Where is Cambodia’s anti-corruption law?

Hong Kong, China — On May 16, 2006, a petition with over 1 million signatures and thumbprints was presented to the National Assembly in Phnom Penh, Cambodia, calling on the assembly to urgently enact an anti-corruption law. The sheer number of people –one out of every 14 Cambodians – who supported the petition campaign with their signature or thumbprint in a period of just over five months, revealed the gravity of corruption in the country and the urgent need for government leaders and lawmakers to take action.
Corruption in Cambodia was already rife, affecting every walk of life, toward the end of the communist regime in the late 1980s. It was and still is prevalent in every public institution everywhere and at every level: in schools, hospitals, fire services, the police, the army, the civil service, the judiciary, the government and the Parliament. It has also ravaged foreign aid given to the country.
In the early 1990s when the communist regime ended, the public called on the government to tackle the problem. In the mid-1990s, civil society began to organize seminars to highlight the issue and urge the government to enact an anti-corruption law. Many national seminars were held, at times presided over by prime ministers or their colleagues, not to mention many smaller meetings.
There were study tours for concerned senior government officials and lawmakers to countries in the region, including Singapore and Hong Kong, both of which are renowned for their effective anti-corruption laws and agencies. In 1998, the newly elected government promised to fight corruption and enact a law against it.
For their part, international donors began to feel the gravity of corruption and its negative impact on the aid they had given to Cambodia, to the tune of some US$500 million a year since the early 1990s. In 2002, together with the Cambodian government, they made the fight against corruption and the enactment of an anti-corruption law one of the benchmarks for the flow of aid.
Under such pressure the government finally submitted to the National Assembly an anti-corruption bill – which had been drafted and redrafted many times, well before the adoption of the U.N. Convention against Corruption in 2003.
Shortly after, this bill was withdrawn, to be redrafted again to bring it up to the convention’s standards. Meanwhile, deadlines set for the enactment of that law have repeatedly passed and the final draft has not yet seen the light of day.
In parallel with the pressure on the government to enact an anti-corruption law, successive studies were undertaken to look into corruption in Cambodia. A 2004 study conducted by the U.S. Agency for International Development in Cambodia showed that corruption cost the government between US$300 million and $500 million in revenue every year, an enormous sum for a poor country.
Another survey conducted two years later by the Economic Institute of Cambodia in Phnom Penh showed that in 2005 the private sector paid “unofficial fees”—that is, bribes – to public officials amounting to US$330 million, an amount it said was “2.5 times higher than that of official payment” and “represented also about 50 percent of the total government budget revenue in 2005.”
A more recent survey conducted by Transparency International showed that 72 percent of Cambodians reported paying a bribe to receive a public service in 2007, a percentage which was then the highest in the Asia-Pacific region and second only to Cameroon (79 percent) internationally. The same survey also showed that the judiciary and the police were viewed as the most corrupt institutions in the country. It should be added that in 2007 Cambodia ranked 162 out 179 countries in the TI Corruption Perceptions Index.
Corruption has affected not only the Cambodian people but also foreign donors on whom Cambodia very much depends. In 1999 there was a corruption scandal at the Cambodian Mine Action Center, an internationally funded government landmine clearance organization. That scandal led to the suspension of foreign aid to CMAC for some time.
In 2003, the World Bank discovered the misuse of funds in a project to demobilize 30,000 soldiers, and forced the Cambodian government to repay the missing money. In 2004, the World Food Program found that US$1.2 million of its aid had gone missing, and forced the Cambodian government to make up for it. In 2006, the World Bank discovered fraud and corruption in three of the projects it was funding. It suspended its funding for these three projects and requested the Cambodian government to make prompt repayment of the missing funds.
In early 2007, within six months after its creation, the internationally funded Khmer Rouge Tribunal encountered allegations of corruption in its human resource management. These allegations led to the introduction of corrective measures for better management.
These are a few of the cases known to the public and acknowledged by the government. Yet in all corruption cases very few, if any, suspected government officials have been brought to justice and made accountable for their corruption. Generally, they have simply been disciplined and removed from office and then, when their cases are no longer in the public mind, they have been reappointed to other, sometimes higher, positions.
Enacting an anti-corruption law and setting up an anti-corruption body may not end what is a common practice in Cambodia. It is nevertheless a significant step toward that end. The Cambodian government must not let its officials indulge in corruption with impunity. It must not continue to break its promises to its people and its foreign donors. It must heed the petition presented to the National Assembly and submit the long promised anti-corruption bill for adoption without further delay.
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(Lao Mong Hay is a senior researcher at the Asian Human Rights Commission in Hong Kong. He was previously director of the Khmer Institute of Democracy in Phnom Penh, Cambodia, and a visiting professor at the University of Toronto in 2003. In 1997, he received an award from Human Rights Watch and the Nansen Medal in 2000 from the United Nations High Commissioner for Refugees.)

