Almost half of Cambodia has been sold to foreign
speculators in the past 18 months - and hundreds
of thousands who fled the Khmer Rouge are
homeless once more. Adrian Levy and Cathy
his hair stiff with sea salt, chugs out into the
Gulf of Kompong Som in his weather-beaten
turquoise boat, looking for blackling. He scours
the shallow, blue water, waiting for a shoal to
appear, before skimming his net across the
water. He does the same every day, taking his
catch to auction on Independence Beach in
Cambodia's southern port city of Sihanoukville.
like a scene Sang Run was born into. But 20
years ago the beach was deserted, and he was a
schoolteacher in Mondulkiri, a forested province
hundreds of miles away in the east of the
country. Back then, he could talk all day about
palm sugar and betel nuts. He was something of
an amateur botanist, but had never seen the sea
- nor had any of the group who today gather
around his silvery haul flapping in the sand on
Former nurse Srey Pov, who
runs a Khmer restaurant along the beach, also
came from a province many miles away. She still
cannot swim, she says, shrugging. Heads nod
around her. Cambodia is a nation that would
drown if their boat tipped over; it is also a
country whose citizens mostly do not belong to
the places where they have ended up.
Rouge saw to that, eviscerating the kingdom
after coming to power. It was a movement that
drew inspiration from Mao's Cultural Revolution,
collectivising all the land; but it grew to love
terror more than ideology. The ferocity of the
regime sent more than 300,000 rushing into
exile. At least two million urban Cambodians
were route-marched into the paddy fields to near
certain death. Worst hit was the Eastern Zone,
bordering Vietnam, where Sang Run came from.
people were derided as "duck's arses with
chicken's heads" as the Khmer Rouge grew to
mistrust the Vietnamese and accused Mondulkiri
people of being disloyal - too sympathetic to
their neighbours across the border. Their names
were added to those who were to be purged; the
catalogue of "crimes" became so long, so
general, that anyone could stand accused. The
wave of random violence and retribution that
scythed through the countryside for three years,
eight months and 21 days killed one in five of
family all vanished, but he survived, hiding in
the forests, living off what he could pluck and
hunt. When the Vietnamese invaded in 1978 -
overthrowing the Khmer Rouge a year later - Sang
Run found his way, like thousands of others, to
Cambodia's 300-mile long shoreline. Stretching
between Thailand and Vietnam, the region had
been a Khmer Rouge stronghold, controlled by Pol
Pot's notorious commander, Ta Mok, who was known
as The Butcher.
In the 80s, when the fishing
shacks and noodle stores went up along the Sihanoukville coast, there was no development
plan. There had never been a tradition of
thriving fishing communities along the coast -
few Cambodians lived there except in the old
French colonial towns. The shoreline had been
empty - miles of palm-fringed beach front
interspersed with the few port towns, including
Kep, Sihanoukville and Ream.
began to build new lives there, learning to love
the sea. Some took boats to a nearby archipelago
of 22 coral-fringed, uninhabited islands,
building up clusters of villages on atolls with
names such as Rabbit, Snake and Turtle. Within
10 years, the whole coastline had been patchily
settled by newcomers, among them a former
farmer, Soch Tith, a stocky man with corncob
hands, who was sick every time he got in a boat,
but still found his way to faraway Koh Rong, the
largest of the islands - 7,800 hectares of
jungle. There he cleared small patches to grow
these communities had schools, political
representation, and many householders even had
papers, stamped by the Sihanoukville governor,
Say Hak, which guaranteed them the permanent
right to stay under the 2001 Cambodian Land Law.
The central government in Phnom Penh had in the
90s designated the entire coast and its islands
as State Public Land that could not be bartered
during the past couple of years, a disturbing
wave of rumours swept the coastal communities.
Sang Run says that in September 2006 he heard
that Snake Island, half a mile out to sea, had
been secretly sold to Russians. He did not
check. Cambodians ask little from their
government; a wariness of authority is a legacy
of years of blood-letting under Pol Pot.
case, it was a familiar story. Shortly after Hun Sen, Cambodia's prime minister, came to power in
1985, frenzied landgrabbing began: influential
political allies and wealthy business associates
raced to claim land that the Khmer Rouge had
seized, gobbling up such large chunks of the
cities, forests and paddy fields that Cambodians
used to say the rich were eating the country.
