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Cambodia’s Money Laundering Relisting Shows Dangers of Corrupt Institutions
The global money laundering watchdog Financial Action Task Force (FATF) in February put Cambodia on its “grey” watchlist because of concerns over money laundering. The decision highlights the need for concerted international action against a corrupt and repressive regime that provides a haven for dubious cash flows.
Cambodia was removed from the FATF grey list in 2015. Being relisted again so quickly indicates the speed of the deterioration in Cambodia’s governance, and the dangers of being misled by a corrupt regime. The grey list can be the path to the blacklist, reserved for pariahs such as North Korea. Pakistan was put on the grey list in June 2018 and warned it may be blacklisted by October 2019 if it does not curb money laundering and terror financing. Cambodia will find it much harder to get off the greylist for a second time.
Money from opaque sources continues to flow into Cambodia’s casinos, banks and the real estate market. Yet the FATF noted in its decision that no money-laundering case has ever been prosecuted in Cambodia, and that the country has made minimal use of financial intelligence to investigate money laundering and terrorism financing. These failures must be seen in the context of Cambodia’s highly corrupt institutions. The country was ranked an abysmal 161 out of 180 countries surveyed by Transparency International in its 2018 Corruption Perceptions Index. The Rule of Law Index for 2019 published by the World Justice Project placed Cambodia at 125 out of 126.
Cambodia has been stuck at the bottom of these rankings for many years. The government exists as a front for an operation to strip the country of its natural resources for private gain. It has evicted huge numbers of Cambodians from their land with no regard for their rights and scant interest in their well-being. This is done to secure the access of the powerful to the country’s natural resources, such as rubber, timber, sugar and sand. The absence of the rule of law also makes Cambodia a haven for international criminals. Maritime vessels using the Cambodian flag have done so as a cover not only for illegal fishing but drug trafficking, petrol smuggling and arms trading.
Is Cambodia’s Koh Kong project for Chinese tourists – or China’s military?
- A tourism development by the Chinese firm Union Development Group looks too good to be true
- Sceptics say it is – and that its suspiciously long airport runway and deep water port will give China a military foothold in the country
សង្ខេបអត្ថបទជាភាសាខ្មែរ៖ អត្ថបទនេះបញ្ជាក់ពីបំណងរបស់ចិនក្នុងការអភិវឌ្ឍន៌ដីសម្បទាសេដ្ឋកិច្ចអោយក្រុមហ៊ុនឯកជនចិនចំនួន៤៥០០០ហិចតាថាជាចេតនាបង្កើតមូលដ្ឋានទ័ពរបស់ចិនក្នុងការទប់ស្កាត់និងវាយលុកករណីចិនតៃវ៉ាន់ ជំលោះប្រជុំកោះស្ព្រែតលីឈូងសមុទ្រចិនខាងត្បូង និងការដឹកជញ្ជូនថាមពលធំបំផុតរបស់ចិនតាមច្រកមា៉ឡាកា។ ភស្តុតាងមានដូចជា៖ ១. រូបថតផ្លូវចំណតយន្តហោះខ្នាតធំប្រវែង៣៤០០ម៉ែតដែលហួសពីការវិនិយោគជាកាសុីណូនិងអូតែល ២. ច្បាប់សម្បទានដីរបស់កម្ពុជាមិនអនុញ្ញាតអោយទំហំធំបែបនេះទេ ៣. ទំហំដីសម្បទាននេះអាចលាតសន្ធឹងលើសួនឧទ្យានជាតិដែលហាមឃាត់ ៤. តំបន់នេះជាចំណុចខ្លាញ់ភូមិសាស្ត្រនយោបាយរបស់ចិន ៥. ហ៊ុន-សែនអាចជាមនុស្សម្នាក់គត់ដែលបានអនុមត្តិគំរោងនេះអោយចិន ៦. ក្នុងរយៈពេលតែ២ខែផ្លូវចតយន្តហោះខ្នាតធំត្រូវបានគេធ្វើរួចដែលអាចចំណាយទុនមហាសាល ៧. ចិនបានធ្លាប់ច្បាមយកកំពង់ផែសិរីលង្កា ឡាវ ភូមា និងប៉ាគីស្ថាន ៨. ចុងក្រោយចិននឹងប្រើលេសថាជាកំពង់ផែក្រោមក្របខណ្ឌអង្គការសហប្រជាជាតិប៉ុន្តែខ្លួនជាអ្នកគ្រប់គ្រងទាំងស្រុង។
This Week in Asia: Is Cambodia’s Koh Kong project for Chinese tourists – or China’s military?
It’s only natural that Beijing might show an interest in a tourism development that aims to lure big-spending Chinese tourists to the shores of Cambodia with the promise of casinos, golf courses and luxury resorts.
After all, Cambodia granted 45,000 hectares of its prime real estate in Koh Kong province – and 20 per cent of its coastline – to private Chinese company Union Development Group, just so it could build this supposed tourism Mecca, and all for a peppercorn rent that will start at just US$1 million per year.