By LAO MONG HAYColumn: Rule by Fear
http://upiasiaonline.com

Prosecution seeks $19M in pyramid scam case

Prosecutors plan to seek a 13-year prison term and $19.1 million in restitution today from a Rhode Island man who helped swindle hundreds of Cambodian immigrants out of some $30 million.

U.S. District Court Judge Richard Stearns is set to sentence Christian Rochon of Warwick, R.I., on mail fraud and other charges related to Canton-based World Marketing Direct Services Inc.

Rochon, 57, the company’s ex-president, pleaded guilty last year and agreed to testify against ring leaders James Bunchan and Seng Tan, whom a jury later convicted.

Defense lawyer James Krasnoo said he plans to seek home confinement instead of prison for Rochon, who claims to suffer from numerous health problems.

A court has already sentenced Bunchan and Tan, who are married, to long prison terms. Bunchan also faces charges for allegedly trying to hire a hitman to kill Rochon and other witnesses.

World Marketing billed itself as a vitamin and beauty-supply company, but prosecutors say the firm was simply a “pyramid scheme” that targeted Bunchan and Tan’s fellow Cambodian immigrants.

The company promised $300-a-month payments for life to people who invested $26,000, and many victims refinanced homes or raided 401(k) plans to participate.

But authorities say the ring spent much of the money on houses, cars and high-stakes gambling trips. World Marketing then used cash from new victims to send early investors monthly payments until the scheme collapsed.

Scammers partly used memories of Cambodia’s 1970s “Killing Fields” era to advance the scam.

Tan reportedly told would-be investors she had fought the communists who took over Cambodia in the 1970s and killed some 2 million people. One victim also told prosecutors that after challenging the ring, Tan told people the man was “lucky he was not back in Cambodia or else he would have disappeared already.”

By Jerry Kronenberg

http://www.bostonherald.com

ECONOMY-CAMBODIA: Resource Curse or Blessing?

PHNOM PENH, May 28 (IPS) - Cambodia is facing a natural resource boom, prompting donors and non-government organisations (NGOs) to warn that without measures to improve financial transparency, promote better governance and curb corruption, the potential windfall could be squandered.

In addition to significant oil reserves off Cambodia’s coast, there are major deposits of natural gas, as well as minerals such as gold, copper and bauxite, mainly in the northeast of the country.

"The risk of a resource curse is there," said Jo Scheuer, country director for the United Nations Development Programme (UNDP) in an IPS interview. "Included in this is the issue of corruption and funds disappearing."

At the same time Scheuer is keen to stress that Cambodia "has a great opportunity to avoid mistakes that have been made in other countries,’’ and translate the benefits to all Cambodians to ‘’create a resource blessing’’.

"The government says it is a little early to start to talk about revenue because the resources are still underground," said Chhith Sam Ath, executive director of NGO Forum in Phnom Penh. "We think it is important for us to be prepared for the new situation and challenges."

