Costello linked to controversial banana project

Peter Costello (Photo: Wikipedia)

Tue Apr 12, 2011
By South-east Asia correspondent Zoe Daniel
ABC News (Australia)

Environmental activists in Cambodia are opposing a multi-million dollar agribusiness proposal by a company associated with former treasurer Peter Costello.

They say the project will close off an internationally significant wildlife corridor.

But the company behind the banana plantation and reforestation project in Cambodia's Cardamom Mountains says it will be sustainable and provide jobs and export income.

The mountain forests have been regenerating for the last 10 to 15 years after previously being selectively logged.

Cambodian forest group targets Australian firm

April 13, 2011
ABC Radio Australia

Wildlife campaigners in Cambodia are turning their attention to halting an Australian-backed banana plantation after they successfully stopped a controversial mining development.

The Cambodia Government surprised environmentalists by scrapping plans for a titanium mine in the Southern Cardamom Forest. The forest is home Cambodia's largest population of Asian elephants and dozens of endangered species. But despite the win, The Wildlife Alliance says the area remains under threat from clearing for agriculture.

Presenter: Liam Cochrane

Speaker: John Maloy, Wildlife Alliance spokesman

Click here to listen to the audio program (Windows Media)

COCHRANE: John Maloy, first of all let's address the issue of the titanium mine. What reasons were given for the government deciding not to go ahead with it?

MALOY: The government, in this case, the prime minister himself basically said that the environmental impact both on biodiversity and the potential affects on water resources as well as impacts on the local people Cardamoms were basically the reasons behind cancelling this concession.

COCHRANE: Did that decision take you by surprise?

MALOY: Completely, completely. We had been campaigning for months to stop this titanium mine and it received approval back in February, which actually also caught us by surprise, because it happened about two weeks before a meeting which was supposed to actually decide on whether this project was going to go ahead and even happened. So we were very much convinced that this project was a done deal and we're now working to try and minimise the damage that it would cause, but obviously this is a much better outcome.

Proposed Agricultural Deal Carries Risk for Cambodia's Rural Poor

Cambodian farmers prepare seedlings for their rice plantation at the paddy rice farm in Kandol village, Kampong Cham province, about 60 kilometers (37 miles) north of Phnom Penh (Photo: AP/file photo)

Phnom Penh 18 February 2010
Robert Carmichael, VOA

An investment group out of Australia has unveiled a $600 million plan to create a massive farm project in Cambodia. However, human rights workers are concerned that this deal, and others like it, will do little to help Cambodia's rural poor. Robert Carmichael in Phnom Penh has more.

BKK Partners, an Australian financial advisory firm, has a client that wants to buy 100,000 hectares of Cambodian land on which to grow crops such as rice, bananas, sugar cane, palm oil and teak.

BKK managing director Peter Costello was in Cambodia recently to discuss the idea. The client for the deal is a company called Indochina Gateway Capital Limited, which has ties to BKK.

The Phnom Penh Post newspaper recorded an interview with Costello, a former Australian finance minister, in which he explained why investing in food is so tempting. "I think agriculture is going to come back into its own as an investment in the decades that lie ahead and of course that's a great opportunity for Cambodia," he said.

The investors say the project will create jobs in an impoverished country, and help improve farming methods for the undeveloped - yet vital - agriculture sector.

But human rights workers say previous farm-industry deals have worked against ordinary Cambodians because of corruption, poor governance and often-violent land evictions.

Poor farmers often are kicked off the land and because of Cambodia's inadequate land-ownership records, often receive no compensation. So they wind up with no farm, no home and no way to start over.

Three years ago the United Nations human rights office in Phnom Penh said at least 59 land concessions totaling almost 1 million hectares had been granted to private companies for agriculture projects. It said that impoverished rural residents generally have lost out in such deals.

Government figures show it has approved 33 more projects since the U.N. report was released.

