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26 Aug 2018

Mekong Watch

Mekong Watch statement urges companies who built and finance collapse dam to compensate communities

"Grave damage caused by dam collapse in southern Laos: Funds from Japan involved in the project development," 31 August 2018

On July 23rd, a devastating incident occurred in the Sanamxay District of Attapeu Province in southern Laos. The top of a saddle dam (*1) installed at one of the reservoirs of the Xe Pian-Xe Namnoy hydropower project (*2) collapsed, releasing a massive amount of water...

According to early reports, dozens of deaths have been confirmed and at least 6,000 people in 1,370 households have lost their homes to date...

The...project is implemented by a joint venture between a Thai company, two South Korean companies, and a Lao state-owned enterprise. Japan is also involved in its financing. Among the Thai banks that co-finance the joint venture, the Bank of Ayudhya Public Company is currently under the umbrella of Japan’s Mitsubishi UFJ Financial Group (MUFG). The bank’s 76.88% share is held by the MUFG’s Mitsubishi UFJ Bank (MUFG Bank) (*6). Although the Bank of Ayudhya’s decision to finance the joint venture was made before the integration of the bank with MUFG Bank, currently a number of Japanese nationals hold the bank’s management positions, including CEO (*7). Also, Japan’s Government Pension Investment Fund (GPIF) owns shares worth 1,402,665,244 yen (approximately 13,954,300 USD) of the Krungthai Bank, another Thai co-financer of the joint venture, and credits worth 6,268,142,275 yen (approximately 58,993,900 USD) of the Export-Import Bank of Korea, which finances Lao Holding State Enterprise (LHSE) that formed the joint venture (both figures as of end of fiscal year 2017).

The companies directly involved in the dam project must take the primary responsibility for the consequences of this incident, both in terms of the immediate suffering of thousands of directly affected people, but also long-lasting implications... [F]inancial institutions that made it possible for the companies to build the dam, the development policies of the Lao government (which depend heavily on large-scale dam building), and the donor countries and agencies that have supported such development policies all need to be examined.