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Analysis: Is ACU’s political face bad for business?

Om Yentieng (left), head of the Anti-Corruption Unit, hands a memorandum of understanding to an assistant last year during a signing ceremony in Phnom Penh with Electricite du Cambodge and the European Union.
Om Yentieng (left), head of the Anti-Corruption Unit, hands a memorandum of understanding to an assistant last year during a signing ceremony in Phnom Penh with Electricite du Cambodge and the European Union. Heng Chivoan

Analysis: Is ACU’s political face bad for business?

The Anti-Corruption Unit (ACU) has become embroiled in what some are describing as a political witch hunt linked to the upcoming 2018 national election, leaving members of the local business community to wonder if the ostensibly independent body’s increasingly partisan focus could prove a deterrent to future investment.

Presented as a gold standard in the fight to stamp out corruption, the ACU has inked at least 23 anti-graft agreements with private sector companies since it began to push a business reform agenda in 2013. American beverage giant Coca-Cola was the first to sign on, and corporate heavyweights including Prudential, EuroCham and Phnom Penh SEZ soon followed.

The non-binding memoranda of understanding (MoUs) – in which signatories vowed to take a zero-tolerance approach against corruption, including the widespread practice of offering officials “tea money” – were seen as a way to attract foreign investment.

It was hoped that a coalition of high-profile signatories could lead reform and help rid the Kingdom of its long-held reputation as a pay-to-play business destination.

However, with the ACU’s zealous investigation into the alleged Kem Sokha sex scandal – which has seen four rights workers, an election official and a commune chief jailed, and a UN employee charged in absentia for “bribery” – members of the business community who spoke to the Post this week say the corruption watchdog’s credibility is increasingly at stake.

“It is sad and regrettable that the ACU had built a good basis of credibility with many corporations from the private sector by signing MoUs to combat corruption,” a regional consultant who requested to remain anonymous, said. “But it has since jeopardised its reputation by involving itself with such petty, highly politicised investigations.”

The 23 MoU signatories may question if aligning themselves to stamp out corruption with an institution that “has degraded ethics, social justice and fairness” was the right decision in the first place, the consultant said. Regardless, he added, any future potential signatories would be faced with the political stigma attached.

Blaise Kilian, advocacy manager of EuroCham Cambodia, said the organisation decided to link with the ACU because it provided an official interlocutor that would reduce non-transparent practices within the government.

However, he said, as none of the business chamber’s 210 member companies had sent a complaint to the ACU – at least not through EuroCham – it was impossible to assess how efficiently the corruption watchdog deals with such complaints.

Still, Kilian considered it unlikely that the ACU’s recent foray into seemingly politicised cases would hamper its fight against corruption or its relations with the 23 anti-graft MoU signatories.

“It is our understanding that the ACU’s other activities do not preclude their continuing engagement of the private sector,” he said.

Preap Kol, executive director of Transparency International Cambodia, which signed an anti-graft MoU with the ACU in 2012, said the partnership has reaped some tangible rewards, such as a bilingual guidebook on anti-corruption practices for businesses operating in Cambodia.

However, the idea that the ACU would lead reforms to “increase trust and confidence among foreign investors” has been strained by the body’s recent political entanglement, and a distancing of private sector support.

“We think that sensible people, especially credible companies, would consider their engagement with the ACU more carefully in the current climate,” Kol said.

CNRP lawmaker Son Chhay said the events of the past two months had placed the 23 private sector firms that joined the ACU’s anti-graft fight “in a very difficult situation”.

“Investors from Western countries are already uncomfortable with corruption in Cambodia, so how can these agreements even be legitimate, as the ACU is not independent?” he asked.

Chhay said now that the ACU has revealed its true political hand, the question to ask is whether “the government wants to attract more good investment, or control the people”.

Ear Sophal, author of Aid Dependence in Cambodia: How Foreign Assistance Undermines Democracy, said that for businesses who had signed up with the organisation, it should have been obvious from the start that the ACU was destined for politics.

“When [the ACU] is not the centre of corruption, it is used to silence and arrest enemies,” he said. “Of course, that is not what they should do, but it is how they are used in the developing world. Is anyone surprised?”

Given the disputed election results in 2013 and what is at stake in the upcoming 2018 election, he said: “Frankly, I’m surprised [the political attacks] didn’t happen sooner”.

However, Sophal doubted that the body’s recent political involvement would stifle foreign investment – with the exception of American corporations that are already hesitant of entering the Kingdom. He added that investors would only be scared off if the corruption watchdog started targeting international companies, “and that’s not going to happen”.

Anthony Galliano, CEO of Cambodian Investment Management, said that while there have been a few notable small-scale business cases tackled by the ACU, “Cambodia still has an uphill battle with international investors as global corruption indexes repeatedly place Cambodia on the bottom of charts”.

According to Transparency International’s 2015 Corruption Perceptions Index, Cambodia is the most corrupt country in ASEAN, and 150th out of 168 countries globally.

Nevertheless, Galliano argued, that companies are usually more concerned about the extent and scale of corruption that they have to deal with than whether the national corruption watchdog has a political agenda.

“I don’t think I have ever been asked by a company considering entering the market whether the ACU is effective or not,” he said.

ACU chairman Om Yentieng could not be reached for comment yesterday.

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