The Board of Directors of the International Finance Corporation (IFC) has granted itself additional time to review a decision by its independent accountability mechanism to open an investigation into IFC microfinance investments in Cambodia. The Board has until 28 July 2023 to uphold or overturn the decision to investigate.

The IFC is a member of the World Bank Group, and it has made significant investments in Cambodia’s microfinance industry. Following a complaint, the independent accountability mechanism of the IFC – the Compliance Advisor Ombudsman (CAO) – completed, among other steps, a seven-month-long review and on 13 June 2023 “concluded that an investigation is merited". On 29 June, IFC management requested that the Board review the CAO’s decision, by activating a never-before-used 2021 amendment to the CAO Policy.

Twenty-four stakeholders, including LICADHO, wrote a joint letter to the Board on 12 July 2023 outlining concerns about IFC management’s request for Board review. The letter reminds the Board that CAO Policy limits their review to narrow technical criteria, and that the Board is explicitly prohibited from making a judgement on the merits of the complaint.

The complaint to the CAO was submitted in February 2022 by LICADHO and Equitable Cambodia on behalf of affected Cambodian microloan borrowers. Among other points, it alleges failures in IFC’s pre-project due diligence, as well as violations of IFC Performance Standards caused by unethical and predatory lending practices.

LICADHO has published four reports on MFI abuses in Cambodia since 2019. The most recent report, “Right to Relief”, was co-published in 2021 alongside Equitable Cambodia and interviewed more than 170 borrowers across 14 Cambodian communities. Read more about this topic here.