Two of the country’s most powerful and politically connected business owners are on the board of governors of the company thought to have brokered a controversial deal between the world’s largest hydropower developer and the Cambodian government, documents obtained by the Post show.
Cambodian People’s Party senator Lao Meng Khin and his wife, Choeung Sopheap – owners of Boeung Kak lake developer Shukaku Inc and the Pheapimex group, respectively – are listed as third-party governors of Sinohydro (Cambodia) United Ltd. That firm is a local “affiliate” of Beijing-based Sinohydro Corp, according to the company’s registration papers, which are dated April 4, 2006, and signed by Koem Sithorn, then-secretary of state at the Ministry of Commerce.
Sinohydro took over the concession for the Stung Cheay Areng hydropower dam project about two months ago, the Post first reported last week.
The Areng Valley at the edge of the Cardamom Mountain range, where the dam is planned, is one of Cambodia’s few remaining pristine natural habitats. The area is home to internationally protected Siamese crocodiles and a large wild elephant population, as well as numerous other endangered species.
Alex Gonzalez-Davidson, founder of local NGO Mother Nature Cambodia, said that while it was not clear if Meng Khin or Sopheap had directly brokered this deal, it was a logical conclusion given that they had engineered a similar deal for the Kamchay hydropower dam in Kampot province – where Sopheap was born – in 2006.
“They’re powerful brokers, which opens up all these doors for military, ministries, any other investors. The key thing is that you’ve got the largest hydropower company in the world, stock-listed in Shanghai … [but for] their cooperation, you could not choose a more [notorious] partner,” he said.
Neither Sinohydro United nor Sinohydro Corporation responded to emailed requests for comment and phone calls over more than a week. Meng Khin hung up on a reporter yesterday.
Meng Khin and his wife are arguably the most powerful tycoons in Cambodia, regularly brokering deals between Chinese investors and the authorities. Both Meng Khin and Sopheap speak fluent Mandarin and make regular visits to China.
Meng Khin’s Shukaku Inc was granted the lease for a $79 million development of the Boeung Kak lake area of Phnom Penh in 2007, after which more than 1,500 families were forcibly evicted.
As of 2007, Pheapimex controlled 7.4 per cent of Cambodia’s total land area, according to Cambodia’s Family Trees, published that year by London-based NGO Global Witness. Two “joint ventures” with Chinese company Wuzhishan LS and Kong Triv, another tycoon and CPP senator, for economic land concessions in Pursat and Mondulkiri, have led to serious human rights abuses, the report noted at the time.
“Whether in terms of taxes paid or jobs created, there is little evidence that handing over enormously valuable public assets to Pheapimex has contributed in any way to Cambodia’s development,” the report said. “What is not in doubt is that the company’s owners and their political patrons have profited handsomely.”
Ith Praing, secretary of state at the Ministry of Mines and Energy, said he did not know about the deal, despite reports that officials from the ministry had visited the area in recent weeks in preparation for building an access road into the site and preparing the ground for construction.
Phay Siphan, spokesman for the Council of Ministers, declined to comment until he had time to review the details of the project.
Last week, officials at the Ministry of Agriculture and Ministry of Environment confirmed that an environmental impact assessment, commissioned years ago, was still “under consideration”.
“It’s not surprising, but alarm bells should be ringing,” conservationist Marcus Hardtke said yesterday. “If you have cronies like that involved, it’s a guarantee that projects will be approached without consideration for legal frameworks or social and environmental standards. If the cronies get their hands on it, everything goes out the window.”
He added that another concern with the Stung Cheay Areng dam concession was that two companies had already backed out because they considered the project economically unviable.
“The danger is that there’s money to be made in constructing this dam. That might be enough for them. Many of these projects, you find black groups, cartels. A Chinese loan goes to a company, and these guys are sitting in the middle,” he said. “Even the power lines are privatised. It looks like a licence to print money.”
Son Chhay, opposition Cambodia National Rescue Party whip, echoed conservationists’ concerns over the likely involvement of Meng Khin in the Areng project.
“Regarding power projects, this couple … they will have a secret deal with the government, grabbing everything. They have the power to reject any investigation on any problematic effects,” he said yesterday.
“So many secret deals are made. Lao Meng Khin seems to be a broker for so many Chinese companies in the country. We should have a warning about investing in Cambodia. We should be clear about these deals, especially for the Chinese investors, that these deals are corrupt. It’s clear destruction of our natural environment,” he said.
Sinohydro Corporation has adopted the World Bank and International Finance Corporation’s standards for hydropower investment. According to its Environmental Protection Policy, its projects should “best minimise the harm to the environment and biodiversity”, provide full disclosure and consultation on the impact of the project to affected communities, and will “not occur in a national park, habitat of threatened species or protected wetlands, which are no-go zones for project development”.
Khnhel Bora, director of local consultancy firm SBK Research and Development, said yesterday that a contract granted to SBK to assess the resettlement needs of about 5,000 villagers who will lose their land if the project goes ahead “was signed with the Sinohydro Corporation in China”.
According to villagers and a commune chief in the area contacted earlier this week, the only information they have received from any of the companies involved in the project was notification that they would be relocated.
“Sinohydro has its own environmental and social standards. They should think long and hard [about this investment],” Hardtke said. “Maybe the companies themselves are not so happy about these deals. It would be a real tragedy, because people are filling their pockets with [money from] dams that turn out to be nonsense and a catastrophe for Cambodia.”
Chhay, who has visited the area on several occasions to investigate the project in recent years, said that it was “ridiculous” that the project had been granted to Sinohydro after another firm, China Guodian, backed out last year.
“The destruction is so, so large, and compared to the benefits from the power produced by the dam … it’s quite ridiculous to allow these companies to change hands, because the forest has already been destroyed. We find no money has come to the country budget whatsoever,” he said.