2006, the World Bank estimated that 40,000 had
been made homeless in Phnom Penh alone. But,
until now, no one had bothered with the coast.
Sang Run paid no particular attention to the
Snake Island rumour. He should have - it
signalled a radical new course for the Cambodian
months later, Sang Run was out in his boat at
7am when disaster struck his village. He arrived
back at 11am to find bulldozers had flattened
his home and those of the 229 families who lived
beside him. He heard from neighbours that it had
happened in an instant. Uniformed men, sent in
by governor Say Hak, used electric batons to
chase terrified residents from the burning
ruins; three of Sang Run's neighbours were
Village Number One - a
mundane name that failed to capture the beauty
of its uninterrupted sea views and vegetable
gardens that ran to the beach - had been erased.
Sang Run heard that a hotel was planned,
although no information was given to the people
evicted from their homes for a further 18
Nurse-turned-restaurateur Srey Pov tells us
that, by early 2007, rumours were buzzing around
Sihanoukville's covered market that virtually
every island in the region was up for sale. Over
the following months, Koh Russei and Koh Ta
Kiev, Koh Bong and Koh Ouen, Koh Preus, Koh
Krabei and Koh Tres were all snapped up by
foreigners, who then started negotiating for
mainland sites, too, among them public beaches
with names such as Serendipity, Occheuteal and
In February, 47-year-old Srey Pov was
evicted, too, her Independence Beach restaurant
shut down to make way for another rumoured
hotel. "All I've got left is the chairs and
tables," she says - they're stacked up in the
cramped living room of her Sihanoukville home.
Former farmer Soch Tith, on Koh Rong, was the
last to hear that last month his island had been
sold, too, to a British developer.
of these people knew was that the troubled
kingdom of Cambodia, a precarious debtor-nation
underpinned by more than £500m of hand-outs from
the international community, had suddenly found
itself a refuge for cash and speculators fleeing
paralysed western financial markets. As London
and New York, overcome by the US sub-prime
crisis, began grinding to a halt last year, many
in the City had moved on, transferring liquid
assets to the east.
fund managers had started pitching up in Phnom
Penh wearing linen shirts and khaki drip-dry
jungle wear, alerted by the country's unexpected
boom in tourism that in 2006 had seen
one-and-a-half million visitors overcome the
west's collective memories of Cambodia's recent
past to travel to the temples of Angkor Wat.
Enticed also by indicators that suggested the
feeble economy was turning a corner, super-rich,
predominately British, French and Swiss
speculators, fuelled by a high-risk machismo,
came hunting for profits of 30% or more. Their
interest was land speculation: buying up large
sites in developing countries that they would
then sit on in the hope that, with the influx of
tourists, land values would soar.
Hun Sen and
his ruling Cambodian People's Party (CPP) have,
in effect, put the country up for sale.
Crucially, they permit investors to form 100%
foreign-owned companies in Cambodia that can buy
land and real estate outright - or at least on
99-year plus 99-year leases. No other country in
the world countenances such a deal. Even in
Thailand and Vietnam, where similar land
speculation and profiteering are under way,
foreigners can be only minority shareholders.
other inducements. Many foreign funds - hedge
funds, property funds, private equity funds -
operating on the outer margins of the financial
world thrive on complexity, risk and maximising
profit. In Phnom Penh, they found an ideal
partner in the prime minister, who has created a
unique business environment. Since the mid-90s,
Hun Sen and the CPP have declined to enforce
money-laundering legislation and have concerned
themselves little with the probity of investors.
Foreign businessmen were offered nine-year tax
holidays, and were allowed to hold their cash in
US dollars in banks outside the country.
recently, no one would touch us," Brett Sciaroni,
a Phnom Penh-based US lawyer who acts for many
new western investors, tells us. "We were dirt.
