The International Finance Corporation (IFC) on Friday requested a review of its ombudsman\u2019s decision to investigate six IFC-funded financial institutions providing microloans in Cambodia.<\/p>\n\n\n\n
Cambodia\u2019s largest microlending institutions face investigation for allegedly harming borrowers with \u201cpredatory and deceptive lending practices\u201d according<\/a> to the IFC\u2019s Compliance Advisor Ombudsman, its official watchdog. <\/p>\n\n\n\n The six financial institutions have also contributed to \u201closs of land, loss of livelihood, food insecurity\u201d and \u201cthreats to health\u201d and child labor, according to a complaint filed in February last year by two human rights NGOs on behalf of impacted communities. <\/p>\n\n\n\n The human rights NGOs which launched the complaint slammed the IFC for requesting its board of directors review the June 13 decision by its ombudsman to proceed with an investigation into the six micro-lenders and four of their investment funds.<\/p>\n\n\n\n \u201cAn investigation is a crucial step toward justice and remediation for Cambodian borrowers who continue to suffer due to predatory lending,\u201d said Licadho\u2019s outreach director Naly Pilorge in a Monday statement<\/a>. \u201cThe IFC management\u2019s request for board review, after the ombudsman decided an investigation is merited, is a shameful ploy to avoid scrutiny.<\/p>\n\n\n\n This is the first time the IFC has made a request to review its ombudsman\u2019s decision since a review policy<\/a> was implemented in 2021, according to Licadho. The review could end or delay the pending investigation. <\/p>\n\n\n\n The ombudsman\u2019s decision to investigate is based on \u201cpreliminary indications\u201d of harm and non-compliance with IFC\u2019s environmental and social policies, according to the CAO\u2019s guidelines<\/a>.<\/p>\n\n\n\n The IFC\u2019s board will have 10 working days to consider the ombudsman\u2019s decision, but may extend the review period, according to the ombudsman\u2019s website.<\/p>\n\n\n\n CAO spokesperson Emily Horgan stated in an emailed response that the IFC management can request a review “in exceptional circumstances” if the management “believes that technical criteria\u2026have not been met.”<\/p>\n\n\n\n “The Board will not have any editorial input into the CAO compliance appraisal report, which will be published following completion of the review process,” Horgan said.<\/p>\n\n\n\n An IFC spokesperson said via email that “IFC does not comment on matters that are part of a deliberative process of its Board of Directors.”<\/p>\n\n\n\n The six institutions under scrutiny \u2014 Acleda, Amret, Prasac, Hattha Bank, LOLC and Sathapana \u2014 represent more than 70% of the microlending market in Cambodia and are active recipients of millions in funding linked to the IFC, which handles the World Bank Group\u2019s private sector projects.<\/p>\n\n\n\n \u201cI am happy to have an independent entity\u2026working on this complaint [to] follow the CAO policy,\u201d said LOLC Cambodia CEO Voeun Sok, who is also the president of the Cambodia Microfinance Association (CMA). <\/p>\n\n\n\n CMA spokesperson Tongngy Kaing said: \u201cCMA is following the case carefully.\u201d<\/p>\n\n\n\n The other five institutions named in the complaint did not respond to requests for comment.<\/p>\n\n\n\n Three NGOs \u2014 including Licadho \u2014 also filed a complaint<\/a> with a Dutch government watchdog against social investor Oikocredit in December last year, alleging the investor had failed to conduct proper due diligence given the mounting allegations of abuse in the Cambodian microfinance industry. Oikocredit has invested tens of millions of dollars into Prasac, LOLC and Amret.<\/p>\n\n\n\n In the past several years, civil society<\/a> and media reports<\/a>, along with government-sponsored studies<\/a>, have found widespread land sales as a result of over-indebtedness linked to microfinance loans. <\/p>\n\n\n\n \u201cWe hope this [IFC] investigation can move forward as quickly as possible to advance borrowers\u2019 right to remedy and begin to address the serious harms caused by these investments,\u201d said Eang Vuthy, executive director of the NGO Equitable Cambodia. \u201cCambodian borrowers continue to suffer from the effects of Cambodia\u2019s microfinance and microloan sector, and we look forward to working with the CAO team to address this ongoing crisis.\u201d<\/p>\n\n\n\n Note: This article has been updated to include responses from the IFC and CAO.<\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":" The International Finance Corporation (IFC) on Friday requested a review of its ombudsman\u2019s decision to investigate six IFC-funded financial institutions providing microloans in Cambodia.<\/p>\n","protected":false},"author":42,"featured_media":11440,"comment_status":"closed","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1342,1],"tags":[2178,1878,2532,2534,349,1016,2533,2537,2535,2531,1503,61,333,460,342,2530,1877,2180,964],"acf":[],"_links":{"self":[{"href":"https:\/\/cambojanews.com\/wp-json\/wp\/v2\/posts\/11438"}],"collection":[{"href":"https:\/\/cambojanews.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cambojanews.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cambojanews.com\/wp-json\/wp\/v2\/users\/42"}],"replies":[{"embeddable":true,"href":"https:\/\/cambojanews.com\/wp-json\/wp\/v2\/comments?post=11438"}],"version-history":[{"count":3,"href":"https:\/\/cambojanews.com\/wp-json\/wp\/v2\/posts\/11438\/revisions"}],"predecessor-version":[{"id":11552,"href":"https:\/\/cambojanews.com\/wp-json\/wp\/v2\/posts\/11438\/revisions\/11552"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cambojanews.com\/wp-json\/wp\/v2\/media\/11440"}],"wp:attachment":[{"href":"https:\/\/cambojanews.com\/wp-json\/wp\/v2\/media?parent=11438"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cambojanews.com\/wp-json\/wp\/v2\/categories?post=11438"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cambojanews.com\/wp-json\/wp\/v2\/tags?post=11438"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}