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Govt denies mining sector corruption

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A new report from Hun Sen's bete noire, international NGO Global Witness, says Cambodia's nascent oil, gas and mining industries are being monopolised by a powerful elite.

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An ore pile at the Cambodia Iron and Steel Mining Industry Group site in Preah Vihear province. London-based watchdog Global Witness is pressing for more transparency in the Kingdom's extractive industries.

CORRUPT ruling elites have monopolised Cambodia's emerging oil and mineral sectors, aided by a "total lack" of transparency and a supine foreign donor community, according to a new report from corruption watchdog Global Witness.

The 70-page "Country for Sale" report, released Thursday, takes aim at the "high-level corruption, nepotism and patronage" infusing the Kingdom's extractive resources sector, which it claims is dominated by senior government officials.

On the basis of investigations conducted in 2008, the report's authors say that concessions for mineral and oil exploration are allocated "behind closed doors" and raise fears revenues from these resources will be mismanaged rather than used for infrastructure development or poverty alleviation.

The report goes on to name dozens of high-ranking military and ruling party officials it said have control over the country's resource revenues.

"Cambodia today is a country for sale. The small number of elite powerbrokers who run the state have sold off large concessions in a manner that is non-transparent and highly dubious," the report says.

OIL IS GOING TO MAKE DEVELOPMENT PROBLEMS IN THE COUNTRY MUCH WORSE.

A "total lack of transparency in the ownership of companies ... serves only one purpose - to protect and entrench the interests of those who benefit from the continued functioning of Cambodia's shadow state".
To date, Global Witness claims the government has granted over 100 mining concessions - including 21 in 2008 - to companies controlled by "elite regime figures", with little environmental oversight.

It raises further concerns about the nature of fees paid by firms to secure mineral exploration agreements, following a 2007 comment by Lim Kean Hor, minister of water resources and meteorology, describing a US$2.5 million BHP Billiton-Mitsubishi social development fund as "tea money".

The report also slams the Cambodian National Petroleum Authority  - the institution in charge of the Kingdom's infant oil-and-gas industry - as a "constitutionally dubious body" with "no parliamentary oversight", claiming millions in oil exploration fees have failed to show up in national revenue reports since 2006.

Government denials

RCAF Commander-in-Chief Pol Saroeun, named by Global Witness as the owner of the Rattanak Stone Co, which operates iron ore mines in Preah Vihear province, denied the report's allegations, saying: "I am not involved with the activities in the report."

Om Yentieng, head of the government's Human Rights Committee and reputed co-owner of Float Asia Friendly Mation Co, which the report claims is mining marble from protected areas in eastern Pursat province, also said he had "no time" to dispute the findings.

"I think that the Global Witness report is badly intentioned," he said. "They do not know what is right or wrong."

Minister of Industry, Mines and Energy Suy Sem and officials at the CNPA, including Director General Te Duong Dara and Deputy Director General Men Den, also refused requests for comment Thursday.

But Minister of Information Khieu Kanharith said the government was handling its resource explorations in an open and transparent manner.

"We have always announced in public how many blocks of oil we have, and we have never held bidding because no one knows whether there will be oil there or not," he said, adding that Global Witness was motivated by "personal anger" towards Prime Minister Hun Sen.

However, David Lempert, an international development consultant, agreed with the report that the coming windfall of resource profits would paralyse local development.

"Cambodia's oil is going to make development problems in the country much worse ... by postponing the key problems of sustainability, [of] balancing population with productive, renewable resources," he said.

Spineless donors

Foreign donors - which have pledged nearly $1 billion in aid to Cambodia for 2009 - are also to blame for granting "international legitimacy" to high-level corruption, the report says.

Donors "have refused to acknowledge the fact that the government is thoroughly corrupt and does not act in the best interests of the population", it says.

Independent analyst Chea Vannath said that countries needed a certain amount of tolerance for corruption if they wanted to do business in Cambodia, and that rising levels of Chinese aid - rarely accompanied by conditions - discouraged foreign donors from taking a strong stance on corruption.

"Each country's agenda ... is to have business ventures in Cambodia - not to lecture the Cambodian government about corruption," she said.

Global Witness made headlines in June 2007 when its "Family Trees" report - alleging widespread involvement of senior government officials in illegal logging - was banned in Cambodia, with the prime minister's brother, Hun Neng, saying that he would "hit [Global Witness staff] until their heads are broken". The organisation's staff have been barred from the country since 2005.

Senior CPP lawmaker Cheam Yeap said Global Witness had the right to conduct investigations into corruption issues, but warned they would "face lawsuits" if they published inaccurate information about government officials.

He added that there were clear laws relating to the allocation of mineral and oil concessions, and that the government was trying to root out "individual officials at the local level" engaged in corrupt activities.

"The prime minister has shown a commitment to fight corruption, and he has taken action step by step," he said.

"I think that Global Witness should not take an issue from one dark corner to criticise the government."

Eleanor Nichol, a Global Witness campaigner, said the organisation would welcome an "independent and credible investigation" into the allegations contained in the report, but said that she was "not aware of a government investigation into corruption in the oil and mining sectors".

Nichol also expressed hopes the government would shy away from banning the report, as it did in 2007.

"One of the reasons we put this report together is that there is very little information in the public domain about extractive resources available to the Cambodian public," she said by phone from Bangkok.

"For this reason, we very much hope that the current government does not take the same action."

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