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ANZ in Laos: banking on poverty

Blog post by Senator Lee Rhiannon

If you think ANZ is not too good on customer service and could improve its operations it is be worth your time to check out what this bank is up to far beyond Australian shores.

I have just returned from two days visiting the site of the Theun-Hinboun Dam Expansion Project in central Laos where ANZ is one of the three main financiers. From what I saw this international bank has no sense of corporate social responsibility.

Locals forced to move when their villages and land were inundated told me worrying stories about how the Theun-Hinboun Power Company has treated them. The promised benefits from this dam are hard to find in this region. The inconsistencies in the compensation packages for those impacted by the dam are extreme.

So why is ANZ involved? In one word - profits. The original dam in this region, the Theun-Hinboun Hydropower Project, has delivered windfall profits for its shareholders. In 2008 the Vientiane Times reported a $570 million profit in the company's first ten years of operating.

If that is what ANZ shareholders can anticipate then the story for the local people is very different and the bank would have known that before they became involved in the Theun-Hinboun Expansion Project.

Resource Management and Research, a consulting firm involved in the Environmental Impact Assessment for the expansion project, in 2005 found that the original Theun-Hinboun project had caused the Nam Hai River to widen by 45 metres resulting in the loss of 68 hectares of land.

RMR estimated the value of the land at between $US100,000 to $US136,000. The last report I read found that locals have not received any form of compensation for the loss of this land.

The first dam on the Nam Kading River, which created the Theun-Hinboun Hydropower Project, has had considerable impact on the day to day lives of about 30,000 people. This is the project that is now being expanded with financial assistance from ANZ. 

Locals living both down and upstream have seen their fish catch decrease, drinking water polluted, crops lost to riverbank erosion, and rice yields reduced. For many, poverty is more extreme. From my discussions during visits to local villages it became clear that these problems are set to continue under the expanded hydro project.

At Ban Ka Sa La, a village directly below the giant dam wall, life looked tough. We visited this village after viewing the giant reservoir of water from the dam wall. Fishing is no longer possible as the Nam Gnouang River has been reduced to a trickle. Large volumes of water will be periodically discharged when the new dam is in full operation but experience with other dams suggests fish stocks will not recover.

The negative impact dam operations has on food security came up in most of my conversations.

In the villages, Ban Phoumakheng and Ban Nong Xong, many people I met said that overall they were happy they had moved. When the company representatives told them that their homes or land would be flooded they also promised that they would receive compensation including a new home situated in a village with roads, schools, a health clinic and a meeting hall, and they would also receive new farming land.

With such offers it is not surprising that most people agreed to move.

The assistance package was supposed to include rice paddy land equivalent to what they had owned, a house, and compensation for their fruit trees, timber trees, and bamboo and vegetable garden.

Months down the track not all these promises for a new life have been kept. Compensation has been inconsistent between households. I was particularly concerned to hear from a number of villagers about their difficulties with food production.

Everyone to whom I spoke said their new land was less productive, smaller in size and their yields were down. For many the new difficulties they face are compounded by the long distances they have to travel to their new land.

Locals spoke of their concerns for the future when the compensation is finished and they are left with smaller fish catches, less produce from the land, and they have to pay for electricity and water.

One woman said to me "We have to eat". There is uncertainty about the future.

Right now the villagers are under pressure from the Project Team for the Theun-Hinboun Dam Expansion to finish their houses as they understand that there will be an inspection by "foreigners". Some said that they had been told building materials would be taken away if construction was not complete.

Colleagues who monitor these projects have voiced concerns that this inspection could well be a form of greenwash aiming to present this project as meeting certain environmental and social standards.

ANZ and the other finance companies might be after a check list inspection to be followed by a glossy colour report that declares the project a success.

But by far the majority of locals impacted by this project still live below the poverty line. This project is not poverty alleviation nor sustainable development under any definition. ANZ has a lot of questions to answer.

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