Keat Chhon said that he will take measures against corrupt officials at the Social Welfare ministry who lost more than $5 million

Keat Chhon

Ith Sam Heng

18 July 2011
By Meas Mony
The Free Press Magazine
Translated from Khmer by Soch
Click here to read original article in Khmer

On Monday 18, in front of members of Parliament, Keat Chhon, the minister of Economy and Finance, claimed that he will take measures against corrupt Social Welfare ministry officials for losing more than $5 million in retirement funds.

Keat Chhon – who was an advisor of KR leader Pol Pot – said that, currently, the Anti-Corruption Unit is taking legal measures against these officials.

Keat Chhon’s claim came after the opposition party and the civil society stated that the corrupt officials who stole retirement funds should be brought to face legal charges. Two weeks ago, the ministry of Economy and Finance ordered Ith Sam Heng, the minister of Social Welfare, to pay back to the ministry of Economic and Finance more than $5 million of funds lost.

Not all convinced by Cambodia's action on graft

By Prak Chan Thul

PHNOM PENH, Dec 13 (Reuters) - Cambodia has begun to enforce an anti-graft law that came into effect this year but some businessmen and analysts already spot loopholes that could undermine the legislation in one of Asia's most corrupt states.

Corruption is endemic in Cambodia. Watchdog Transparency International's 2010 list of most corrupt countries ranks Cambodia 154th out of 178 nations. Fighting it is something of a novelty, and expectations are modest in the near term.

"If they can enforce the law 70 percent, I'd be really happy," said Mong Reththy, chief executive of Mong Reththy Group of Companies, which has interests in agriculture and the ago-industrial sector.

A verdict in the first trial under the new law is due on Dec. 16. It involves a former Finance Ministry official who is charged with embezzling more than $600,000 by forging is pay cheques over a two-year period and squandering it all on gambling.

Kuy Dara, former acting bureau director of the Financial Industry Department, is the only person charged. He told the court he acted alone, but his attorney and a prosecutor among others doubt that was the case and believe he is protecting more senior officials.

The Anti-Corruption Institution held a seminar on Dec. 9 for hundreds of government members, state functionaries, police and army officials, explaining how civil servants would be obliged from Jan. 1 to declare their assets and debts.

Its head, Om Yentieng, assured the audience that civil servants' wives and children were not obliged to make any declaration; their cash in banks did not have to be declared, he said, adding his view that corruption was not a big problem.

Those are big loopholes, said San Chey, a fellow of the Affiliated Network for Social Accountability in East Asia and the Pacific, a Manila-based advocacy group.

"When money in banks is not forced to be declared, big officials will just sell their assets and put their cash in banks," he said. "I am not confident in this body."

CHARGES OF TAX GRAFT

The Anti-Corruption Institution has said it had evidence to prove at least 40 Cambodian state tax officials had engaged in corrupt practices.

That investigation was opened after claims by 11 non-governmental organisations that officials were pocketing about $1 million a year in road tax payments.

But none of the officials seems likely to be prosecuted.

Instead, the Finance Ministry will be left to decide whether to fire, demote or simply issue a warning to offenders.

Despite its shortcomings, the law has been cautiously welcomed by international financial institutions like the International Monetary Fund and Asian Development Bank, and by foreign investors such as Richard Stanger, managing director of Liberty Mining International Pty Ltd.

"It will assist with improving the perception that foreign investors have of the country," Stanger said. "It will assist foreign investors to make more informed decisions."

Peter Brimble, the ADB's chief economist in Cambodia, was also looking on the bright side.

"Corruption remains a critical factor for the business environment in Cambodia. According to the World Bank, corruption was the most important constraint faced by the private sector in late 2009," he told Reuters.

"The new anti-corruption law can play a key role in reducing levels of corruption, and is an important signal of the government's intention to improve the overall business climate."

(Editing by Alan Raybould and Jason Szep)

No Clear Use Found for BHP ‘Social Fund’ [-It's all: Corruption! Corruption! Corruption!]

Ros Sothea, VOA Khmer
Phnom Penh Thursday, 27 May 2010

“We don’t know of a clear policy for granting concessions or licenses to those companies, and what we are facing now is the limited disclosure of related information.”

A year after it pulled out of Cambodia, the Australian mining giant BHP Billiton has found itself under a US Securities and Exchange Commission investigation for allegations related to bribery in a foreign country.

Officials have not said which country the alleged corruption took place in, but the company has said it gave $2.5 million to the government here in exchange for mining exploration rights, making Cambodia among the likely countries under the scope of the investigation.

It is not uncommon for companies to pay bonuses for concessions here, but what happened to that money remains unknown, with government and company officials sending conflicting statements and no apparent accounting for the funds.

The mystery underscores worries from environmental and development advocates who say money from Cambodia’s natural resources will be lost or squandered to corruption if and when gold, oil and other minerals and resources are explored in full.

BHP came to Cambodia under a 100,000-hectare exploration license for gold in 2006. After three years of exploration in Mondolkiri province, the company withdrew from the country, claiming it had not found enough to continue its investment. The company told the UK-based watchdog Global Witness that it had paid a $1 million signature bonus and $1.5 million for a social fund in 2006.

Global Witness now says there is no sign of that money.

