The International Finance Corporation (IFC) Board of Executive Directors has approved a Management Action Plan in response to an independent investigation into IFC’s investment in An Binh Joint Stock Bank (ABBank) of Viet Nam, following complaints from Cambodian communities affected by a nearby hydropower project, according to an IFC press release. The Compliance Advisor Ombudsman (CAO), IFC’s independent accountability mechanism, completed its investigation in November 2024, finding that IFC failed to conduct adequate environmental and social (E&S) due diligence before investing in ABBank in 2010 and did not properly monitor E&S commitments during supervision. The case centers on serious harm to communities living near the Lower Sesan 2 hydropower project in Cambodia, including forced resettlement, livelihood damage, threats against project opponents, and destruction of ancestral graves and spiritual forests.
IFC’s original 2010 investment of US$40.6 million in ABBank was intended to boost financial inclusion and reduce poverty in Viet Nam. Before that investment, ABBank held a stake in a company that had contributed to the hydropower project’s development — though IFC maintains that neither that company nor the hydropower plant were subject to its E&S policies, as they received no IFC financing. IFC divested from ABBank in May 2024.
Because IFC considers direct project-level remediation outside its mandate in this case, the Management Action Plan focuses exclusively on systemic reforms. These include strengthening due diligence procedures for financial institution (FI) clients, dedicating more resources to monitoring high-risk FIs, and providing regular staff training on IFC Performance Standards. IFC also developed a new Guidance Note on FIs in 2023 that clarifies what qualifies as a higher-risk transaction and defines the E&S responsibilities of FI clients regarding sub-projects.
Additional reforms include new tipsheets to help IFC staff assess FI clients’ capacity needs and better use IFC’s leverage — including by explicitly linking E&S commitments to investment milestones such as first disbursement. The CAO will monitor the implementation of these measures annually and publish progress reports publicly, ensuring ongoing external accountability for the reforms IFC has committed to making.
