An agreement to relieve the Ariston company from $1.3 billion in development obligations it incurred when building Phnom Penh’s Naga Casino was called off at the last possible minute last week, sources said Wednesday.
Commerce Minister Cham Prasidh and Ariston Chairman Chen Lip Keong were gathering to sign the agreement at the Council for the Development of Cambodia when the government aborted the process.
In 1995, Malaysian-owned Ariston agreed to build an airport and power plants in Sihanoukville and a resort on Koh Pos island in exchange for the exclusive right to develop a casino in the capital.
On July 14, the government was preparing to free Ariston of the obligation, when it decided doing so would render it powerless to collect back taxes it says the Naga Casino owes, the government sources said.
“The government waited 10 years for Ariston to implement the agreement signed in 1995,” Civil Aviation Director of Planning Sin Chansereyvutha said. “Development projects are to be withdrawn from Ariston except Naga Casino, the legal casino corporation.”
The government and the French-owned Societe Concessionaire de l’Aeroport, which runs the Siem Reap and Phnom Penh airports, are set to sign an agreement for an undisclosed sum to develop the Sihanoukville airport. The government is keen to increase tourism in Sihanoukville, the aviation official said.
The agreement hinges on the Ariston deal. That deal fell through, Sin Chansereyvutha said, over millions of dollars in back taxes and a claim by Ariston to money SCA will likely pay the government to purchase land surrounding the airport for its enlargement.
“The government cannot agree with the demands of Ariston to claim the money,” he said.
“We will await a decision of Samdech Krom Preah [Prince Ranariddh],” a CDC official who asked not to be named said. The official said that government officials are debating whether relieving Ariston of its obligations before collecting taxes owed will hurt the government’s ability to force payment.
Contacted Wednesday, a Naga Corp representative identified as Ravy said that Naga cannot respond to any questions from the media until Aug 2, when spokesman Michael Tachene returns from attending football matches in Brunei.
A Finance Ministry official familiar with the Ariston negotiation said that Ariston was hobbled by the Asian financial crisis of 1997 and does not have capital to invest in the proposed projects.
SCA, he said, is in sound financial position to develop the Sihanoukville airport. SCA spokesman Khek Norinda could not be reached for comment.
(Additional reporting by Erik Wasson)