Following a scathing report from its internal watchdog about the resettlement of thousands of Cambodian families affected by a national railway rehabilitation project that it is funding, the Asian Development Bank has agreed with the government on an action plan for further compensation, it said yesterday.

The ADB Compliance Review Panel’s central recommendation was that the government set up a compensation fund of up to $4 million, funded by ADB loans, to further compensate families, but the bank is remaining tight-lipped on what exactly has been agreed to.

“ADB Management, in consultation with the Government of Cambodia, has developed remedial actions to address the Board-approved recommendations . . . The remedial actions are currently undergoing ADB’s internal review, including consultation with CRP,” it said in a statement. “Thereafter the remedial actions will be implemented to bring the Project back into compliance.”

Families began moving in 2010 to make way for the $143 million project, funded primarily by ADB loans.

The watchdog’s report – which found that compensation for relocated families was inadequate, homes undervalued and lost income not covered – laid the blame at the feet of the ADB, which oversaw the government’s resettlement plan, for failing to implement its own safeguards.

On January 31, the ADB said it would prepare a “time-bound action plan” within 60 days in coordination with the government in order to address “compensation deficits and other deficiencies”.

Last week, Stephen Groff, the bank’s vice-president for operations in East Asia, Southeast Asia and the Pacific, visited Cambodia. Minister of Economy and Finance Aun Porn Moniroth met with Groff on March 27 “to discuss railroad rehabilitation in Cambodia”, according to a government statement.

In February, rights groups argued that the bank would be passing the buck on its own failures if it made the government pay out for further compensation through loans, as recommended.

ADDITIONAL REPORTING BY CHEANG SOKHA