Govt defends handling of oil

via Khmer NZ News Media

Friday, 25 June 2010 15:02 Sebastian Strango and Meas Sokchea

THE government has defended its handling of extractive resource exploration agreements, in response to opposition queries about payments made by foreign firms for the right to explore Cambodian oil and mineral deposits.

On May 7, Sam Rainsy Party lawmaker Son Chhay wrote to Deputy Prime Minister Sok An requesting information about which companies have been awarded the right to prospect for oil and gas and how funds from those companies have been administered.

He also requested information about a US$28 million payment by French oil giant Total to secure offshore oil exploration rights, as well as the nature of a “social development fund” set up to distribute a portion of that firm’s payment.

In a letter dated June 9, a copy of which was seen Thursday, Sok An confirmed that a total of 23 companies have been awarded rights to explore for oil in Cambodia, although not all of them are still operating.

He also confirmed the $28 million Total payment, stating that it included a $20 million signature bonus, $6 million to be paid into a social-development fund, and another $2 million for administrative purposes.

The letter denies any misuse of the funds, and says that all signature bonuses are made into a National Bank of Cambodia account jointly managed by the Cambodian National Petroleum Authority (CNPA) and the Ministry of Economy and Finance.

“Like other national budgets, the money has a single exit and a single entry point with only one commander in chief and one chief of staff,” said Sok An, who is also the president of the CNPA.

“No payment has been paid directly to any government official,” his letter added. “All payments must be made according to oil agreements ... [and] put into an account which is defined by the government.”

The social development fund is jointly managed in the same way, but “consultation” with a particular company is required before its funds can be disbursed, Sok An stated.

The recent concerns about extractive resource revenues arose in April, when mining giant BHP Billiton announced it was under investigation by the US securities and exchange commission for possible violations of anticorruption laws.

Some linked the probe to Cambodia because of comments by Minister of Water Resources and Meteorology Lim Kean Hor, who told the National Assembly in 2007 that BHP had secured rights to a concession in Mondulkiri province by paying $2.5 million in “tea money”.

In a speech later that month, Prime Minister Hun Sen mentioned the Total payment, prompting government critics and opposition members to call for further disclosure.

In a statement issued in May, London-based graft watchdog Global Witness said foreign donors should confront the government about whether such payments have been registered in national accounts.

“No information about the whereabouts of these payments has been made public by the authorities,” Global Witness said.

On Thursday, Son Chhay welcomed Sok An’s letter, saying it provided new information on a number of issues.

But he said some of his questions remained unanswered. He noted that the letter does not address his request that the government disclose information about revenues and expenses from the social development fund, as well as the legal framework that dictates its use.

“Where is the money that is collected from all these companies? How can the government create a fund without regulation or a law to regulate the fund?” he said. “It’s these sorts of things that have been criticised by the public. There are still more questions that need to be answered.”

He also disputed Sok An’s claim that no government officials have received direct payments, saying he has evidence of a senior government official receiving a personal payment in relation to an oil and gas deal.

The identity of the official will be revealed after more evidence is collected, he said, and vowed to “push for more details” about the government’s handling of oil and gas exploration payments.

Tith Sothea, a spokesman for the Council of Ministers’ Press and Quick Reaction Unit, said Sok An’s responses to Son Chhay were thorough and dismissed Son Chhay’s concerns.

“All answers are not to Son Chhay’s liking, since he has the opposite ideas. If Son Chhay accepts them or not it is up to him,” he said.

Mam Sambath, chairman and executive director of the NGO Cambodians for Resource Revenue Transparency, told the Post in May that the premier’s announcement of the Total payment in April was a positive sign for future transparency, but that further disclosure is necessary.

“They should improve how to disclose information by having more detailed information,” he said.