NGO Forum is one of a number of local organisations behind a new coalition, yet to be formally launched, that wants to ensure the potential financial benefits from the country’s resource windfall are managed in a socially responsible manner.

The Berlin-based Transparency International’s 2007 Corruption Perception Index ranked Cambodia 162 out of 179 countries, making it the most corrupt country in Asia after Burma and among the worst globally.

"I think the concern is the past experience," continued Sam Ath. "A lot of natural resources have been extracted often under concessions, but the revenue that has gone into the budget has been less than expected."

"It is generally accepted that poor governance, lack of transparency and corruption are serious problems for Cambodia," said Sek Barisoth, director of the Mainstreaming Anti-Corruption for Equity Programme with PACT Cambodia, another supporter of the emerging coalition.

While observers say the Cambodian Government is verbally committed to the fight against corruption, there has been little action. A proposed anti-corruption law, developed in early 2005 with technical assistance from PACT, remains in draft form. It would establish an independent anti-corruption commission and provide a better legal definition of corruption.

Oil is the current focus of the resource boom, with exploration well underway in the waters off Cambodia’s cost to determine the extent of the country’s reserves.

How much oil is there? "We do not know," said UNDP’s Scheuer. "The standard answer is that no one has done any work on exactly how much oil and gas there is."

Two years ago, U.S. oil giant Chevron, the lead partner in Block A, where exploration has gone the furthest, announced "significant" oil and gas reserves. Scheuer said the company is expected to announce the results of its exploration sometime after Cambodia’s July national election.

With the price of a barrel of crude currently hovering around 130 US dollars and some analysts expecting it to reach 200 dollars by the end of the year, the financial gains for Cambodia are significant.

"It is a potentially huge windfall for a country if invested wisely in the long-term development objectives such as health, education and expanding the labour market," said Scheuer. His organisation has been one of the key donors working to help the Cambodian government deal with the threats and opportunities presented by the oil boom.

It is collaborating with the Cambodian National Petroleum Authority to build its capacity, and earlier this year cooperated with the government to organise a major international conference on oil and gas.

"It is not necessarily a blessing for a country to be endowed with petroleum resources," Arne Walther, a Norwegian diplomat said at the conference. Norway, one of the poorest countries in Europe until the discovery of oil and gas off their coast in the mid-sixties, is cited by many as a success story in terms of how to handle the issues raised by an influx of petro dollars.

"It is how governments arrange for their resources to be extracted and how revenues earned are used that determine the success or failure of being a petroleum endowed state," Walther said. "I believe Cambodia faces a challenging task in planning and developing its petroleum sector and developing policy and instruments for channelling the future oil and gas revenues in a best possible way for the benefit of Cambodians. It is actually a momentous task."

"We realise the opportunities that petroleum revenues may afford us to improve the livelihoods of the Cambodian people," Deputy Prime Minister Sok An told the gathering. "The translation of the capital value of oil reserves into the stored capital value of our people through improved health and social conditions and education is very important for the long term prosperity of Cambodia."

"While some technical people in the government are concerned that the Nigerian experience is not copied in Cambodia it is unclear how high up this goes," said Barisoth.

"The concerns are valid," agreed Scheuer. "It is still too early to make a judgement and we are cautiously optimistic that they will get it right," he says of the government’s efforts.

The threat of corruption is not the only factor bearing on Cambodia’s efforts. "It is extremely difficult for a country like Cambodia, with its capacity, to develop a petro industry because everything is so complicated," said Scheuer.

The appropriate contractual arrangements and tax regimes are just two of the complex issues the country faces. Other countries, including developed countries, have encountered unexpected economic difficulties in developing their resource wealth, often dubbed ‘Dutch Disease’.

This refers to the problems associated with dumping large amounts of resource revenue into an economy and the distorting impact this has on other sectors such as agriculture. It originated in the Netherlands after the rapid flow of funds from the discovery of North Sea gas led to significant structural changes, including price increases and the de-industrialisation of many sectors of the economy.

