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Logo of Phnom Penh Post newspaper Phnom Penh Post - Leak names justice minister as offshore investor

Minister of Justice Ang Vong Vathana, who has been named as an investor in a British Virgin Islands-incorporated company in the massive "Panama Papers" leak.
Minister of Justice Ang Vong Vathana, who has been named as an investor in a British Virgin Islands-incorporated company in the massive "Panama Papers" leak. Heng Chivoan

Leak names justice minister as offshore investor

An investigation into a set of leaked documents by a coalition of journalists has revealed that Minister of Justice Ang Vong Vathana was a shareholder in an offshore company incorporated by a shady Panamanian law firm, a revelation the Justice Ministry was quick to declare to be “fake news” yesterday.

Vong Vathana’s interest in the company was revealed in the so-called “Panama Papers” – an enormous leak of offshore banking records that details the questionable business practices of some of the world’s wealthiest and most powerful individuals, and has generated headlines across the globe.

The 11.5 million leaked documents originated from the Panamanian law firm Mossack Fonseca, which the International Consortium of Investigative Journalists who are coordinating investigations into the leak’s contents – described on Sunday as “one of the world’s top creators of shell companies”.

Experts contend that offshore businesses are routinely used to evade taxes and launder the proceeds of criminal activity and government corruption. They can, however, serve legitimate purposes as well, such as legal tax avoidance and giving investors from different jurisdictions a common base of operations.

The revelations have landed senior officials and politicians around the world in hot water. Less than 24 hours after the story broke, the possibility of snap elections had already been raised in Iceland following indications among the leaked documents that Prime Minister Sigmundur David Gunnlaugsson used offshore bank accounts to hide potential conflicts of interest since his election to parliament seven years ago.

Among the millions of leaked company formation records, contracts and emails, was a handwritten register of investors in the British Virgin Islands-incorporated company RCD International Limited bearing Justice Minister Vong Vathana’s name.

He was listed as one of five shareholders in RCD, having purchased 5,000 shares at $1 each in May 2007, listing his occupation on the register as “Minister of Justice”. The other four shareholders are reported to have been a mix of Cambodian and Chinese businessmen.

The ICIJ’s website lists Hong Kong-based Corporate Management Services Limited as having registered RCD in the British Virgin Islands on February 12, 2007. RCD was struck off the British Virgin Islands Register of Companies on October 31, 2010.

April 4 is a public holiday in Hong Kong and representatives of Corporate Management Services Limited were unreachable.

It is not known what, if any, business activities RCD was involved in for the three years it operated.

In December 2015, Global Financial Integrity (GFI), a US-based non-profit announced its investigators had identified $15 billion of capital that had been illicitly transferred out of Cambodia between 2004 and 2013.

The majority of that sum is believed to have been laundered through a process known as “misinvoicing”, in which offshore shell companies similar to RCD play an integral role.

Justice Minister Ang Vong Vathana could not be reached for comment yesterday.

However, Justice Ministry chief of cabinet Sorn Sophorn issued a press release yesterday evening proclaiming he had “the honour of informing the public and the press that His Excellency the minister does not know the above company [RCD International Limited] and he has never bought any shares in any foreign company”.

The press release went on to describe the ICIJ’s revelations regarding Vong Vathana’s alleged offshore investments as, “fake news and a lying news”, and promised the minister would defend his honour through legal channels.

Transparency International Cambodia executive director Preap Kol said in an email yesterday that not enough information had been released to determine if Vong Vathana had done anything wrong. However, he did add that a senior minister conducting business offshore was cause for concern.

“It is very troublesome if a minister uses an offshore shell company for his business deals. As a high-level government official, the minister is expected to serve as an example for the rest of society and not to engage in an offshore business where owners of companies are kept secret,” wrote Kol. He went on to implore the justice minister to account for any involvement he might have had in RCD.

“If this information is true, I think that the minister should provide a comprehensive and transparent explanation of why he decided to place his money on the British Virgin Islands, and how much money he has placed in the company and where those assets came from,” the email continued.

When asked if Vong Vathana had declared any offshore investments for tax purposes, a General Department of Taxation official said such enquiries must be made via an official letter.

Contacted yesterday afternoon, Anti-Corruption Unit vice president Nuon Sophal said he was unaware of the ICIJ’s revelations before hanging up.

Additional reporting by Mech Dara

This article has been updated with further reporting on April 5.
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Comments

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Don Rennie's picture

Dear Jack,

It's too bad you do not work for the Wall Street Journal. They like guys like you.

This article is not news to me. A colleague of mine used the Royal Bank of Scotland (RBS) beginning in 2000 to place client money offshore. Although asked, I stayed out of his particular action. For my colleague, his actions bought a giant size swimming pool with waterfall on a 1/2 hectare property he owned in Orange County, CA.

Is it any wonder that the Minister of Justice has been recently identified with the Panama Papers?

When the impotent Anti-Corruption Unit begins to unseal the assets of the highest ranking government officials, starting with PM Hun Sen who has amassed a $100 million verified fortune (some say $500 million), then you will have a story to sink your teeth into. How could a PM and family members become a 40% stakeholder in Canadia Bank without a high net worth and a salary of $1,000-1,500 over 25-30 years?

Listen. Canadia Bank controls 25% of the money in Cambodia.

The leaked tapes of CNRP leader Sokha are child's play by comparison. Cambodia is a country of children masquerading as adults.

DR

Don Rennie's picture

Dear Jack,

I hope you and the PP Post are ahead of the curve and looking to see if other top Cambodian government officials were named in documents leaked from the law firm Mossack Fonseca.

DR

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