Clan a big player in energy sector

 

Clan a big player in energy sector

Phnom Penh Post | 7 July 2016

Amid its vast portfolio of business interests, today’s report by Global Witness shows Prime Minister Hun Sen’s family to be a powerful player in Cambodia’s energy industry, having obtained substantial private sector interests ranging from power plants to renewable energy to petrol stations. 

Citing the premier’s vow to connect large swaths of Cambodian households to the national grid in coming years, Global Witness said it was “not surprising” that his family has “significant stakes in the country’s energy sector” and identifies six energy firms to which the family is linked.

Numerous family members have ties to Cambodia People’s Party Senator Ly Yong Phat’s utility company Cambodia Electricity Private (CEP) – a company that as of 2014 provided 95 million kilowatt hours of power to the capital. The company’s high-profile directors include Hun Mana, Hun Manith, Hun Maly and Hun Manith’s mother-in-law, Men Pheakdey, The quartet have been involved with the company since 2005.

Hun Mana and Ly Yong Phat declined to discuss the family’s involvement when contacted last week. However, Lat Lay, vice president of CEP, defended the family’s holdings as inconsequential in a plant that he said cost $30 million to build. 

“They are part of the company because they had the money to buy in,” he said. “The family only owns a small amount of the company, so they are not involved in any decision making. 

“The family is only able to gain profits from the electricity we sell to the EDC [Electricite du Cambodge].” 

He declined to provide a figure for how much the family takes in despite the company having an 18-year power purchase agreement with the EDC. 

According to the report, Manith’s role in the military makes his involvement illegal. According to Article 25 of the law governing military officers’ conduct, no member of the armed forces is allowed to be a “member of a board of directors or to ensure the management of a private company”. 

But the Hun family’s involvement in energy does not stop there. Global Witness highlighted that Hun Mana is the chair of Jaya Holding, a subsidiary of a Singaporean-listed offshore energy services company. The parent company sold off all of its subsidiaries in 2014 to an Australian firm for $625 million. Records show that Mana originally bought into the company for $220,000. 

Meanwhile, Hun To, a nephew of the prime minister, runs a string of gasoline stations under the directorship of LHR Asean Investment.

The report highlighted that familial favouritism is rife and that the “structures of patronage have extended into the private sector, with chairmanships, directorships and majority shareholdings ending up in the hands of family members or cronies”.

Global Witness also points out the family’s links to Cambodian petroleum firm Kampuchea Tela. According to the Commerce Ministry’s records, the premier’s wife, Bun Rany – under her maiden name – was previously listed as a shareholder, though resigned at an undisclosed date.

According to the report, the company has “long been suggested” as a proxy of the family, its true interests concealed by “front men” shareholders. 

Reached on Monday, a Tela representative said the Post’s request for comment would be forwarded to the relevant person. No response was received as of press time.

Sok Puthyvuth, Hun Maly’s husband, also appears to have benefited from the family’s immense power. As the chair of Soma Energy, the company secured a $3 million Memorandum of Understanding (MoU) with General Electric for a biomass plant in 2012 to turn rice husks into energy. 

When reached by the Post, he admitted that while the family ties have paved the way for lucrative business deals, the relationship was at times fraught with difficulties.

“In some circumstances, it definitely helps when you are frustrated with policy and you know things need to be changed in a way that is good for the country,” he said. 

“But other times it hurts because international companies don’t want to be attributed with a family that does not have the best reputation,” he said.