The key message from the conference earlier this year was that Cambodia should take time to develop the industry and get the policy fundamentals right.

"In Norway it was ten years from the first drilling to first revenue coming on stream. Their advice is not to rush it," said Scheuer. "The main point now is to get the governance and policy frameworks right. If they get it right with Block A it will flow onto the other blocks."

The other idea being suggested by donors and experts with experience in the sector is for Cambodia to set up a fund to store revenue from oil and invested appropriately. Similar funds already exist in Norway and East Timor.

"We need to learn more about this fund but in general we would support a transparent process for the resource revenue," said Sam Ath from NGO Forum. He is one of two Cambodian NGO people who are closely studying East Timor to look at how the fledgling state is handling its revenue from natural gas.

Timor was selected from among several countries because of its similarities to Cambodia. "It is very important to build capacity and learn from them how civil society can engage with the government over the distribution of natural resources," said Sam Ath. "NGOs are open and happy to work with the government. We are not working to oppose them but to help them make the most effective use of the revenue from oil and gas."

NGOs and donors are also keen that Phnom Penh sign up to the Extractive Industry Transparency Initiative supported by a coalition of governments, companies and civil society organisations aimed at ensuring companies disclose what they pay and governments what they receive.

By Andrew Nette

http://www.ipsnews.net

Ban promises UN probe of sex abuse by peacekeepers

UNITED NATIONS (AP) — U.N. Secretary-General Ban Ki-Moon said Tuesday the United Nations will investigate allegations by a leading children's charity that U.N. peacekeepers are involved in widespread sexual abuse of children.

The report by Save the Children UK, based on field research in southern Sudan, Ivory Coast and Haiti, describes a litany of sexual crimes committed by peacekeepers and international relief workers against children as young as 6.

It said some children were denied food aid unless they granted sexual favors; others were forced to have sex or to take part in child pornography; many more were subjected to improper touching or kissing.

"The report shows sexual abuse has been widely underreported because children are afraid to come forward," Jasmine Whitbread, chief executive of Save the Children UK, told Associated Press Television News.

"A tiny proportion of peacekeepers and aid workers are abusing the children they were sent to protect. It ranges from sex for food to coerced sex. It's despicable."

Calling the sexual exploitation of minors a "very serious issue," Ban reiterated to reporters that he has a "zero tolerance" policy for such acts by U.N. personnel.

"I think that the report is very valuable and does give us some good points to which the United Nations should continue to address this issue," Ban said. "On all these cases which have been raised, we will very carefully investigate" and will take "necessary measures" where appropriate.

Earlier, U.N. spokeswoman Michele Montas had welcomed the report. "It's fair, and I think it's essentially accurate," she said.

Abuses have been reported in peacekeeping missions ranging from Bosnia and Kosovo to Cambodia, East Timor, West Africa and Congo. The issue was thrust into the spotlight after the United Nations found in early 2005 that peacekeepers in Congo had sex with Congolese women and girls, usually in exchange for food or small sums of money.

Several month later, Jordan's then U.N. ambassador, Prince Zeid al Hussein, wrote a report that described the U.N. military arm as deeply flawed and recommended withholding salaries of the guilty and requiring nations to pursue legal action against perpetrators.

In response, the U.N. adopted a "zero tolerance" policy toward sexual exploitation and abuse and a universal code of conduct. It requires training for all peacekeepers, but punishment for wrong-doers is left to individual countries.

Montas said the report states the United Nations has already undertaken steps designed to tackle the problem, from establishing conduct and discipline units in all U.N. missions to strengthening training for all categories of U.N. personnel. She said the United Nations also needs to strengthen its investigative capacity.

The study was based on research, confidential interviews and focus groups conducted last year. The charity emphasized it did not produce comprehensive statistics about the scale of abuse but did gather enough information to indicate the problem is severe.