And suddenly we were gold." John Brinsden, a
British banker, now vice chairman of Cambodia's
national Acleda Bank, agrees: "In 2001, only 200
people came to the government's investment
conference. At our most recent, we ran out of
2007, Hun Sen, gambling on his people's tenuous
connection with the land, changed the
designation of the southern islands so they
could be sold. The forests, lakes, beaches and
reefs - and the lives of the thousands of
residents - were quietly transferred into the
hands of private western developers.
that Cambodia could become a tourist magnet to
challenge Thailand, the prime minister began a
fire sale of mainland beaches. By March this
year, virtually all Cambodia's accessible and
sandy coast was in private hands, either
Cambodian or foreign. Those who lived or worked
there were turfed out - some jailed, others
beaten, virtually all denied meaningful
The deals went unannounced; no
tenders or plans were ever officially published.
All that was known was that more than £1,000m in
foreign finance found its way into the country
in 2007, a 1,500% increase over the previous
four years. It was as if Alistair Darling, the
British chancellor, had decided to raise some
extra cash by trading the Isles of Wight, Man
and the Hebrides, throwing in Formby Sands, the
entire Cornish coastline and Brighton seafront -
before trousering the proceeds.
abundantly clear to observers, including the
World Bank and Amnesty International, that by
making these private deals, Hun Sen was denying
prosperity to most of his people, causing the
country's social fabric to unwind like thread
from a bobbin. Today, more than 150,000 people
are threatened with eviction. Forty-five per
cent of the country's entire landmass has been
sold off - from the land ringing Angkor Wat to
the colonial buildings of Phnom Penh to the
Professor Yash Ghai, the
UN human rights emissary to Cambodia, warned,
"One does not need expertise in human rights to
recognise that many policies of the government
have... deprived people of their economic
resources and means of livelihood, and denied
them their dignity." He added, "I believe that
the deliberate rejection of the concept of a
state governed by the rule of law has been
central to the ruling party's hold on power."
It was Hun
Sen who, as early as 1989, realised the power of
land. Rhodri Williams, a researcher for the
Geneva-based Centre on Housing Rights and
Evictions, points out that, as Hun Sen
privatised the land, "he simultaneously cut off
the rights of 360,000 exiled Cambodians,
awarding prime slices to political allies and
friends." The exiles were Cambodians who had
fled the Khmer Rouge into Thailand and beyond in
1975; they had titles to the land, but this
counted for nothing when they returned to claim
it. Hun Sen said Cambodia should start again.
bathes his speeches in socialist values, even
his closest aides told us that Hun Sen was more
often than not a pragmatist. He joined the
Communist party in the 60s and enlisted in the
Khmer Rouge in the 70s, before defecting to the
Vietnamese-backed government in the 80s.
90s, he embraced the free market. Tourism was
not a promising prospect in the early days - the
remnants of Khmer Rouge, violently hostile to
outsiders, were too much of a risk. When western
travelers did begin to explore, they were
taking their lives in their hands.
Briton Mark Slater, Frenchman Jean-Michel Braquet and Australian David Wilson were
kidnapped while riding a train through
Sihanoukville, and all of them executed. Two
years later, Christopher Howes, a British
de-mining expert, together with a Cambodian
colleague, were murdered as they worked 10 miles
north of Angkor Wat.
the country seemed safer, and was finally
becoming a tourist destination. That September,
the CPP received its first foreign offer in the
coastal area: a Russian investor living in Phnom
Penh wanted to buy an island. This deal would
become the template for every developer to come. Alexander Trofimov created a Cambodian shell
company to buy Koh Puos, or Snake Island.
cash apparently no object, he proposed to
stunned government officials that he would link
the island to a mainland beach - known as Hawaii
- with a 900-metre suspension bridge. "He also
asked to buy Hawaii beach," the official who
oversaw that meeting told us. "And we gave it to
him." No figures were published. The official
claimed he didn't know them.
used the beach and island were kept in the dark.
No one quizzed Trofimov. He produced a book of
cut-and-paste designs that he said would
encompass a £150m resort consisting of 900
tightly packed villas, a dolphin aquarium, two
hotels, a shopping centre and a marina - all
crammed into an egg cup-sized island.
enticing stuff for the CPP, although the project
faltered when Trofimov was accused of having sex
with underage girls, and jailed this year.
