Cambodia's mining, oil sector allegedly corrupt

Thursday, February 05, 2009
By DENIS D. GRAY

BANGKOK, Thailand (AP) — The corrupt elite of Cambodia, one of the world's most impoverished nations, has laid the groundwork for siphoning off vast profits from a coming boom in mining and oil exploitation, a nongovernment organization said Thursday.

Britain-based Global Witness said that rights to exploit the resources have been allocated behind closed doors by a small number of power brokers around Prime Minister Hun Sen and other senior officials. The report, titled "Country for Sale," said "the same political elite that pillaged the country's timber resources has now gained control of its mineral and petroleum wealth."

"Unless this is changed, there is a real risk that the opportunity to lift a whole generation out of poverty will be squandered," the report said.

Global Witness, which has worked in Cambodia for more than a decade, said its findings were based on numerous interviews with industry insiders in the country and with others around the world over the course of 2008. The report's appendix also cites a number of academics, journals and newspaper reports.

The allegations were denied by Suy Sem, the minister of Industry, Mines and Energy, saying Global Witness "always defames the government."

"Regarding the exploration for oil and gas, we operate under procedures that are very fair and transparent and based on the rule of law," he told The Associated Press in the Cambodian capital, Phnom Penh. He did not address specific allegations in the report.

The government's spokesman could not be reached despite numerous attempts.

Others have raised concerns that rather than pulling Cambodia out of its "beggar status," the revenue windfall will further fuel already rampant corruption. The Berlin-based Transparency International ranked Cambodia 166 out of 180 on its 2008 world corruption index.

The report said international donors, which prop up the country, have so far turned a blind eye to the looming "corruption disaster." Donors, including the United States, European Commission and the World Bank, pledged $1 billion in development aid two months ago, without using the opportunity to demand transparency in the emerging industries, it said.

More than 75 companies, including such internationals as Chevron Corp. and BHP Billiton, were already working in the mining and oil sectors and have paid upfront sums to the government, the report said.

"Companies need to come clean on what they have paid to the government to secure access to these natural resources, or risk becoming complicit in a corrupt system," the report said.

Global Witness said it wrote to both Chevron and BHP asking them to reveal any payments made to the Cambodian government or government officials. Chevron, it said, did not respond while BHP said it had made no illegal payments related to its mining operations.

Chevron spokesman Gareth Johnstone told the Associated Press on Thursday that the company could not comment until they had a chance to read the report.

Global Witness said it could not find a record of bonuses paid to secure concessions totaling millions of dollars in the 2006 or 2007 revenue reports of the Ministry of Economy and Finance.

Of the mine sites investigated in 2008, Global Witness said every one was controlled or owned by members of Cambodia's political and military elite, including top military commanders and relatives of Hun Sen and cabinet ministers.

Charged with control over the gas and industry is the newly created Cambodian National Petroleum Authority, which is stocked with politicians close to Hun Sen and maintains a blanket of secrecy over its activities.

"The small number of elite power brokers who run the state have sold off potentially valuable concessions to companies in a manner which is non-transparent and highly dubious," the report said.

The report said the government's actions duplicate the wholesale destruction of forests with few of the resulting profits ending up in national coffers or among the general population.

The report also said the government was opening up environmentally sensitive areas to private companies, with mining activity already proceeding in at least six of the country's 23 protected areas.

Over the past few years, Cambodia has been buzzing with excitement — and anxiety — about an oil discovery by U.S. energy giant Chevron Corp. off the southwestern coast. There have also been discoveries of other minerals including bauxite, iron ore, copper and chromium, while onshore oil reserves are also being explored.

Conferences and discussions, both domestic and international on how to deal with the windfall have been held.

U.S. Ambassador Joseph Mussomeli told The Associated Press in 2006, shortly after the discovery, that Cambodia could fall victim to an "oil curse" that has afflicted other developing countries.

Some estimate that in coming years Cambodia may reap some $1 billion in annual oil revenues, enough to cut its ties to foreign development aid if the funds are properly utilized.

Associated Press writer Sopheng Cheang in Phnom Penh contributed to this report.