The report said that more than half the children interviewed knew of cases of sexual abuse and that in many instances children knew of 10 or more such incidents carried out by aid workers or peacekeepers.

The Save the Children UK researchers, who met with 129 girls and 121 boys between the ages of 10 and 17, and also with a number of adults, found an "overwhelming" majority of the people interviewed would never report a case of abuse and had never heard of a case being reported.

The threat of retaliation, and the stigma attached to sex abuse, were powerful deterrents to coming forward, the report said.

Ann Buchanan, an Oxford University expert in statistical attempts to quantify rates of child abuse, said the topic is so taboo it is virtually impossible to come up with reliable numbers. But she said the new report provides a useful starting point.

"This will never be a statistical study," she said. "We'd call it a pilot work exploring the start of an issue. All the research shows kids don't make it up."

Buchanan, who directs the Oxford Center for Research into Parenting and Children, said the biggest obstacle to accurate numerical studies of child sexual abuse is the reluctance of children to come forward and tell adults they have been taken advantage of.

"Sexual abuse is a hugely difficult, sensitive area and it's not something that you can usually do surveys about because kids feel terrible shame and are afraid to say what's happened to them," she said. "Given what we know about underreporting of sex abuse, I would say this report is probably true. They've gone about it as sensitively as you can."

Save the Children spokesman Dominic Nutt said U.N. peacekeepers are involved in many abuse cases because they are present throughout the world in such large numbers. But he praised the United Nations for improving its reporting and investigative procedures regarding sex abuse.

"We're not singling out the U.N. In some ways they do a good job. It's all peacekeepers and all aid workers, including Save the Children," that are involved in sexual abuses, he said.

The report says several Save the Children workers were fired for having sex with 17-year-old girls in violation of agency guidelines.

In its report, Save the Children UK makes three key recommendations: establish a way for people to report abuse locally, create an international watchdog agency this year to deal with the problem, and set up a program to deal with the underlying causes of child abuse.

Tom Cargill, Africa program manager at the London think tank Chatham House, said there is no "magic bullet" that can solve the problem quickly.

"The governance of U.N. missions has always been a problem because soldiers from individual states are only beholden to those states," he said. "So it's difficult for the U.N. to pursue charges and difficult for the U.N. to investigate them."

By EDITH LEDERER

The Associated Press
http://www.mlive.com

Rice Futures Drop to Two-Month Low on Increased Global Supplies

May 28 (Bloomberg) -- Rice futures plunged for a third day to a two-month low as producers resumed exports, boosting global supplies, and a report showed improved crop conditions in the U.S., the world's fourth-biggest supplier.

The July contract on the Chicago Board of Trade dropped as much as 5.5 percent to $18.52 per 100 pounds, the lowest since March 24, after declining by the daily limit for the past two days. Cambodia lifted an export ban this week, and Vietnam said May 21 it will remove a ban on new overseas shipments in July.

The staple for half the world has lost as much as 26 percent since reaching a record last month, when it was buoyed by export curbs from China, Vietnam and India. Record prices for food, including wheat, corn and palm oil, have stoked concern about shortages and caused unrest from Haiti to Egypt.

``We will see more supplies in the coming months as producers in Southeast Asia harvest their crops,'' Kazuhiko Saito, strategist at Interes Capital Management Co. in Tokyo said today. ``Producers may try to sell as much as possible following record price levels.''

The July contract fell 74.5 cents, or 3.8 percent, to $18.855 per 100 pounds at 9:23 a.m. Singapore time, after declining by the daily limit of 75 cents yesterday. The price is still 78 percent higher than a year ago.

In the U.S., about 72 percent of the rice crop was in good or excellent condition, up from 65 percent a week earlier and 67 percent a year earlier, the Department of Agriculture said yesterday in a report. About 94 percent of the U.S. crop was seeded as of May 25, compared with 84 percent a week earlier and 97 percent at the same time in 2007, it said.