That does not include land concession granted to other countries. Qatar, Kuwait and South Korea have been pursuing concession deals here.

Matthieu Pellerin works on land rights for Cambodia human rights organization Licadho. He says corruption means that not only are the poor unprotected, the investors themselves may be at risk.

"Well-established system of corruption; a lack of checks and balances to ensure that poor communities, indigenous communities are not victimized by any kind of major agro-industry deals where sizable pieces of land are sold to private companies; the collusion of all state actors from the village up to the national level. All of these factors just make it very, very, very difficult if not impossible to abide by the book. I think that if one wants to really abide by the book, Cambodia in 2010 is not the place to come," he said.

BKK Partners' Costello says the investors plan to give five percent of the cash generated by the land deal to social projects in Cambodia.

But Pellerin says that may not benefit the poor, unless there is adequate oversight to make sure the money goes to community needs and not politician's pockets.

Opposition politician Son Chhay says if the BKK deal is done properly, it could mark a welcome change from past agreements with Chinese and Vietnamese agriculture companies. He says they do not invest in the country's people.

However, Son Chhay says it can be difficult to get information about land agreements. Until 2008 he headed parliament's foreign affairs committee, and he says members of parliament are blocked from examining contracts on such deals. "It's still the case that we are not able to get our hands on investment documents, and that's a cause for great concern," he said.

He says BKK must make the details of the deal public to ensure that rural poor do not lose out.

The issue of land seizures in Cambodia has drawn the attention of the U.N.'s special rapporteur on human rights. Surya Subedi on a recent visit asked the government to suspend land evictions until it put in place proper legal safeguards. But the government refused, saying to do so would hold up development.

Subedi says a new law on government land seizures is too vague. "For example, what do we mean by public interest? If land can be acquired in the public interest, how do you define it? Who defines it?," said Subedi.

Opposition politicians and activists for the poor say the risk is that the government will simply seize any land it wants, and those farming the land will have no legal protection.

Australian agro-deal in Cambodia carries risks, rewards

Mon, 01 Feb 2010
DPA

Phnom Penh - As a former finance minister of Australia, Peter Costello is comfortable with large numbers. The latest is his proposal on behalf of an Australian fund to invest 600 million US dollars into at least 100,000 hectares of land concessions in Cambodia. The concessions would see private equity investors pumping money into plantations of teak, palm oil, sugar, rice and bananas. In return, Cambodia would get 150,000 jobs, the government said after Costello met with Deputy Prime Minister Sok An.

Significant investment, plenty of jobs plus the promise of improved agricultural methods? Such a deal should be good for Cambodia on all three counts.

But human rights workers said they worry the country's ongoing problems with corruption and poor governance combined with often-violent land evictions mean it is less certain that ordinary people would benefit.

And as veteran opposition legislator Son Chhay made clear, transparency in investment deals is hardly the order of the day.

Son Chhay has plenty of experience in how the ruling Cambodian People's Party (CPP) operates when it comes to investments. He headed parliament's foreign affairs committee until 2008 but said his deputy, a member of the CPP, regularly prevented him from getting information on deals.

"It's still the case that we are not able to get our hands [on investment documents], and that's a cause for great concern," he said.

In the past two decades, much of rural Cambodia has been carved up into economic land concessions (ELCs). The UN's human rights office released a report three years ago that said 59 large concessions totalling almost 950,000 hectares had been granted to private companies to develop agricultural-industrial plantations.

The report made it clear that the true figure was certainly higher because data on smaller ELCs were not available. What was clear, it concluded, was that the concessions had "adversely affected the human rights and livelihoods of Cambodia's rural communities."

In the intervening three years, government figures showed it has approved 33 more agricultural-industrial projects worth 837 million dollars although they did not indicate how much land is involved. State-to-state deals, however, are not on that list, and Qatar, Kuwait and South Korea have so far expressed interest in, or signed deals for, ELCs.

