It emerged in January that PP Sugar had used child labour, forced evictions and military-backed land grabs in a project in part funded by the ANZ.
The ANZ, which has ambitious expansion plans in Asia, says PP Sugar has paid out its loan and is no longer a customer of the bank.
Correspondent: Karon Snowdon
Speaker: Dr Mark Zirnszak, social justice spokesman for the Uniting Church in Victoria
SNOWDON: An ANZ spokesman says Phnom Penh Sugar was able to, Quote : "get finance cheaper when all the compliance costs required by ANZ were factored in." This suggests the decision to end the relationship was PP Sugar's and not a decision by the ANZ.
Mark Zirnszak is the social justice spokesman for the Uniting Church in Victoria which as a shareholder in the ANZ raised concerns with the Bank earlier this year.
ZIRNSZAK: We would definitely think in our view it was a very bad decision to have enter into a loan arrangement with Phnom Penh Sugar without the ability to clearly enforce basic human right standards, given the allegations that have been made around Phnom Penh Sugar. And clearly, the ANZ has come to the view that the client hasn't met the standards that they would expect. By the fact they've exited this relationship. It would appear they have acknowledged it hasn't been a good decision on their part.
SNOWDON: The ANZ is the majority shareholder of the ANZ Royal Bank in Cambodia.
It lent the PP Sugar Company the money for its 2010 development in the poor province of Kampong Speu. More than one thousand families were forced from their homes and land for the sugar plantation of tycoon Ly Yong Phat, a government senator and one of the country's richest men.
Cambodia has a reputation as a country where the rich and powerful take what they want. When the controversy emerged, the ANZ met with communities and concerned NGO's and insisted PP Sugar incorporate the social and environmental aspects of the bank's forestry policy. PP Sugar found the compliant costs too high and went elsewhere for finance. Mark Zirnszak again.
ZIRNSZAK: It's disappointing that we haven't been able to get a better outcome for the people who have been allegedly harmed by the activities of Phnom Penh Sugar and that the issues have not been satisfactorily resolved. It is our understanding that the bank has undertaken reasonable efforts to try and get a good outcome.
One thing that we would say has come out of this I think is that the ANZ Bank should be more transparent about it's investment decisions. It's hard for us to know when a mistake like this is made - Is it a kinda one-off out of a very large number of clients or is this an indication that their systems need tightening up?
SNOWDON: The next big market or the next important market for some Australian banks, the ANZ included, is, of course, Myanmar, which is just transitioning from a very troubled situation to some form of democracy.
Does the Uniting Church have a watching brief on Australian companies in Myanmar?
ZIRNSZAK: Look, we certainly would be giving those companies moving into Myanmar the same sort of attention we would give to operations in other countries, where we may have concerns about the progress on human right standards and obviously a company moving into Myanmar would need to be very aware of the risks around human rights issues within Myanmar. I think a certain level of caution would be wise on behalf of companies moving into Myanmar.
SNOWDON: The ANZ acknowledges what it calls its "super regional expansion in Asia," commits it to growth in countries "with varied government policies."
The Bank's sustainability policy says it supports customers "who are continuously improving their practices, recognising this will deliver environmental, economic and social benefits to their businesses and communities in which they operate."