To contact the reporter for this story: Jae Hur in Singapore at jhur1@bloomberg.net

By Jae Hur

http://www.bloomberg.com

Cambodia's fuel subsidies to cost 300 mln USD in 2008

PHNOM PENH, May 28, 2008 (Xinhua via COMTEX) -- -- With discontent growing over rampant inflation, the Cambodian government has claimed it will spent 300 million U.S. dollars on fuel subsidies in 2008, local media reported Wednesday.

"We are trying to control inflation which is a phenomenon that influences Cambodia from outside by subsidizing gasoline," Keat Chhon, Cambodian Minister of Economics and Finance, was quoted by the Mekong Times newspaper as saying.

Keat Chhon predicted the subsidies would cost the state 300 million U.S. dollars by year's end, the newspaper said.

The government still imposes the same tax on oil - 309 U.S. dollars per ton for gasoline and 267 U.S. dollars for diesel - despite the fact imported oil has currently increased price to over 1,000 U.S. dollars per ton, Keat Chhon said.

"Currently, we do not take tax freight and insurance even though the oil price is rising," he added.

The Cambodian government claimed last month it had spent 29 million U.S. dollars on gasoline subsidies so far this year.

BY http://www.tradingmarkets.com

Rice tumbles as Cambodia lifts ban on exports

SAN FRANCISCO (MarketWatch) -- Rice futures slumped by their daily limit of 50 cents for a second day on Tuesday after Cambodia, one of the world's top 10 rice exporters, said it will lift restrictions on exports.

Cambodia will resume rice exports Tuesday after a temporary two-month ban, the country's Prime Minister Hun Sen announced on Monday, according to the Associated Press. Rice futures trading on the Chicago Board of Trade tumbled 50 cents to below $20 per 100 pounds.

Futures prices also slumped by 50 cents on Friday. Trading was closed on Monday in observation of Memorial Day.

Cambodia's move, however, may have a limited effect on the long-term world rice market, according to a U.N. rice expert, because the ban had already been somewhat lifted.

Cambodia has limited milling facilities, said Concepcion Calpe at the U.N.'s Food and Agriculture Organization in Rome. The country has to export rice to two neighboring countries, Thailand and Vietnam, to get milled. Cambodian rice will then be re-exported from these two countries.

"They had lifted bans in a number of neighboring provinces along the boarder," said Calpe. Officially ending the ban will "make things a little easier, but there won't be much difference because rice has already been flowing through the boarder."

Export restrictions

Rice futures have almost doubled this year, touching a record high of $24.46 per 100 pounds in April, despite estimates that the world rice production is to hit a record high in the next crop season. The culprit is export restrictions among leading rice producers, analysts said.

India, the third largest exporter of the grain, banned the export of non-basmati rice in March. Commerce Secretary Gopal Pillai on Tuesday said that the country won't follow Cambodia and ease curbs on export restriction, Reuters reported.

India's "export restrictions spread to other suppliers and lead to urgent efforts by rice importing countries to secure supplies -- at any price -- in a thin global market," said Tom Slayton, an economist at Center for Global Development, a Washington-based nongovernmental organization, in a note.

Vietnam, the world's second-largest rice exporter, reportedly may lift restrictions on rice exports in July. But the country lowered this year's export target to between 3.5 million and 4 million tons from last year's 4.5 million tons.

Other countries such as Argentina, Russia, Ukraine and Kazakhstan have also placed additional taxes or restrictions on exports of grains, rice and other products.

Export restrictions in some countries were driven by political reasons, Slayton said. India is facing a parliamentary election in May 2009 and "the government does not want to face further criticism."

To secure grain supplies, consuming countries have been encouraging imports by reducing or eliminating tariffs. Mexico on Sunday eliminated import tariffs on staples including corn, rice and wheat, according to Reuters.

Moming Zhou is a MarketWatch reporter, based in San Francisco.

By Moming Zhou, MarketWatch