Human rights workers said risks to the rural poor over such deals are significant because they are regularly evicted to make way for foreign investors. The government's often-brutal approach to evictions and its disregard for its own laws in doing so have raised concerns abroad.

Such government behaviour was one of the items discussed by the UN's special rapporteur on human rights during a recent two-week visit. Surya Subedi asked the government to suspend all land evictions until proper legal safeguards are in place.

The government denied the request, citing the need to develop the country. It told Subedi that national guidelines on evictions were being drafted but did not say when they would appear.

The UN envoy expressed cautious optimism in telling reporters that the UN Human Rights Council has adopted a resolution that requires guidelines be put in place to protect the vulnerable.

"So it is now becoming an international requirement," Subedi said.

One relevant regulation recently approved by Cambodia's parliament was a much-criticized expropriation law. Subedi criticized parts of the law for being far too vague.

"For example, what do we mean by public interest?" he asked. "If land can be acquired in the public interest, how do you define it? Who defines it?"

Acceptable compensation measures for those affected were absent, too, he said.

Those concerns are shared by many in Cambodia, including Son Chhay although he did welcome one of the benefits touted by Costello: new ways of farming to boost production.

The opposition lawmaker said new methods could help 80 per cent of the 14 million people who rely on outdated farming techniques. The country's rice yield of around 3 tons per hectare, for example, is far below that of some of its neighbours.

But the primary motive for Costello's investors is financial. Investors want a return on their money, and the food crisis of 2008 when prices rocketed showed that food can be profitable.

"I think agriculture is going to come back into its own as an investment in the decades that lie ahead, and of course, that's a great opportunity for Cambodia," Costello told the Phnom Penh Post.

For his part, Son Chhay would prefer investment from countries like Australia rather than from Cambodia's more traditional investors, such as China and Vietnam, whose companies, he said, are uninterested in improving local skills.

Yet he insisted that a transparent, corruption-free approach is vital to ensure the Cambodian people benefit from the deal.

"A lot of concessions have caused problems to our farmers and indigenous people who have no knowledge of what is in the contracts," he said.

But he called on Costello to make public the full details of any contract with the government.

"He should act upon his word [to do so]," Son Chhay said. "We would hope that this kind of investment from a society like Australia would be done in a proper manner."

Costello pushes USD$600 mil investment in Cambodia

January 25, 2010
ABC Radio Australia

Australia's former Treasurer Peter Costello left parliament four months ago and now is hard at work in Cambodia. Mr Costello is acting as a financial adviser to an investment fund that's planning a 600-million dollar project. If successful it will be the biggest single foreign investment in Cambodia to date, roughly equalling the total approved investment in the country last year.

Presenter: Karon Snowdon
Speaker: Peter Costello, former Australian treasurer

Click here to listen to the audio program (Windows Media)

SNOWDON: Peter Costello was Australia's longest Treasurer, holding the post for the 11 years of the Howard Government. Mr Costello resigned from Parliament in October having spent two years in opposition after the Liberal party lost the 2007 federal election.

In November he joined the Australian company BKK Partners, which provides financial and corporate advisory services in the Asia Pacific region. His client in Cambodia is Indochina Gateway Capital Limited, which focuses on private equity investments in Cambodia, Laos and Vietnam. Its hoping to develop an agri-business fund to focus on Cambodia's agriculture.

Peter Costello told Steve Finch of the Phnom Penh Post newspaper he's in the country to meet with government officials.

COSTELLO: The proposal is that the investment would be in rice, sugar, bananas. That other investors would put together a sizeable sum that would bring the best of Australian technology to the agriculture sector and export state of the art agriculture production to markets outside Cambodia. Its a very large scale investment. We're looking at 600 million [US dollars].

SNOWDON: Mr Costello says Australian technology and know-how will benefit Cambodia.

COSTELLO: Australia is one of the world's major agricultural producers. And that technology, if it were brought into a country like Cambodia, would lift productivity enormously.

