[Vietnamization] Inside the Hun family's business empire

Image: Daniel Nass

Inside the Hun family's business empire

A scathing new report by Global Witness details the vast holdings of the Hun Sen clan.

Phnom Penh Post | 7 July 2016

Cambodian Prime Minister Hun Sen’s family has amassed a “vast fortune”, with stakes in at least 114 domestic companies spanning most of the Kingdom’s key sectors, including major energy, telecoms, mining and trading firms, according to an investigation by Global Witness, which accuses the Hun family of flouting the country’s laws to build a business “empire”.

Released today, the report, Hostile Takeover: The Corporate Empire of Cambodia’s Ruling Family, details the vast holdings of the Hun family across 18 sectors, finding that 27 relatives of the premier are linked to companies whose official share capital value is more than $200 million. 

The data, collected from the Ministry of Commerce’s own business registry, does not provide information on revenues or profits, meaning the figures represent just a fraction of the companies’ worth. 

Further, the report – and sources spoken to by the Post – stress the paper trail is just “the tip of the iceberg”, stating the family is believed to use proxies to hide the true size of its business empire and its members’ personal fortunes.

“Hun Sen has abused his position as Prime Minister to allow his relatives control of, or major stakes in, most of Cambodia’s major industries,” the report states.

“However, this is not just about the accumulation of personal wealth or specific links between Hun family members and particular companies – the Hun families domination of Cambodia’s public and private sectors has resulted in Hun Sen having near-total control over the country.” 

Contacted this week, government spokesman Phay Siphan declined to comment on the findings, dismissing Global Witness as trying to incite a “rebellion” against the premier and noting he was “a spokesman, not the prime minister’s lawyer”. 

Spokesman for the Commerce Ministry Soeng Sophary acknowledged there was always a need to improve regulation of the private sector, but attributed the premier’s relatives’ success to their “good reputation”, which attracted investors. 

“It is not perfect… but Cambodia is now a free market, those who have the money can invest in the sector they want to, no matter who they are,” he said. 

 

The empire

In 2011, the prime minister declared his assets to the new Anti-Corruption Unit, a body established to combat endemic graft led by long-time Hun Sen confidant Om Yentieng, who could not be reached for comment on the report this week.

"Today, I have fulfilled my obligation under the anti-corruption law," the premier said at the time.

He declared his sole source of income as his salary as the country’s leader: $1,150 per month, or $13,800 a year.

Citing this figure, Global Witness accuses Hun Sen of breaching the anti-corruption law’s “illicit enrichment” clause, pointing out the discrepancy between the premier’s professed income and his lavish lifestyle, luxury houses and personal boasts that he funds projects and charitable deeds out of his own pocket.

According to Hostile Takeover, on paper, the family holds stakes in at least 17 trading companies, 10 finance firms, 10 hospitality and entertainment businesses, eight interests in both tourism and retail, and seven in construction and real estate.

Their holdings also span energy, mining and agriculture and forestry, with six companies in each respective sector; media, where the family – predominately the premier’s daughter Hun Mana, who directs Bayon Radio and TV – is linked to five companies; and transport, an area with five Hun-linked businesses. 

There are also interests listed in three telecom firms, including Mana’s 6 per cent stake – valued at $44 million – in Viettel Cambodia, part of the Vietnamese-military controlled Viettel Group, which owns Metfone. 

Among examples of “special treatment” given to companies cited in the report, is Hun Sen’s endorsement of the mobile service provider, which he advised all soldiers to use. A press relations number for the company was not answered this week.

Global Witness also note that the Ministry of Tourism has named Vital Premium Water – made by NVC Corporation, which is chaired by Mana – as the official water for all state ceremonies, according Vital’s website. 

The family’s portfolio also includes three manufacturing companies, three legal firms, two gambling operators, two security outfits, interests in two special economic zones and a pharmaceutical venture. 

Among the 114 companies – 11 of which do not have their purpose stated – 103 list a member of the Hun family as a chairperson or director or as having a shareholding of more than 25 per cent.

