In Cambodia, A Close Friendship With The PM Leads To Vast Wealth For One Power Couple
This story appears in the October 20, 2014 issue of Forbes Asia.
In
summer 2013 Pal Liv, a farmer in Cambodia’s Pursat Province, 140 miles
north of the capital Phnom Penh, watched as maybe ten men came on
tractors and pulled up the bananas, rice, beans and corn he had planted.
A larger contingent, some armed and others with badges, supervised the
destruction. Nearly half his 3.5 hectares was seized. By Pal’s telling,
it wasn’t the first time that his parcel and his living had been carved
up–and by the Pheapimex Group, a company with powerful owners and
connections.
A similar thing had happened three years before, he says. That time
the men had moved in on what Pal says were 10 hectares belonging to him.
His crops were surrounded by what he describes as a forest that he and
his family tapped for resins and fruits. The company logged the trees
for timber.
Farmer Pal Liv, seen with his grandchildren,
is no longer able to make ends meet, his land carved up by Pheapimex.
(credit:© Thomas Cristofoletti / Ruom for Forbes)
Pal, 55, has tried to scramble back, as he also did after the Khmer
Rouge took his original family homestead in the late 1970s. Land rights
in the country have been in flux since. Following his first brush with
Pheapimex, in a period when the Cambodian government was under pressure
to respect customary possessions, he was able to get his title to the
3.5 hectares. Now that’s been shaved to 2, and he can’t make ends meet.
Cambodia, one of the poorest nations in Asia, holds potentially rich
payoffs for the well-placed. In the past decade it’s seemingly moved to
embrace a market economy and averaged GDP growth of 7.9% from 2000 to
2013, driven predominantly by the textile and tourism sectors. (While
agriculture’s contribution to growth has fallen over the last two
decades, it’s still the main source of livelihood in rural areas.)
Officially a multiparty democracy, in reality the country remains a
one-party state dominated by the Cambodian Peoples Party and Prime
Minister Hun Sen, a recast Khmer Rouge official in power since 1985. The
open doors to new investment during his reign have yielded the most
access to a coterie of cronies of his and his wife, Bun Rany. Two of
these are Senator Lao Meng Khin and his equally powerful wife, Choeung
Sopheap, better known as Yeay Phu. They own Pheapimex and other firms
active elsewhere in the nation.
Bun Rany and Yeay Phu are friends, often traveling together and serving on the board of the Cambodian Red Cross. The U.S. embassy in Phnom Penh in a 2007 cable titled Cambodia’s Top Ten Tycoons–released
by WikiLeaks–explained how the prime minister bridged political and
private sectors, and maintained a pretense of civil society, by
cultivating relationships with the country’s most prominent tycoons.
These symbiotic relationships illustrate the networks of business
tycoons, political figures and government officials that have formed in
Cambodia, which reinforce the culture of impunity and limit progress on
reforms such as Hun Sen’s self-declared war on corruption.’ ”
The cable called Lao and Yeay Phu “one of the most politically
and economically connected couples in the country (after Prime Minister
Hun Sen and his wife, and Commerce Minister Cham Prasidh and his wife).”
Lao Meng Khin has been a CPP senator since 2006.
In the murky world of Cambodian business, not much is known–even by
Global Witness, a British nonprofit that has been monitoring the
activity–about the status of the various projects the couple has been
linked with over the years, including a couple of coal-fired power
plants, a hydropower plant and a bauxite mine. Along the way, however,
the pair’s efforts have been a magnet for Chinese capital (see box,
opposite).
Farmland in Pursat Province confiscated by
Pheapimex, 140 miles north of Phnom Penh. (credit: © Thomas
Cristofoletti / Ruom for Forbes)
Cambodia lacks transparency on such investments. What is known, says
Global Witness, is that through Pheapimex and the various logging and
land concessions it’s chalked up over the years, the owners control
about 7% of Cambodia’s total land area–despite a law aimed at
restricting any individual’s property to 10,000 hectares (24,700 acres).
While the forest concessions are inactive because of a government
decree banning logging, the pair remain in possession, and farmers like
Pal must battle to keep what they can.
“There is growing public anger over the means by which both the
government and private companies are forcing existing residents off the
land,” says U.K. risk analysis firm Maplecroft in a report. “There have
also been reports of the government employing the military to conduct
forced evictions. Affected populations are often inadequately
compensated.”