SNOWDON: And he believes there are potentially good returns for investors.

COSTELLO: Personally I think agriculture is going to be a great industry for investment. We have seen a spike in food prices in 2008. So I think agriculture is going to come back into its own as an investment in the decades that lie ahead and of course that's a great opportunity for Cambodia. Countries that have natural advantage in agriculture should make the most of them. I think it'll be good for Cambodia, I think it'll be good for Australia by the way. I think its a natural fit.

SNOWDON: The Cambodian Government has made agricultural development its main priority for achieving higher growth and poverty reduction. Around 80 per cent of the population lives in rural areas and in poverty, dependent on agriculture, mainly rice.

According to the Phnom Penh Post, the scale of the IndoChina Gateway project is bigger than anything previously seen in Cambodia. If the fund raised its target of USD$600 million, it would be more than the total of all domestic and foreign investment in the country in 2009. Last year saw a big improvement though - investors are looking at Cambodia with fresh ideas.

But Peter Costello says there's still a long way to go to reassure investors who need a better legal system, business regulation, and straightforward anti-corruption measures.

COSTELLO: There's a reason why we should be against corruption. Eventually corruption undermines development. People who think you can develop an economy and turn a blind eye to corruption are wrong. Really the first thing you need for development is certainty and security for investment and corruption undermines and corrodes that.

[Australia's] Costello’s $600 million Cambodian crusade [... one of the world’s most corrupt countries]

Monday, 25 January 2010
by Bernard Keane and Andrew Crook
Crickey.com.au

The recent cases of Group 78, located next to the Australian Embassy in Phnom Penh and the nearby Dey Kraham, show just how punitive the authorities can be when locals get in the way of progress.

Peter Costello’s first major private sector venture is a $US600m investment fund aiming to bring agricultural technology to Cambodia, one of the world’s most corrupt countries.

Last year, Costello retired from federal politics and became managing director and partner at corporate advisory outfit BKK Partners, founded and run by ex-Goldman Sachs and NAB execs and chaired by Alistair Walton, a long-time Costello mate from his days in student politics.

But Costello’s massive private equity foray will struggle to avoid the corrupt taxes and charges attached to nearly all commercial deals in the mostly-peasant nation, according to sources familiar with the region.

Last Thursday, in a development ignored by the Australian media still in holiday mode, the Phnom Penh Post reported that Costello was advising Indochina Gateway Capital in developing an investment fund focusing on “rice bananas and sugar” by taking advantage of government “land concessions”.

In a video interview with the paper, Costello said he would “bringing in major multinational agro-technology firms and investors in a bid to add value to the Kingdom’s farming sector”, as well as teak and palm oil:

The massive investment will be greater than the total foreign investment Cambodia attracted in 2009, and will far exceed any previous investment in agriculture in one of the world’s poorest nations. Cambodian Government approval will be required both for the investment fund and its projects, which, according to BKK chairman Alistair Walton (who is also chair of chair of Indochina Gateway Capital) will be over 100,000 hectares in size.

But the issue of graft or “special taxes” in Cambodia remain a factor, with the nation coming in at a lowly 158 in Transparency International’s anti corruption rankings last year, alongside other luminaries like the Central African Republic and Yemen.

BKK’s as yet negotiated land deals will no-doubt draw the most scrutiny. The firm is currently seeking investors to take advantage of land “concessions” on 70 and 99 year leases.

One Cambodian insider told Crikey: “Land grabbing and dodgy forced evictions have been a massive issue in agricultural and city areas for a few years. Usually the company does a deal with the government so the government ends up kicking the residents off the land.”

The recent cases of Group 78, located next to the Australian Embassy in Phnom Penh and the nearby Dey Kraham, show just how punitive the authorities can be when locals get in the way of progress.

According to the Global Witness report “Country for Sale”, Cambodia is run by a “…kleptocratic elite that generates much of its wealth via the seizure of public assets, particularly natural resources.” The report prompted this Photoshopped response from Cambodia’s Ambassador to the UK, who is also the foreign minister’s son.

