ADB Railway Project Made ‘Major’ Mistakes

 By Zsombor Peter | February 8, 2014

The Asian Development Bank (ADB) made “major” mistakes in designing and carrying out a $143 million project to rehabilitate Cambodia’s dilapidated railway system, mistakes that helped drive hundreds of families deeper into poverty and debt, according to a new report for the bank released on Friday.

The final report of the ADBÕs independent compliance review panel, the result of a 17-month investigation, lays out a history of bad planning, faulty land measurements and missed opportunities and says the bank needs to rethink its entire approach to dealing with the local communities directly impacted by all of its projects.

The report, approved by the ADBÕs board of directors on January 31 in its first official admission of guilt, vindicates the many complaints and studies human rights groups say have been issues for years. The board, at the same time, adopted six of the panel’s recommendations and said it would come up with an action plan within 60 days to carry them out.

Some 3,000 families living along the tracks have lost parts of their land to make way for the project and another 1,000 have had to move to ill-equipped resettlement camps from Sihanoukville to Poipet.

“These people have suffered loss of property, livelihoods and income and as a result have borne a disproportionate cost and burden of the development efforts funded by ADB,” the report says.

Approved by the ADB in 2006, the project was envisioned to make Cambodia’s economy more competitive with its neighbors and bring down consumer prices by diverting some transport from road to rail. While the southern line between Phnom Penh and Sihanoukville is up and running, the longer northern line, which links Phnom Penh to Poipet and the Thai border, has no money to call on and is far from finished.

According to the new report, the seeds of the project’s troubles were planted from the start.

“The [review panel] found major design flaws in the original 2006 [resettlement plan],” the compliance review panel said.

“These included inadequate requirements for consultation with and participation of [affected households], a lack of provisions for inflation-indexed compensation, no provisions for replacement housing of minimum standard to improve the situation of poor and vulnerable resettled families, inadequate planning for the facilities required at resettlement sites, inadequate grievance redress mechanisms, and a weak program for capacity building for government entities involved in the project.”

The review panel makes a number of recommendations to bring the ongoing project into full compliance with the ADB safeguard policies the ADB broke, from improving the facilities at resettlement sites to spending another $3 million to $4 million on giving the families the additional compensation they deserve.

With regard to the latter, Ly Borin, director of the Ministry of Transport’s railway department, said he did not know where the money would come from.

“I don’t know,” he said. “Who would borrow that much money to pay it [out in compensation]?” he asked.

The board also approved a recommendation to “improve the functioning of the grievance redress mechanism, to be reflected in a time-bound and verifiable action plan.”

The report says the problems with the railway project were “particularly grievous” because it repeated many of the same mistakes the ADB made on a past project to improve Cambodia’s National Road 1, and that both projects were staffed by some of the same people who should have learned from the first experience.

After this, the panel says, the ADB needs a “mind shift” in the way it treats people evicted by its projects and to not handle their needs as “mere add-ons.”

“There is a need for an urgent, firm and clear message to ADB management that resettlement, environmental and public disclosure and consultation issues should be taken seriously and accorded the priority consideration they deserve,” the report says.

“The inclusion of vulnerable and affected populations as direct beneficiaries must be part of the DNA of ADB projects and be implanted in the very conceptual embryo of each such project.”

Besides its recommendations specific to the railway project, the panel says the ADB should assign more staff and find reliable, effective and independent monitors for all future projects where resettlement and environmental impacts are significant.

The investigators found that resettlement sites were far from the families’ jobs and that efforts to help them earn more money were late in coming. They found “considerable inaccuracies” in the measurement and inventory of the property families had to give up. The compensation scheme drawn up in 2006 was not changed when relocation sites were set up farther away than originally planned, nor adjusted for inflation when being paid out five or more years later.

The report says it all added up to evictees being forced to take on even more debt, often at exorbitant interest rates.

“While there are success stories of [affected households] making good or doing better, overall the resettlement left a substantial number of [them] worse off and impoverished,” it says.

The investigators visited four of the five resettlement sites and found “serious infrastructure problems” at each.

“The health center at [the] Phnom Penh site was in an appalling state with one bed, no medical doctor and a building badly in need of repair to serve its larger resettlement population,” the report says.

According to the panel, the ADB had taken note of the project’s shortcomings in its own regular mission reports, but did not get actively involved with the government and families until after the NGOs took their complaints to the ADB president in late 2010.
In its recommendations, the review panel says the best option would be a fresh cost study and audit to find out exactly how much additional compensation each family deserves. However, it dismissed the idea because an audit would take at least two years and the government was opposed to it anyway.

“These [affected households] need assistance as soon as possible and the delay is not justified,” the report says. “Besides, the [review panel’s] interviews with government officials clearly showed that the government does not favor a resettlement audit.”

The human rights groups that have been pressing the ADB to fix its mistakes and do more for the families for the past few years welcomed the report, but said the ADB should have taken responsibility long ago.

“It is an outrage that ADB failed to act all these years while people fell into a spiral of debt and poverty after the resettlement plans it approved turned out to be disastrous,” said David Pred, managing director of the NGO Inclusive Development International.

Inclusive Development and Equitable Cambodia filed the complaint that eventually triggered the investigation on behalf of 22 families living at the resettlement sites.

The NGO Sahmakum Teang Tnaut also did much of the work and research documenting the plight of the families over the years and bringing their problems to light.

Ee Sarom, Sahmakum’s program coordinator, said the ADB still had to prove it was now prepared to fix the mistakes it has finally admitted to.

“This is ADB’s opportunity to demonstrate to the Cambodian people whether it is here to alleviate poverty or to create it,” Mr. Sarom said.

The same rights groups have been urging the Australian government, which has pledged $21.5 million to the project, to do more for the families as well.

On Tuesday, the Australian Embassy put out a statement welcoming the coming ADB report and saying it would work with those responsible for implementing the recommendations. It did not admit any fault for the project’s mistakes and ignored a list of questions.

Officials at the ministries of Transport and Economics could not be reached for comment.