At least, that’s the official version. But sceptics who say the terms of this deal are too good to be true think there’s another reason for China’s interest: they believe the development is as much about welcoming the Chinese military as it is about Chinese tourists.
Such scepticism has grown louder recently, with the release of satellite images from the European Space Agency showing that the runway for the site’s airport is far longer than is required for civilian aircraft.
Cambodian officials have already been at pains to deny that the project’s deep water port could serve Chinese military interests, so questions over the runway have only fuelled claims that the development serves a dual purpose.
“The runway is about 3,400 meters long, which is larger than the international airport in Phnom Penh and could accommodate any plane in the Chinese air force,” said Gregory Poling, director of the Asia Maritime Transparency Initiative at the Centre for Strategic and International Studies.
“It is also in a rather secluded location for such a large airport if it were for civilian purposes. The only thing nearby would be the Koh Kong casino/resort project, which as I understand it hasn’t seen much success so far,” Poling said. Reports says construction work at the Koh Kong project has been stalled for months.
As to whether the project is intended for military use, Poling said there was “a lot of smoke but no fire”, but he added: “if there is any country in Southeast Asia where the Chinese might be able to gain a rotational military presence, it would be Cambodia”.
The satellite images suggest there was a flurry of construction on the runway after US Vice-President Mike Pence delivered a letter to Cambodian Prime Minister Hun Sen in November, expressing concern that the project had a military use.
Most of the runway was completed in just two months and it is significantly larger than the Federal Aviation Administration’s recommendation of 2,800 metres for a Boeing 787-900.
Union Development Group may be a private Chinese company, but the development has long been suspected of having government connections.
Zhang Gaoli, the former vice-premier of China and chairman of the leading group for Beijing’s Belt and Road Initiative, backed the project from the beginning, presiding over the signing of the agreement between UDG and Cambodia. The project has also received multiple visits from other Chinese Communist Party figures, including Wang Qinmin, vice-chairman of the Chinese People’s Political Consultative Conference.
And as a private venture, many question the viability of its bottom line. As another Western military expert put it: “The scale of the development by China’s Union Development Group appears inconsistent with the commercial potential of the area, raising questions about its financial viability and sustainability, possible dual-use and military applications, as well as the ultimate intent of involved stakeholders.”
Cambodian Defence Ministry spokesman Chum Socheat could not be reached despite repeated attempts, while government spokesman Phay Siphan said he had “no idea” whether the Cambodian government had any oversight of the project.
However, Paul Chambers, a regional analyst at Naresuan University, previously told This Week in Asia that senior Cambodian officials privately admitted that Hun Sen was considering approving a Chinese naval base there.
Chambers likened the Koh Kong project to Chinese projects in Laos and Sri Lanka. Sri Lanka handed over control of its Hambantota Port to China on a 99-year lease after it became unable to meet its debt obligations to Beijing, which had financed its construction.
“In Sri Lanka’s case, over-dependency on China forced Sri Lanka to simply give that facility to the Chinese. The same could easily happen here in Cambodia,” he said.
បទអត្ថាធិប្បាយរបស់អ្នកជំនាញសេដ្ឋកិច្ចចិននេះកើតឡើងតាំងពីឆ្នាំ២០១៦ប៉ុន្តែការទស្សន៍ទាយនិងវិភាគរបស់បណ្ឌិតឃេយូជិននៅមានភាពមន្ទិលច្រើនកន្លងមកពីព្រោះចិនពុះពារសេដ្ឋកិច្ចខ្លួនមិនតាមរបៀបនីតិវិធីសេដ្ឋសាស្រ្ត(unorthodoxy)សាកល តែការរីកចំរើនក្នុងរយៈពេលចុងក្រោយនេះមានភាពមិនប្រក្រតីច្រើននិងមានហានីយភ័យខ្ពស់។ ការវិភាគរបស់អ្នកស្រីថាសេដ្ឋកិច្ចចិននឹងដួលរលំអាចនឹងត្រឹមត្រូវនៅពេលដែលសហរដ្ឋអាមេរិកចាប់ផ្តើមយកពន្ធលើទំនិញនាំចូលរបស់ចិន ក៏ដូចជាចិនបែរមុខហ៊ានប្រឈមជាមួយលោកសេរីកាន់តែខ្លាំងឡើងក្នុងសភាពការណ៌បច្ចុប្បន្នដូចជាករណីប្រទេសវេណាស៊ុយអេឡានិងប្រទេសកម្ពុជាជាដើម។
This presentation of Chinese economy expertise happened in 2016 but predictions and analysis of Dr. Keyu Jin has had some flaws since then because China has struggled to push for economic growth unorthoxically. But this growth is irregular and risky. Her analysis to predict that China’s economy shall be collapsed has emerged some ground when US initiated tariffs all goods from China as well as China dare to face up with democratic world in current circumstance such as the case of Venezuela and Cambodia.