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Chinese company sanctioned by US for rights abuses in Cambodia

Union Development Group accused of burning down villagers' houses and seizing land for $3.8 billion resort
Chinese company sanctioned by US for rights abuses in Cambodia

Dara Sakor resort in Koh Kong province has a 3.4-kilometer runway. (Photo: TripAdvisor)

Published: September 16, 2020 02:53 AM GMT
Updated: September 16, 2020 02:59 AM GMT

A Chinese state-owned company has been sanctioned by the United States Treasury for human rights abuses and the seizure of land in southwest Cambodia that was used in a US$3.8 billion property development.

A Treasury statement said Union Development Group (UDG) had been blocked and its financial transactions and provision of goods and services prohibited within the US under the Global Magnitsky Human Rights Accountability Act

The Magnitsky act targets perpetrators of serious human rights abuses and corruption.

“The United States is committed to using the full range of its authorities to target these corrupt practices where they occur,” Treasury secretary Steven T. Mnuchin said on Sept. 15.

It said UDG had prevented Cambodian villagers from planting rice on disputed land and noted the company was accused of burning down the houses of villagers and using private security and the Cambodian military to seize land.

UDG had also ignored warnings from the United Nations Office of the High Commissioner for Human Rights and a directive from Cambodia’s Council of Ministers to stop destroying villagers’ property.

“This entity’s predatory investment schemes deepen corruption, undermine the rule of law and exploit the resources of other countries,” Mnuchin added.

UDG acquired a 99-year lease on 36,000 hectares at Dara Sakor in southwest Koh Kong province 12 years ago and has since constructed what it says is a tourist resort with a 3.4-kilometer runway.

Analysts have cast doubts over the project, suggesting it could be used for military purposes as Cambodia emerges as a strategic player in the trade war between the US and China.

Beijing is investing billions of dollars in infrastructure in Cambodia, which has backed Chinese policies in the diplomatic arena. That has created friction within the Association of South East Asian Nations (ASEAN) amid overlapping claims in the South China Sea.

The Treasury statement cited Gen. Kun Kim, a former joint chief of staff of the Royal Cambodian Armed Forces, for using the military to intimidate villagers and to clear land for UDG ahead of construction at Dara Sakor.

Kun Kim was sanctioned by the US Treasury in December alongside three members of his family, while five entities under their control were also sanctioned. Cambodian tycoon Try Pheap was also sanctioned for illegal logging.

The Treasury said Kun Kim was instrumental in the UDG development and had “reaped significant financial benefit from his relationships” with UDG.

It added that the size of the Dara Sokar project had violated Cambodian law, which limits land concessions to 10,000 hectares. The site was also extended into the protected Botum Sakor National Park, land that can only be handed over by royal decree.

“In order to receive the land, UDG registered itself as a Cambodian-owned company headed by a Cambodian national,” the statement said.

“But within three years of receiving the land, UDG switched back to being a Chinese-owned and operated company on paper.”

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