It’s not even the 1 per centers, it’s the 0.01 per centers ... a handful of people who have their hands in everything.

Global Witness also highlights several links between international brands and the Huns, who it calls “major gatekeepers” to the influx of foreign capital seeking to do business in the Kingdom.

Multinational giants Apple, Canon, LG Electronics, Lenovo-IBM Nokia, Electrolux and Pioneer distribute via companies linked to the family.

Products including Nescafe Gold, Kleenex tissues and Durex condoms are imported via a company linked to the premier’s sister, who also chairs a firm with the exclusive license to sell Johnnie Walker whiskey, Hennessy cognac and Corona beer.

“It shows that in Cambodia, as with elsewhere, it’s not even the 1 per centers, it’s the 0.01 per centers. We are talking about a handful of people who have their hands in everything,” Ear Sophal, an associate professor of diplomacy and world affairs at Occidental College in Los Angeles, said of Global Witnesses’ findings.

“Can you imagine how the benefits of globalisation could be shared more widely, and more transformatively, under different circumstances? It’s all about ksae (string) and knong (backing) in Cambodia. Who you are born to, unfortunately, determines how far you can go, and that is a pity.”

Meet the Huns (and friends)

Under the leadership of Hun Sen, Cambodia’s elites have consolidated their control over the country through a mix of strategic marriages, business interests and positions in public office.

Among the 27 Hun family members and associates featured in Hostile Takeover, at least four have interests in the private sector while simultaneously holding positions in the nation’s security forces.

These include the premier’s middle son, Hun Manith, a military general, as well as his son-in-law Dy Vichea and nephew Hun Chea, who are officers with the National Police, and in-law Yim Leang, a general in the military.

As for Manith, chief of the army’s intelligence department, Global Witness asserts that his position as a director and shareholder of power supplier Cambodia Electricity Private breaches Cambodian law.

According to Article 25 of the General Statute of Military Personnel of the Royal Cambodian Armed Forces, it is forbidden for career military personnel “to be a member of a board of directors or to ensure the management of a private company”.

The Post was this week unable to reach Manith. His wife, Hok Chendavy – daughter of late national police chief Hok Lundy, a close Hun Sen associate – meanwhile, is listed as a developer of a special economic zone in Bavet town.

Ministry of Defense spokesman Chhum Socheat declined to comment on Manith’s alleged conflict of interest.

The report does not directly connect Hun Sen’s eldest son, Hun Manet, a military lieutenant general, and his youngest son, Hun Many, a lawmaker, to any companies but links them by marriage to major firms. 

Manet’s wife, Pich Chanmony – daughter of Ministry of Labour Secretary of State Pich Sophoan – has links to eight companies, including the chairmanship of Legend Cinema and G Gear, which has the exclusive license to sell LG products.

Yim Chhay Lin, the wife of Many and daughter of Deputy Prime Minister Yim Chhay Ly, has roles at six firms, including the directorship of a mining exploration company and the chairmanship – and a 20 per cent stake in – a pharmaceutical business.

Chhay Lin was also recently transferred a 51 per cent stake in “The Bay” a $250 million condominium and hotel project in Phnom Penh developed with a Singaporean company, which severed ties with its previous partner, disgraced businessman Sok Bun, after he was imprisoned for assaulting a former television presenter.

But while the spotlight is often focused on the Hun sons, it’s the women of the family who have the most prolific business portfolios, in particular eldest daughter Hun Mana. 

Mana is already well known as a business mogul, with 22 interests identified by Global Witness ranging from major media outlets, advertising and telecom companies to VIP aviation services, the Angkor National Museum in Siem Reap and shares in business tycoon Kith Meng’s Royal Group. 

Her younger sister Hun Maly, meanwhile, boasts stakes in seven companies, including the chairmanship of high-end Phnom Penh shopping mall TK Avenue. 

Mana’s and Maly’s husbands – three-star police general Dy Vichea, the son of late national police chief Hok Lundy and the head of the National Police’s Central Security Department; and Sok Puthyvuth, son of deputy prime minister Sok An – also control companies.