The clique that controls Cambodia was also detailed by this article that appeared in the Fairfax press towards the end of last year. The article looked at a state-within-a-state dominated by guns, cash and Cadillac Escalades. BKK’s Phnom Penh headquarters is located in a ritzy part of the capital full of international businesses and foreign NGOs, whose offices are tucked behind barbed wire. The area is frequented by wealthy expats and Cambodian business people.

Asked whether BKK has formulated an approach for dealing with corruption, Managing Director John Anderson told Crikey that his official policy was “no corruption”.

“In any developing country in the world with corruption issues you go in with your eyes wide open. We’ve told the government that if bribes were part of the deal we can’t abide by it.”

Anderson cited record commodity prices and Cambodia’s swathes of unoccupied land wiped out by the Khmer Rouge as a major incentive behind the project.

“Commodity prices spiked in 2008 and in many developing countries there’s limited land available, limited water. In Cambodia there’s an abundance of land and water because the Khmer Rouge wiped out 40% of the people. Thailand and Vietnam are the largest agricultural hubs in South East Asia, while Cambodia exports next to nothing…,” said Anderson.

Anderson said that the main reason to pursue the project was the “profit motive through the private equity fund” and also cited a “social development angle”, that would “transport western technology and skills” into the country’s fields. Five per cent of the investment would go towards a charitable foundation, Anderson said.

BKK would set up a corporate governance committee that would assess displacement issues before the funds were raised.

“Village displacement issues are important to us but we’ve got to focus on the development benefits for the Cambodian people in raising up the agricultural sector to where it should be. The agricultural sector should be the main contributor to GDP. If you raise the standards and raise the yields the benefit for the Cambodian people will be huge.”

It is Costello’s post-political role, rather than his status as former Australian Treasurer, that makes him a key figure for BKK and Indochina Gateway Capital. Costello has been a member of the World Bank’s 4-person anti-corruption Independent Advisory Board since 2008. Corruption in Cambodia has been a particular problem for the World Bank, which has been repeatedly criticised, including by the Wall Street Journal for turning a blind eye to corruption in the country. In 2006, the World Bank suspended Cambodia’s right to draw Bank project funds and cancelled several projects until the Cambodian Government repaid funds and put in place a series of anti-corruption measures. But there continue to be claims that foreign access to Cambodia’s natural resources depends on bribing key officials.

On Friday, Costello spoke off the cuff at a breakfast at the Intercontinental Hotel in downtown Phnom Penh with a Crikey source reporting that he cheerfully signed a large photograph from the former Australian Embassy featuring a very young looking Paul Keating sitting at a table with Cambodia’s King Sihanouk.

Costello reportedly drew an arrow next to Keating’s head and wrote “Not the world’s greatest treasurer!”

Two Australian businessmen take over Phnom Penh Post

01.07.08

BANGKOK (Thomson Financial) - Two Australian businessmen with stakes in The Myanmar Times weekly announced Monday they have taken a controlling interest in The Phnom Penh Post, a respected Cambodian newspaper.

Ross Dunkley, chief executive officer of Myanmar Consolidated Media, which publishes the Myanmar Times, said he and Bill Clough, an Australian miner and oil and gas entrepreneur, have taken a controlling stake in the paper.

He said the Cambodian paper would be run completely separately from the Myanmar publications, which include English and Myanmar-language weeklies.

The Phnom Penh Post, which publishes every two weeks, was founded by American journalist Michael Hayes 17 years ago.

Hayes will remain as editor in chief, while the project will be managed by Michel Dauguet, a French national with extensive experience working in Vietnam in media and software development, the statement said.

The Myanmar Times began publishing in 2000 as that country's first private newspaper in over three decades. Dunkley also had experience working in tightly-controlled societies as editor of the Vietnam Investment Review.