One doesn’t have to go beyond the Cambodian capital to see this play
out in an area called Boeung Kak Lake. Once the largest body of water in
the city and a scenic spot for villagers, it also served as a main
drainage basin for managing Cambodia’s intense monsoons. The government
leased the 133-hectare area in 2007 for 99 years to Shukaku, another
company owned by Lao and Yeay, for $79 million, or $0.60 a square meter.
In 2011 the government approved their plans to build luxury hotels,
condos, shopping malls, a hospital, a school and residential and
commercial buildings at a cost of $2 billion.
Since then the lake has been mostly filled with sand, and
three-quarters of the 4,000 families living around it are gone, evicted,
their houses razed or inundated with mud, and drainage in the area
blocked–all amid repeated clashes with the police and military.
Things came to a boil in April 2011 when several residents,
including two children, were manhandled by security forces in front of a
Phnom Penh municipal building as they attempted to press authorities to
stop pumping sand into the lake and to reach a settlement, says the
Cambodia Center for Human Rights, an NGO in the capital. Nine women were
arrested and forced to sign confessions admitting provocation and
responsibility for the violence, the group says. (They were released a
day later.)
Phan Chhunreth was one of them. She and her extended family of 12 are
remaining holdouts. They bought a house in a Boeung Kak Lake village in
1993. Phan, 55, runs a small convenience store, while her husband
ferries passengers on a motorbike. They rent out a room in their house
for additional income. Phan doesn’t have a title to her house, like many
in the country. (Some have not been recovered since the Khmer Rouge
days.) Dressed simply on an August day, she says she is still waiting
for the title the government promised her in 2005. “I’ve been beaten,
and I’ve been to jail,” she says. “The government development policy
does not provide justice and equality for all.”
Meantime, Shukaku’s grand plans have become dormant as a prominent
investor in its Chinese partner, Inner Mongolia Erdos Hung Jun
Investment, is reportedly under investigation in China. (That would be
Chen Jihong of Denzheng Resources, who appeared on the 2010 FORBES CHINA
rich list at $500 million.) Though the probe is not believed to be
related to the Phnom Penh project, the contentious area has been given
over mostly to wild grass, at the far end of which lies the prime
minister’s office and newer towers in the capital’s skyline.
Boeung Kak Lake, once the largest body of
water in Phnom Penh, is mostly filled in with sand as part of a stalled
development project (the prime minister’s office and new towers are in
the background). (credit:Omar Havana/Getty Images)
Boeung Kak Lake was also at the heart of a 2011 decision by the World
Bank to place a moratorium on loans to Cambodia until the 779 families
still living there were adequately compensated. The accompanying global
media glare shined a rare light on the owners of Boeung Kak Lake and
their relationship with the government. Two days later, on Aug. 11,
2011, Hun Sen authorized that 12.44 hectares of land within the Boeung
Kak development area be allocated to the remaining families for onsite
housing on plots with legal ownership. Most of those families, like
Phan’s, are still waiting for their land, and as of last January the
World Bank held off plans to resume lending.
Will Lao Meng Khin or Yeay Phu comment? Neither seems to have an
office number or business Web address. When FORBES ASIA approached their
mansion in Phnom Penh, a staff member laughed and said, “No
journalists,” before quickly retreating and shutting an ornate
brown-and-gold gate. The house is on a tree-lined street in a posh
neighborhood, and military police guard it around the clock.
Meanwhile, away from even the meager protection that some watchful
media are able to provide the landless in Phnom Penh, Pal Liv in Pursat,
his ribs visible above the blue shorts, assesses his plight. “Earlier
we had enough rice for everyone to eat, and we could buy new clothes for
the children,” he says. The land yielded enough vegetables for his
family and often extra to sell. As the skies opened up to a brief
shower, a daughter and five grandchildren huddled in the doorway of the
tiny one-room hut built with hay and supported on stilts, and he went
on: “But ever since I’ve lost the land to the company, I don’t earn
enough to send my grandchildren to school or to buy new clothes for
them. There is no spare money, and we have run through our savings.”
Pheapimex cultivates cassava and potatoes on the logged land on the
horizon. Pal’s wife and another daughter and son-in-law work those
fields from 6 a.m. to 5 p.m. but get paid only if they meet the target
that has been set for the day, says Pal. Once his wife was jammed with
several other workers in a mini-truck transporting them to a farther-off
field when it overturned. She broke her arm, and the company gave her
$50 to have it taken care of. It was not set properly, and her wrist
juts out awkwardly.
It is far from the only casualty of Cambodia’s economic rush that needs a better fix.