Vichea is listed as a director and shareholder of gambling company Poseidon, which operates slot machines, according to a business listing by Bloomberg.

According to media reports in 2008, Filipino tech company Diversified Financial Network Inc (DFNN) was poised to buy Poseidon, via a Singaporean subsidiary, for $4.2 million, with the company’s revenue pegged as $21.2 million between June and December 2007, including $1.09 million in profits. 

Vichea was unreachable this week, while DFNN had not responded for a request for information as of press time.

From its core, the empire branches out to relatives both by blood and marriage. 

Hun Sen’s younger sister Hun Seng Ny has 12 listed companies. His cousin Dy Chouch, along with Chouch’s ex-wife Seng Keang – who Global Witness previously accused of running the country’s premiere logging syndicate in a separate report – are connected to five.

Keang, described as a close associate of first lady Bun Rany, is listed as the chair and director of garment firm Grand Harvest International (GHI).

GHI is connected to a Hong Kong firm of the same name that claims to supply major brands including Tommy Hilfiger, Polo Ralph Lauren and All Saints.

Nieces, nephews and in-laws also boast impressive portfolios. The children of Hun Sen’s brother Hun Neng, a current lawmaker and former governor of Kampong Cham province, have links to 28 firms, while his wife chairs two.

Contacted yesterday, Neng’s son Hun To, linked to five firms, including LHR Asean investment, which runs a network of petrol stations, swore at a Post reporter and said his companies operated legally. 

“Don’t make this a headache for me,” said To, who was previously linked to drug smuggling by Australian newspaper The Age, an accusation he stridently denied.

Reached on Monday, Neng said he doubted the information about his immediate family’s business interests revealed by Global Witness, conveyed to him by the Post. 

He warned that anyone disseminating false reports could be imprisoned.

Above the law?

On its website, the law firm founded by Hun Kimleng, the premier’s niece, highlights one major advantage it can offer clients: lobbying.

HML Law Firm & Consultants is “particularly well positioned to ensure good cooperation and results” from lobbying government ministries and offices, according to its website.

In its report, Global Witness suggests firms linked to the family have received “special treatment” in dealings with the state, while alleging ruling party’s sway over the courts has allowed them operate with immunity from laws designed to prevent corruption, ensure transparency and punish legal violations.

HML representatives did not return requests for comment.

In the “murky” world of Cambodian business, the right connections are often essential, well-placed business sources told the Post this week.

Speaking under condition of anonymity, a long-term expatriate business consultant said that while some, like Kimleng, openly leverage links to family, which were “super valuable” when it came to dealing with the government, other relatives often kept their participation quiet, to protect the family and their partners’ reputation. 

“The hard part is knowing what’s theirs, or what belongs to other people. They own a lot you’ll never see in writing anywhere,” they said. 

Another source, a long-time legal professional, who also declined to be named for fear of potential repercussions, said family members – and other powerful figures connected to the ruling Cambodian People’s Party – often worked as silent partners, “smoothing out” the regulatory process, while the foreign firm brought in the capital and expertise.

“They help get licenses in a timely fashion,” they said, adding that they provided “good backup” in the event of trouble and noting it would be a “career limiting move” for a tax inspector to audit a Hun-linked company.

However, getting into bed with the family – or any powerful figure in Cambodia – could quickly turn sour if contracts weren’t honoured, they said.

According to Transparency International, Cambodia’s public institutions, particularly its judiciary, are viewed as the most corrupt in Southeast Asia. The World Bank’s Ease of Doing Business rankings list Cambodia as 127th out of 189 countries, with “enforcing contracts” the most concerning field. 

“Even if you get a ruling in an international arbitration court, who is going to implement it?” the legal source asked.

According to the report, family-linked businesses are handling major projects from state contracts, natural resource exploitation including rubber plantations, mining and sand dredging, or have secured lucrative rights, including a casino license and the right to develop SEZs.

