SYDNEY/PHNOM PENH (Reuters) - A loan by the Australia and New Zealand Banking Group Ltd <ANZ.AX> to a Cambodian sugar company involved in a land dispute was hard to reconcile with the bank's own human rights standards, an Australian government investigation found.
The finding, published on Thursday, comes as Australia's banking sector has been rocked by a powerful public inquiry uncovering scandal after scandal and a culture of greed driving widespread misconduct.
A government agency that handles complaints about Australian companies' behaviour overseas said ANZ made a loan to the Phnom Penh Sugar Company (PPS) in 2011, despite widely publicised protests against alleged land-grabbing by the sugar miller.
"It is difficult to reconcile ANZ's decision to take on PPS as a client with its own internal (human rights) policies," the Australian National Contact Point, which sits within the Australian Treasury, said in a statement following complaints by Cambodian human rights lobbyists.
Villagers at Kompong Speu, 48 km (30 miles) from Phnom Penh, told Reuters during a protest in 2010 that they were only offered meagre compensation when land they had tilled for years was awarded to the sugar company for a plantation and refinery.
ANZ told the National Contact Point that it breached none of the Organisation for Economic Cooperation and Development's human rights guidelines and need not divest itself of any of the profits it made before the loan was repaid in 2014.
The bank said in an emailed statement that "Phnom Penh Sugar left the bank after we sought to influence change" and that it regrets not being able to make more progress.
Phone calls made to Phnom Penh Sugar went unanswered and there was no immediate reply to a Reuters email request for comment.
Human rights lobbyists Equitable Cambodia and Inclusive Development International first filed complaints about ANZ's involvement in the project with Australian authorities in 2014.
The Australian National Contact Point recommended ANZ strengthen its due diligence, establish a process for resolving human rights grievances and tighten internal standards. ANZ said it either has or will implement the recommendations.
Eang Vuthy, Executive Director of Equitable Cambodia said the ruling "offers some measure of vindication for the families."
"It doesn't address their immediate situation, which remains desperate," he said.
(Reporting by Tom Westbrook in SYDNEY and Prak Chan Thul in PHNOM PENH; editing by Richard Pullin)