However, two more Russian businessmen seamlessly
emerged to take up the reins, representing a
Cypriot-holding company that, it later
transpired, had owned the Koh Puos project from
was quick off the mark, too. A quietly spoken
and likeable French businessman, Darc had
arrived in Cambodia in the 90s, building a hotel
and restaurant business in Phnom Penh. In 2006,
after hearing from a French colleague working at
Sihanoukville's provincial airport that the
runway was likely to be extended, he identified
two massive beach-front sites totalling more
than 220 hectares that he liked the look of.
brought in Jean-Louis Charon, a Parisian real
estate tycoon, whose Nexity company is the
largest in France, and whose name brought in "40
French high-net worths", as Darc described them;
they raised £12.5m to be held by City Star, a
foreign-owned investment company. "The maths was
easy, and the returns potentially fantastic,"
Darc said. City Star's land values quadrupled as
soon as the Cambodian government confirmed the
airport rumours, a spokesman for the
Sihanoukville governor's office told us.
investors could have sold up and come away rich.
But this was development with a difference. City
Star investors wanted more, but did not want to
go to the trouble of constructing anything. They
were speculating on the future value of the
land, believing that by adding only modest
infrastructure, perhaps attaching big-name
hoteliers, they would reap vast profits in seven
to 10 years.
Darc's group continued buying,
snapping up 333 hectares on Koh Russei and Koh
Ta Kiev, two islands off Ream. Such was the
appetite for easy money that City Star raised a
further £30m in a matter of days from a second
group of French high rollers last July, this
time to buy in Phnom Penh.
model appealed to British investors behind
LimeTree Capital, a Hong Kong-based private
equity group that in 2007 bought up chunks of
beach front near Ream; sites it planned to leave
idle for many years until prices peaked. This
spring, a third entrepreneur, Frenchman Alain
Dupuis, through his Cambodian company LBL
International, bought Koh Sramaoch. Soon after,
Koh Tonsay, or Rabbit Island, was auctioned off
to Chinese investors; 14 fishing families were
evicted to make way for a casino and a golf
mainland, Sang Run returned to the beach to find
his village in Sihanoukville destroyed to make
way, supposedly, for a hotel. A few hotels have
been built, but generally the sites remain
empty. The Cambodian economy has grown by more
than 24% over 18 months and land values have in
some cases risen by more than 100%, so there are
fortunes to be made from doing nothing but wait.
Rory and Mel Hunter were the only investors who
made an attempt to incorporate into their plans
the people whose land they were buying. An
advertising executive, Rory had come to Cambodia
to work for an agency in Phnom Penh. During a
week-long vacation in 2006, he and his wife,
Mel, had set out on a diving trip around the Koh
Rong archipelago and fell in love with the twin
islands of Koh Bong and Koh Ouen, attached to
one another by a coral reef and cupped in a
shallow strait - they were known collectively as
the Sweethearts. "We dreamed of a beautiful
resort where people could immerse themselves in
a new part of Asia," Mel said.
negotiations with two village men to buy their
houses and those owned by 60 other families.
"They thought we were nuts," Rory said. "The two
head guys wanted £7,500 each. We agreed and
signed the contract in a boat out in the strait.
We helped take down their tin shacks, and slowly
relocated all the families and their homes to Koh Rong, across the strait." They worked for
weeks to clear 20 years of debris, while
beginning negotiations with the government to
buy the islands themselves.
drummed up backing from a handful of British
speculators, including a currency broker who
(preferring we didn't use his name) tells us why
he leapt at the opportunity. "I loved the deal
from the start. Let's be honest, who wants 6%? I
wanted a deal that would wake me up in the
night, sweating. We could make good money," he
says over drinks in Phnom Penh, his City suit
exchanged for shorts and a T-shirt. "There was a
buzz about Cambodia you don't get elsewhere.
It's Cambodia, the killing fields and all that
stuff. Something different to show your mates
back home. I show them the visa in my passport.
I have something they don't."
Hunters' enterprise would soon be challenged by
a cascade of deals involving neighbouring
islands. While they worked on retraining local
fishermen on neighbouring Koh Rong, British
property developer Marty Kaye bought the ground
from under their feet. Kaye, who had spent much
of his career working on construction in Hong
Kong, had spotted the island while planning an
£800m luxury tourist development on a nearby
Vietnamese island, Phu Quoc.