Prime Minister Hun Sen told a private sector conference in April the $2.5 million had been put into a social fund for a hydropower project in Pursat Province.

Contacted by VOA Khmer in April, Pursat Governor Khuy Sokha said he was unaware of any hydropower projects other than one venture paid for by a $300-million Chinese investment.

“There is only one hydropower [project] in Pursat, and it belongs to the Chinese company, and for which the construction process began in December 2009,” he said. “That is called Atay Hydropower.”

BHP did not respond to queries related to the social fund. Officials have said they are looking into the company’s practices abroad in the wake of the US investigation.

The company published information on its website indicating it provided money to a handful of non-governmental organizations here, though the website does no say how much money the company offered each group.

VOA Khmer was able to identify four institutions that received BHP money for development projects between 2007 and 2010: the Cambodian Mine Action Center, the Danish Red Cross, Health Net International and Village Focus International.

The total amount of money given to these organizations was a little more than $615,000, according to individual representatives of the organizations, nearly three times less than the company told Global Witness it had paid.

Where the other $885,000 was spent remains unclear. Likewise, there is no record of the $1 million signature bonus the company claims to have made.

The lack of accounting for such large sums of money is cause for concern for development groups and donor countries, who warn Cambodia could face a “resource curse” when millions of dollars in oil and other resources begin to flow.

George Boden, a researcher for Global Witness, said the current complications in managing revenue from the extractive industries does not bode well for future, more lucrative ventures.

So far, 33 countries have been granted exploration licenses here. Thirteen of them have begun exploration for oil and gas and minerals.

“We don’t know of a clear policy for granting concessions or licenses to those companies, and what we are facing now is the limited disclosure of related information,” Mam Sambath, president of Cambodians for Resource Revenue Transparency, told VOA Khmer. “The information regarding the [BHP] case has never been revealed in public, so our research on the issue will also be limited.”

The outcome of the SEC investigation could affect investment in Cambodia, Mam Sambath said, because potential investors may shy away from a country implicated in a corruption scandal.

And BHP is not the only company to have put money into a social fund. In 2006, Indonesia’s MedcoEnergi provided $4.5 million for a license to explore blocks of onshore and offshore oil. The company withdrew in 2010, without citing a reason.

Meanwhile, the French oil and gas company Total, which has a license to explore oil and gas in the overlapping area near Thailand, has said it paid a $20 million signature bonus and another $8 for a social development fund.

A Total official told VOA Khmer from France the company had already provided $6 million of the social fund, which is to be used for a healthcare program under the joint control of a local Total representative and the Cambodian National Petroleum Authority. The official declined to elaborate.

Michael McWalter, an adviser to the CNPA, said signature money is properly deposited into an official account to “become a part of the revenue for the government,” and social funds are carefully watched by companies.

All companies are required to pay signature bonuses based on potential investment, and some are required to provide for a social fund, based on negotiations with the government, but neither should be a concern, he said. “So what one has to do is to trust the government to do the job properly.”

Deputy-director of the Telecommunications department transferred [to new position after corruption charge]

Nhiek Kosal Vithya (L) and So Khun (R)

20 April 2008
By Sok Serey
Radio Free Asia
Translated from Khmer by Socheata

The Ministry of Post and Telecommunications had recently decided to remove Nhiek Kosal Vithya from his position as deputy director of the Telecommunications department while he is accused of corruption, embezzlement of million dollars of state funds from the network and the national and international telephone system in Cambodia.

The removal of Nhiek Kosal Vithya took place during a position transfer following the end of his 3-year term.

So Khun, the minister of Post and Telecommunication, told RFA on Sunday that: “It’s the end of his term. He only worked for three years, therefore after three years, we must change.” When asked if this removal is connected to the corruption accusation, So Khun replied: “We leave this to the police to research some more, because the ministry’s audition in connection with the Parliament, they are still continuing their research some more.”

The position transfer took place last Friday stemming from a sub-decree nominating Lao Saroeun as the replacement for Nhiek Kosal Vithya who will still hold a position at the Ministry of Post and Telecommunications, even though he is under investigation by the relevant department for the corruption accusation.

Yang Kim Eng, director of the People Center for Development and Peace in Cambodia which is a member organization of the civil society against corruption, said: “This is the normal way of the government, there’s only a position change from one place to another. This measure does not teach anything to the corrupt officials.”

SRP MP Yim Sovann who is also the chairman of the National Assembly committee for the Interior, Defense, Investigation and cleanup, and Public Works, reacted by saying: “Mr. Nhiek Kosal Vithyea was not the only one involved in corruption and embezzlement of many million of dollars in state funds. But, up to now, the position change opens the path for the investigation, we welcome it. For all cases, we ask for a proper investigation by an independent committee.”

Based on research report issued by the Ministry of Post and Telecommunications in September 2007, 8 points were found, including Nhiek Kosal Vithya’s 2006 embezzlement of state funds whereby 51% of the international phone revenue which should be paid to the state – an amount totaling 1.656 billion riels (~$414,000) – but only 5% of the amount was actually recorded as revenue. He is also allegedly involved in inflating the number of his advisors from 7 to 9, as well as the number of aid workers, he was accused of pocketing the salaries of the ghost workers. There were also additional accusations made by the ministry.

Nhiek Kosal Vithya could not be reached on Sunday about these corruption charges.