French oil giant Total said yesterday that a $28 million payment made to the Cambodian government for offshore exploration rights in January was made directly to the Cambodian National Petroleum Authority, though the company was unable to provide specific details about how they expect the money will be used.
Noting that the payment made by Total to the government had been kept under wraps, environmental group Global Witness said in a statement last week that transparency of payments made by firms in the oil, gas and mining industries should top the agenda at the next donor-government meeting in June.
Total spokeswoman Phenelope Semavoine said yesterday from Paris that the $28 million payment to the government was made in return for exploration rights within the so-called “overlapping claims area,” in the Gulf of Thailand, which forms the Thai and Cambodian maritime border.
“The payments were made to the CNPA which acted on behalf of the government,” Ms Semavoine said, adding that the exploration agreement is still provisional and depends on a resolution between Thailand and Cambodia for shared ownership of the seabed on their mutual border.
Ms Semavoine said that the “provisional petroleum agreement” was signed in October. She also confirmed that a signature bonus of $20 billion and an additional payment of $8 million had been paid to the CNPA in January to go into a “social fund.”
The CNPA and Total will control that fund, Ms Semavoine said.
“Given that [the agreement is provisional], we didn’t really deem it necessary to openly communicate about it [the $28 million payment],” she said. “That is why we didn’t bring out a statement.”
The $8 million social fund “will be aimed at general health, education, culture and welfare for the people of Cambodia,” she said, adding that Total had already paid part of the $8 to the government.
Ms Semavoine declined, however, to say how much had been paid so far due to a “confidentiality agreement” between Total and the government. She also declined to say what specific projects the social fund would support or what arm of the government controls the fund, citing the premature state of that agreement with the government.
Asked if Total had any legal requirements to be informed of where the money it pays to the government is spent, Ms Semavoine declined to comment.
Te Duong Tara, director general of the Cambodian National Petroleum Authority, said he was unable to talk yesterday, while Cabinet Minister Sok An, who chairs the CNPA, could not be reached.
Environmental and aid groups have called on the government to make public all details on government revenues from oil, gas and mining in the light of an investigation into the dealings of BHP Billiton in Cambodia.
The world’s largest mining firm, BHP Billiton is currently the target of a US bribery investigation reportedly concerning payments to the Cambodian government. Prime Minister Hun Sen defended the BHP payments last week, saying they were legitimately used for an irrigation project in Pursat province as well as for schools in Mondolkiri province. Mr Hun Sen also made public for the first last week that Total had made a $28 million payment to his government, saying the payment was an agreement signature bonus and to contribute to a social fund.
There is still no public information as to how such social funds work, how much they amount to and how the money is eventually allocated, say NGOs monitoring Cambodia’s extractive industries.
In 1995 the government set up the “Social Fund of the kingdom of Cambodia”, which was backed by the World Bank. But this project came to its natural end in March 2005, according to Bou Saroeun, spokesman for the World Bank in Cambodia.
According to a World Bank report released in Dec 2005, between July 1999 and March 2005 the fund spent $31.5 million on 1,416 projects including the construction of 592 schools, 414 bridges and 88 irrigation systems.
“During the course of contract negotiations, companies would be asked by the host government or they would voluntarily offer to underwrite a budget allocated for social projects in order to demonstrate to the public that they are good corporate citizens,” Lim Solinn, program coordinator for Oxfam America’s East Asia program in Cambodia, wrote in an e-mail yesterday.
CPP lawmaker Cheam Yeap, chairman of the National Assembly’s Commission on Economy, Finance, Banking and Audit, said that once the government’s social fund came to an end in 2005, the social fund was transferred to the state-owned Rural Development Bank and remains under the control of the bank’s CEO Sun Koun Thor.
The fund is made up of voluntary payments “to improve social security and handle famine and disaster management,” said Mr Yeap, adding that he did not know whether oil firms like Chevron, Total or BHP had paid into the fund.
Mr Yeap did not have any other details about the fund, directing questions to the bank’s CEO, Mr Koun Thor, who could not be reached for comment yesterday.