According to the data, family-linked companies hold mining concessions in five provinces including a 20,000 hectare plot owned by Worldwide Investment Group in Oddar Meanchey. 

The company is held by Hun Sen’s niece Hun Kimleng, the chairwoman of HML law firm. 

On its website, Worldwide states that the location has a “huge deposit of coal”, while noting the company also has a license to dredge sand along 4km of the Mekong.

Several agricultural ventures are also mentioned including at least three economic land concessions – two of which are embroiled in land disputes – as is a casino license awarded to Vina (HK). Vina is directed by Kim Heang, wife of CPP Senator Ly Yong Phat, and counts Hun Mana as a shareholder.

In a response to Global Witness, Heang denied benefiting from a system of patronage led by the premier.

However, the report goes on to demand that the companies voluntarily demonstrate that they were awarded licenses and contracts without bias, citing Criminal Code and Anti-Corruption provisions that criminalise the granting of unfair advantages or preferential treatment by the state.

“Given Hun Sen’s history of corruption and the lack of transparency in Cambodia’s opaque public sector, this pattern should raise serious alarm bells,” state the authors.

Curtis Chin, a former US ambassador to the Asian Development Bank, said that while it was important to differentiate between illegal activity and simply leveraging “connections”, the report was a wake-up call for the need for more transparency.

“For Cambodia to grow amidst the greater connectivity and competition that the ASEAN Economic Community might bring, it needs to up its game in terms of corporate governance and transparency,” Chin said. 

The anonymous business consultant, however, said that because of Cambodia’s largely deregulated economy, the Hun family’s investments, though large, did not necessarily harm market competition.

Modernisation, he said, meant the private sector was moving away from the patronage system towards smarter business practices, adding many foreign businesses did not want to risk associating themselves with politically exposed figures.

“The more interesting question is how the family accumulated all this wealth” he said, noting previous estimates of the family’s wealth as being in the billions.

‘We’re trying our best’

Though Global Witness provided right of reply for all family members mentioned in the report, including the prime minster, only Sok Puthyvuth, the husband of the premier’s daughter Hun Maly, responded, conceding that he saw “many issues” and that “good solutions are seldom implemented correctly”.

“I can understand your assumption that I have abused my power to get to where I am today, but I can assure you that I take seriously the challenge of building a responsible and respected private sector group,” wrote Puthyvuth. 

Contracts to develop a new building for the Civil Aviation Authority and involvement in the $100 million Phnom Penh International Airport extension held by one of Puthyvuth’s companies, agro-industrial conglomorate Soma Group, were called into question by the report. 

Speaking last week with the Post, Puthyvuth, who on July 1 was re-elected as head of the Cambodian Rice Federation, said his ties with the family could influence policy change in a way that was good for the country.

The phrase “conflict of interest” in Cambodia is in many senses meaningless; why wouldn’t you trade power for economic gain?

But speaking yesterday, a diplomat, who requested anonymity, said the lack of transparent market structures and the de facto need for high-level backing to effectively protect investments were among the reasons why business people from his country were reluctant to do business on a larger scale in Cambodia. 

“When looking at the Cambodian economy, on the surface there seems to be a liberal economy approach. However, business policies frequently are capricious, with vested interests in mind, and there is no institution which ensures fair competition,” they said, via email. 

“It is not easy to operate a business under these kind of conditions. Also, a lack of fair competition inevitably distorts the market mechanisms, and the price for this has to be paid by the consumers.”

Though other countries in the region are also plagued by allegations of nepotism and cronyism, author of Hun Sen’s Cambodia Sebastian Strangio said Cambodia had almost no institutions to restrict the dominance of personal relationships over the economy and politics. 

“The difference in Cambodia is the extent of the purity of the patronage streams,” Strangio said, via email.

“There’s no clear distinction between business and politics in Cambodia. The phrase ‘conflict of interest’ in Cambodia is in many senses meaningless: why wouldn’t you trade power for economic gain, or vice-versa?”

 

Design and development by Daniel Nass
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