ARISTON Sdn Bhd of Malaysia has started to upgrade Kang Keng airport in Sihanoukville
despite the Royal Government not yet having kept to its side of the deal.
Kang Keng is considered the linchpin of Ariston's $1.3 billion development of the
port city, which will include an island casino, a power plant, a hotel and a golf
course, among other projects.
The Royal Government - for its part - has yet to pass the Control (Casino) Law that
would guarantee the Malaysians exclusive casino rights in Cambodia, according to
the deal struck between both sides.
Ariston - whose deal was brokered by Funcinpec officials - is understood to be gambling
on "good faith" that the Cambodian leaders will untangle what has been
a political impasse. Funcinpec needs CPP Parliamentary votes to pass the Casino Law,
and sources say CPP shows no sign of doing that to allow Ariston a casino monopoly
in the Kingdom.
An Ariston official who visited on April 27, speaking on condition of anonymity,
said: "With any investment in any country in the world, there are going to be
risks. We believe that the agreement will be adhered to on all matters. This is why
we have proceeded with the work, although some approvals are still in the process
of being obtained."
He said that preliminary work on Kang Keng airport had begun. "We have already
invested $60 million in Cambodia, and have moved $10 million worth of equipment into
Secretary of state for Tourism, Dr Thong Khon, confirmed that initial work on the
airport had begun.
It was also revealed that the rental dispute over the Singapore Heritage - the ship
which houses Ariston's floating Naga casino in Phnom Penh - could come to a head
in a matter of days.
Cedric Tan, an official with Unicentral Corporation, the ship's Singapore-based owner,
said by telephone on Apr 20 that the company would pull the Heritage out of Cambodian
waters "within two weeks."
A Phnom Penh-based lawyer representing Unicentral said that as far as he knew there
was "no resolution on the horizon".
However, he said that Unicentral "would have no choice but to pull out the boat,
if they don't get paid."
Other sources said Ariston would resolve the rental dispute by paying Unicentral
four months in back-rent, and then buy a bigger ship to replace the Heritage.
The Ariston spokesman would only say: "We are working towards a solution which
is acceptable to both sides."
According to him, the dispute arose when Ariston learned from a team of shipping
appraisers that the rent charged by Unicentral was too high in relation to the real
value of The Heritage.
At press time, Cedric Tan was unavailable for comment on this point.
The Unicentral lawyer said Ariston was legally bound to a three-year contract for
the Heritage which runs till Dec 1997. He would not say whether any bail-out clauses
were attached to the contract.
Unicentral - which with other international companies competed against Ariston for
the Sihanoukville contract in 1994 - has invoked a Singaporean High Court order against
Kuala Lumpur-based Ariston.
But it remains unclear whether this injunction, filed in a foreign court, will be
upheld in Cambodia.
None of the government officials contacted by the Post would comment on these developments.
In another development, both Khon and the Ariston official disclosed that the Sihanoukville
Development Authority (SDA) would be set up by week's end to accelerate the process.
They said the two prime ministers would preside over the SDA.
"The SDA will be a high-powered body which will make our work here all the easier,"
said the spokesman. "It will coordinate projects between the line ministries
and liaise directly with us."
He explained that, until recently, Ariston's much heralded development scheme had
been snagged in red tape at the local level.
Dismissing fresh reports that the government may be about to scuttle the Sihanoukville
deal, and kick Ariston out of the country, the Ariston spokesman insisted that the
Malaysians are here to stay.
"There are people who say the project is dead in the water," he said. "They
are entitled to their own opinion, but we will prove our critics wrong when we complete
Responding to recent tidings about Ariston's integrity to honor commitments laid
down in the Jan 1995 agreement, he reiterated that it will not shirk its responsibilities.
"We are determined to complete Sihanoukville by Dec 1997," he said. "We
are committed to completing the hotel complex on Naga Island, the upgrade of Kang
Keng Airport, the Independent Power Plant, an additional 200 rooms as well as an
18-hole golf course."
"We were only given the official approval by the Cambodian government to go
ahead with Sihanoukville in Dec 1995," he added. "From that point on, we
have 24 months to finish everything."
Defending his company's record, the spokesman compared the recent speculation surrounding
its Sihanoukville venture with another overseas project undertaken by its subsidiary,
FACB Berhad, which he said was also the subject of public scrutiny.
"Our listed company in Kuala Lumpur was awarded a contract in China to build
a 41-kilometer highway extension. It was widely reported in the press that we would
fail. We completed our project by April of this year, five months ahead of schedule."
He even hinted that by committing so many resources to a contract which has yet to
take legal effect, Ariston is taking a gamble, but it is determined to show its "good
faith" in Cambodian leaders.
Under the agreement, which has been obtained by the Post, Ariston is granted a 70-year
license to run casinos in Cambodia, 20 years of which are exclusive - when the Casino
Law is passed.
Meanwhile, Ariston has paid the first $3 million installment of a $103 million premium
which is staggered over 13 years. However, it has not paid any more premiums - and
$2 million was due last December - and is not likely to be paid until the Government
passes the law.
Therefore, according to another Phnom Penh-based lawyer, "this whole agreement
is no agreement at all.";
However, to one international observer, who has watched the political scene unfold
here over the past two years, either way, Ariston is in a win-win situation.
"Even if Ariston is never guaranteed a casino monopoly through the enactment
of the Control Law it can still continue to operate its casinos here without having
to pay the remaining installments on the premium."
He said even though First Prime Minister Prince Norodom Ranariddh and his Funcinpec
party consider the Sihanoukville development crucial to their 1998 election hopes,
and Second Prime Minister Hun Sen wields the ultimate power to decide its fate. He
said Hun Sen was unlikely to scrap the deal.
The observer said Hun Sen must take into account both the interests of prospective
investors as well as those of future constituents.
"If he wants further investment to come in, and such a big company like Ariston
gets a bloody nose in Cambodia, then why should other investors go in?" he said.
"Cambodia is looking for future investment not only from Malaysia, but across
the board. I really do not believe that either wing of the government is going to
cut down Ariston."
"If Hun Sen really believes that he is prime minister for life in this country
- and he does believe this - he would rather not cancel the contract," the observer
added. "For Hun Sen, post-1993 till 1998 elections is the period in which he
will consolidate his power.
"Post-1998 will be the period in which he must perform, because once he has
finished off Funcinpec in the elections, Hun Sen will have to be answerable to the
public. In other words, he can only perform if the economy is performing."