The parent company behind a firm constructing the Lower Sesan 2 dam in Stung Treng has repeatedly violated Chinese law by building “massive” power projects without prior approval, China’s national auditor has found.

State-owned China Huaneng Group, of which Lower Sesan 2 partner Hydrolancang International Energy is a subsidiary, undertook projects including a 1,900 megawatt dam on the Mekong River without permission, a report released last month by China’s National Audit office says.

“As of the end of 2011, Huaneng had begun construction of 16 major projects – including the Huangdeng hydropower station – without prior approval,” the report states, adding that the projects were worth billions of US dollars.

In total, the auditor adds, the state-owned firm had begun 75 projects by the end of 2011, “but 81,226.27 acres [3,2871 hectares] of land that the projects were being built on had not yet been approved for construction”.

The auditor also found that the company had over-reported assets, liabilities and profits, because its management procedures “lacked stringency and standardisation”.

An employee at Huaneng’s office in China declined to give his name yesterday and said the company could not provide comment.

Hydrolancang, which is owned by Huaneng, announced last November it would build the 400-megawatt, $781 million Lower Sesan 2 dam in partnership with Cambodia’s Royal Group at the confluence of the Sesan and Srepok rivers. Parliament has since approved the project, but riverside communities say they have not been given information about relocation or compensation, despite swathes of trees already being cleared to make way for the resulting reservoir. Environmental groups have said the Lower Sesan 2 poses serious risks to the Mekong River’s fish stocks and bioversity.

Ame Trandem, Southeast Asia program director for International Rivers, said the “major violations” revealed by the audit showed there was no guarantee the Lower Sesan 2 would be built in accordance with Cambodian law.

“If they can’t follow laws in China, why would they follow any laws within Cambodia?” she said. “[Hydrolancang] is their company . . . there are serious concerns with the way they will act.”

Hydrolancang was likely to play a leading role in resettling thousands of people affected by the Lower Sesan 2, which was “concerning”, because it had built the first dam on China’s part of the Mekong River with “disastrous” consequences for villagers, Trandem added.

“A lot of communities . . . waited over 20 years for adequate compensation.” Trandem’s comments came on the sidelines of the Mekong and 3S Hydropower Dams forum, which concluded in Phnom Penh yesterday with representatives of communities and NGOs from Cambodia, Thailand and Vietnam calling for the controversial dam to be scrapped.

“The Lower Sesan 2 dam should be cancelled due to the immense harm the project poses to the Mekong River Basin’s fisheries, sedimentation and other natural resources and the livelihoods and food security of the people of Cambodia, as well as neighbouring countries,” a joint statement says.

Participants also called for governments to abandon projects such as the Xayaburi dam, which is under construction in northern Laos, and for financiers and investors to comply with international standards and respect human rights and the law.

During the forum, many villagers set to be affected by the Lower Sesan 2 voiced their concerns about the lack of information given to them.

“The Lower Sesan will be built and we will be relocated,” one villager said. “I ask for everyone to help us – we can’t help ourselves.”

Kith Meng, chairman of Royal Group, could not be reached for comment, while Ministry of Industry, Mining and Energy secretary of state Ith Praing said he was in a meeting and could not respond to questions.

Additional reporting by Danson Cheong and May Titthara