The government has sold off oil and mining rights under a blanket of secrecy while failing to record millions of dollars in fees and bonuses paid by explorers, according to a report to be released today by environmental campaigners Global Witness.
Expelled from Cambodia in 2005, Global Witness in 2007 aroused a coordinated campaign of official condemnation for a banned report that accused a “kleptocratic elite” of illegal logging and corruption, a pattern that the group now says is being repeated in Cambodia’s growing extractive industries.
The new 70-page report titled “Country for Sale” says investigations conducted last year in Cambodia and abroad compound fears that revenues from oil and mineral extraction will be squandered rather than used to alleviate poverty, as senior government officials have claimed.
“It does not take an expert in governance to appreciate that the first signs of how Cambodia will handle its mineral and oil resources are deeply worrying,” the report’s authors wrote. A “total lack of transparency in the ownership of companies with the responsibility to handle public assets and the destination of payments made to secure these concessions serves only one purpose—to protect and entrench the interests of those who benefit from the continued functioning of Cambodia’s shadow state.”
However the extractive industries fare commercially, despite plummeting prices for oil and minerals, the government does not yet have the laws and capacity to ensure that in Cambodia they are extracted in a safe, efficient and fair manner, according to Global Witness.
Government and military officials Wednesday offered few initial reactions to the report’s claims. Questions submitted to government spokesman and Information Minister Khieu Kanharith and to the Finance Ministry were not answered.
Cambodian National Petroleum Authority Chairman and Cabinet Minister Sok An said he was too busy to talk to a reporter while CNPA Vice Chairman Ho Vichet referred questions to Director-General Te Duong Tara, who could not be reached.
Minister of Industry, Mines and Energy Suy Sem said Wednesday that the government charged only small fees to companies during their explorations and that mineral exploration licenses were subject to competitive bidding open to all.
“Anyone who has a company can request to explore,” he said by telephone, adding that he could not recall the specific fees charged. “There is no principle to charge any companies money before exploitation. The company won’t pay before they find any minerals.”
“When they get to exploitation, we will charge them taxes,” he said.
According to the Global Witness report, oil revenues reported on the government revenue statements, known by the French-language acronym TOFE, indicate a total of $41,300 in non-tax oil and gas revenues for 2006 and 2007.
But during that same period, the Indonesian oil company PT Medco Energi Internasional, which operates offshore oil exploration Block E in the Gulf of Thailand, and on-shore Block 12, claims to have paid as much as $7.5 million in fees and bonuses, according to the report. And under the CNPA’s own “model contract,” production sharing contract holders should pay a minimum of $746,000 to the government in their first year of exploration.
Furthermore, according to the report, more than 100 exploratory mining licenses have so far been granted, including at least 21 in 2008 alone, while large sums paid in exchange appear to have gone missing.
BHP Billiton, the world’s largest mining company, claims to have paid the government $1 million in September 2006 for bauxite exploration rights in Mondolkiri province. However, according to Global Witness, government revenue statements from that year list non-tax revenues from all mining activities as only $443,886, and only $3 million over the past six years, despite the fact the price of a single license is $50,000.
The report also mentioned a 2007 session of the National Assembly during which Water Resources Minister Lim Kean Hor publicly described a $2.5 million “social development projects fund” created by BHP as “tea money”—local slang for a bribe.
However, BHP has denied ever making any payments to any Cambodian government official or representative and says the fund is under its direct control.
The report also identifies newly appointed RCAF Commander in Chief General Pol Saroeun, Prime Minister Hun Sen’s first cousin Dy Chouch and Senior Minister and human rights committee President Om Yentieng, among others, as members of a “ruling elite” to whom concessions have been awarded in a closed process.
According to the report, workers at a Preah Vihear province mine operated by Rattanak Stone Cambodia Development Co, identified the company’s owner as Pol Saroeun.
Pol Saroeun on Wednesday denied having mining interests.
“I don’t have [mining] businesses. I am a soldier,” he said.
Korean company Kenertec, which reportedly has various commercial activities covering more than 2,000 square km and nine operational mines in Cambodia, purchased an 85-percent stake in the mine last year.
Citing an Environment Ministry complaint lodged last year at Pursat Provincial Court, the report says RCAF personnel threatened to shoot ministry officials in Kravanh district after they seized a truck, a tractor and two air compressors from a mine operated by Float Asia Friendly Mation, reportedly owned by Dy Chouch and Om Yentieng.
The company operates at three locations within Phnom Aural Wildlife Sanctuary and the Central Cardamoms Protected Forest.
Om Yentieng said he was too busy to talk to a reporter Wednesday. However Dy Chanthy, Dy Chouch’s sister, said her brother was in Singapore seeking medical attention for serious complications from diabetes.
She said she was unaware of the reported confrontation but that the mine was no longer in operation as the company had found no marble.
“There is no marble. We spent a lot of money but there is no revenue,” she said.