposed to the project via Vietinbank, another IFC banking client in the region.

In June 2018, CAO received a complaint regarding IFC Financial Intermediary clients, ABBank and Vietinbank, and a range of environmental and social (E&S) impacts related to the Lower Se San Dam 2 project in Cambodia. These include concerns related to community resettlement, impacts on livelihoods, threats against community members opposing the project, damage to sociocultural significant sites such as ancestral graves and spiritual forests, and impacts on the fish population of the Mekong, Sesan, and Srepok Basins.

In July 2018, CAO found the complaint to be eligible and began an assessment. The assessment period was extended several times due to the need to establish contact with additional stakeholders whose views were deemed relevant and due to challenges from the COVID-19 pandemic and travel restrictions after March 2020.

After an initial extension to the assessment period to January 2021, CAO extended the assessment again through January 2022 in order to ensure that the potential for dispute resolution was fully explored with all parties concerned. Ultimately, the parties did not reach a consensus to participate in a dispute resolution process. Details from the assessment are available in reports in English and Khmer, accessible via the “Case Documents” section below this page. Based on CAO Policy, the case was transferred to CAO’s Compliance function in July 2022 for appraisal.

On November 18, 2022, CAO completed its Appraisal Report (Available in English and Khmer), concluding that the complaints merit a compliance investigation in relation to IFC’s investment in ABBank, but not in relation to IFC’s investment in Vietinbank.

Regarding IFC’s investment in ABBank, CAO concluded that: (i) there were preliminary indications of harm related to the Lower Sesan 2 project, particularly in regard to the affected communities’ living conditions, livelihoods, cultural sites, and safety; (ii) IFC may not have complied with its E&S policies, specifically those related to conducting a pre-investment review and monitoring the E&S commitments contained in IFC’s legal agreement with ABBank. ABBank was required to apply IFC’s E&S requirements to its investment in EVNI and consequently to the Lower Sesan 2 hydropower project; and (iii) the alleged harm to the complainants is plausibly linked to IFC’s potential non-compliance.

Regarding Vietinbank, CAO found there was not sufficient evidence to conclude that IFC’s financial relationship with Vietinbank provided a basis for a compliance investigation of the Lower Sesan 2 hydropower project.

In November 2024, CAO finalized its compliance investigation and submitted its report to the IFC Board. The investigation found that IFC did not conduct adequate environmental and social due diligence before its equity investment in ABBank and, during supervision, failed to monitor the E&S commitments included in its legal agreement with ABBank, as required under the Sustainability Policy. CAO identified material failures in IFC’s pre-investment review, including failure to review the portfolio of the FI for E&S risks through its Environmental and Social Review Procedures, failure to identify ABBank’s business activities with potential E&S impact and their applicable performance requirements, and approval of the investment without an understanding of the E&S risks in the client’s portfolio. IFC’s supervision was also non-compliant, including failure to monitor the E&S commitments in the legal agreement, including the requirement that existing loans and investments comply with the Performance Standards, inadequate supervision of the client’s E&S performance, and failure to sufficiently use its leverage and influence to ensure compliance. CAO found harm and indications of harm to affected communities in relation to lack of free, prior, and informed consultation, loss of land and livelihoods, inadequate compensation and resettlement, impacts on Indigenous Peoples, and reduced access to natural resources including fisheries and water.

Once the Board approves IFC’s MAP, CAO will publish both the Investigation Report and IFC’s Management Report, including the MAP.