Logo of Phnom Penh Post newspaper Phnom Penh Post - Korean government recovers $8m of illegal assets

Korean government recovers $8m of illegal assets

A section of farmland in the north of Phnom Penh that was recovered by Korea Deposit Insurance Company recently.
A section of farmland in the north of Phnom Penh that was recovered by Korea Deposit Insurance Company recently. Photo supplied

Korean government recovers $8m of illegal assets

Investigators from South Korea’s state-run deposit insurer have announced their largest overseas illegal assets haul ever after they tracked down and recovered large land holdings owned by a Korean fraudster near Phnom Penh.

The haul, worth some $8 million, sheds light on the use of the Kingdom’s booming property market as a method of stashing illegal proceeds from abroad, along with representing another case of a South Korean property investment in Cambodia being financed by illegal loans.

It also comes as South Korean authorities vow to step up plans to crack down on assets illegally hidden abroad to boost tax revenue, the Korea Times newspaper reported last Thursday.

According to a report from the Korea Deposit Insurance Company released on November 11, a mysterious businessman known only as Mr Jang bought up 100 hectares of land from 2004 to 2009 in Russei Keo district with money he acquired from a 98 billion won ($83.6 million) loan fraud scheme with the Eutteum Mutual Savings Bank.

Jang never paid the money back, buying the land under a borrowed name until he bankrupted Eutteum and was sentenced to three years in prison.

But following his release in 2013, Jang moved to Cambodia and switched the land titles to his real name in an attempt to sell off the ill-gotten holdings.

The KDIC began lawsuits in Cambodian courts to seize the assets, but became mired in Cambodia’s “insufficient” legal structure, with the KDIC’s motions to be granted the assets repeatedly being cancelled without decision, according to the report.

“The possibility of recovery became extremely unclear and unlikely,” it read.

The KDIC was finally able to recover the assets by putting advertisements in local papers saying the land’s seller was a recognised fraudster. A local businessman, who had bought the land from Jang, saw the ad and arranged to pay roughly $8 million for the land to the KDIC, as opposed to Jang, over the next six months.

Although Jang’s current status and whereabouts are unclear – the KDIC in Seoul did not respond to comment as of press time – the case illustrates how some foreigners use the local property market to escape the law, industry insiders said.

“This kind of investment happens to some countries, especially in under[developed] and developing countries, where the law is not strong or clear enough,” Kim Heang, president of the Cambodian Valuers and Estate Agents Association, wrote in an email.

“Yes, it is [time] for Cambodia to stop those kind of investments.”

Jang’s case also represents another incident of South Korean property projects being financed by illegal loans.

In 2012, two executives behind high-profile South Korean developments – Camko City and a billion-dollar Siem Reap airport – were convicted in South Korea of using illegal loans to finance their Cambodia projects.

Nguon Chhayleang, chief operating officer of Ratanaka Realty, noted that projects bankrolled by dubious foreign cash could push up prices, making it unaffordable for those who have “real demand” to buy land.

Officials at the Ministry of Land Management, Urban Planning, and Construction declined to comment for this article.

Additional reporting by Soo Jin Kim

MOST VIEWED

  • Hun Sen’s China visit ‘a good opportunity’

    Prime Minister Hun Sen’s visit to Beijing on Sunday to discuss economic and trade issues presents a good opportunity for the Kingdom to strengthen Chinese ties and counter punitive measures by the West, an analyst says. The prime minister’s four-day official visit to

  • Close to the edge: Hair raising pictures from Kulen Mountain

    A new hair raising attraction on Kulen Mountain has finally opened to the public, with people flocking to the protruding cliff edge overlooking green mountainous forests to take photographs. The giant overhanging rock is situated in an area known as Mahendraparvata – an ancient city of

  • ‘Action needed to stop road deaths doubling by next year’

    Minister of Interior Sar Kheng has expressed concern over the rate of traffic accidents, saying the death toll will double by 2020 if no effective preventive measures were put in place. At least five people on average are killed on Cambodian roads every day. The interior

  • Cambodian rice to lose EU duty-free status

    The Cambodian rice sector is set to lose its duty-free export status to the EU today – its major rice market – after the European bloc decided to impose tariffs on rice from Cambodia and Myanmar to curb a surge in such imports. The decision will be