He told us: "I was
walking down the beach on Phu Quoc, seeing where
we were going to put the golf course, and I
spotted another island. No one knew what it was.
We looked on Google Earth and it seemed to be
Koh Rong, in adjacent Cambodia. I said, 'Let's
see if we can get anywhere on Koh Rong, too.'"
runs Millennium property fund, began
negotiating. "Here was a chance to buy an
undeveloped island almost as long as Hong Kong,"
he said. "Nowhere else in the world could you
create your own kingdom from scratch - unlike
the car-crash planning of Thai islands like Koh
Samui." The Cambodian government gave him 18
months to produce more details, and he worked on
an outline plan whose initial development would
cost £100m. When the government signed the deal,
it made no mention of the census it had just
carried out recording how many thousands of
people (the government won't reveal the figures)
live on the 7,800-hectare island.
Kaye is not
worried: "Two guys and a lawyer will see
everyone. But what most of them don't understand
is that even if they have papers, they are not
worth anything. All of them are registered only
locally, not in Phnom Penh, so they will have
absolutely no case. Others are just squatters
with no papers at all." It helped that Kaye's
Cambodian partner was tycoon Kith Meng, a
multi-millionaire with interests in banking,
mobile phones and real estate - and a close
friend of the prime minister, Hun Sen.
wants everything done yesterday," Kaye said. "We
are going to move as fast as we can. It's
fantastically exciting, the opportunity to zone
the whole island, to see where the luxury
exclusive villa plots will be, for the Brad
Pitts, etc." It is an investment that gives the
present residents of Koh Rong just over a year
to make a solid case for keeping their homes or
finding new ones.
If they are
evicted, places in the area to make a new home
are becoming scarce. With all the big islands
sold, even smaller outcrops have gone, too,
including a clump of rocks known as Nail Island,
bought by Ukrainian entrepreneur Nickolai
Doroshenko, who has transformed it into a James
Bond-style lair, complete with a giant fibre-glass
shark that soars over the fortress-like
construction. He already owns Victory Beach, in
Sihanoukville, a restaurant stuffed with live
snakes and a bar that advertises "swimming
The sale of
the century continued with the mainland beaches.
At the end of January, the Sokha Hotel Group,
run by Sok Kong, a Cambodian oligarch and Hun
Sen ally, was confirmed as the new owner of the
lion's share of Occheuteal Beach, the largest
and most popular public dune in the region,
which was closed off to make way for a
1,000-room hotel and golf course. The deal was
originally negotiated in June 2006 when, local
fisherman told us, bulldozers and 10 trucks of
armed men demolished 71 homes and 40 local
to be left out, Say Hak, Sihanoukville's
governor, acquired a small island for himself,
on which he built a villa and jetty; while
Sbaung Sarath, the wife of his deputy, bought
half of Sihanoukville's public Independence
Beach in February 2008, evicting scores of
families in the process. Among them was Srey Pov.
She travelled to Phnom Penh with 27 other
families to protest, but returned with nothing. "The developer issued a warning," she says.
"They threatened to pay the city authorities to
get rid of us. We knew what that meant."
Independence Beach now languishes behind high
fencing, as Srey Pov feared, waiting for the
five-star tourists who will enjoy exclusive
access to the powder-white sand.
Sbaung Sarath struck again, securing part of
Sihanoukville's Otres Beach, one of the last
public dunes, where Queenco, a London-listed
casino company, also announced in February that
it had bought 56 hectares. Queenco declined to
comment on its Sihanoukville project, but it has
already had consequences - 100 fishing families
have been evicted.
They have built a row of
makeshift bamboo shacks, held together with
plastic sheeting and whatever rubbish they could
recycle, along a 200-yard stretch of a nearby
main road. On the day we visited, they were
drying out from an overnight storm that had
filled their ramshackle homes with rainwater.
63, used to have a wonderful view over Otres
beach and the gulf beyond. She was forced off
her land last April. Now all she can see are the
hubcaps and exhaust pipes of lorries that tear
by. She and many of her neighbours had arrived
on Otres Beach after fleeing the Khmer Rouge in
the early 80s, building a fishing village they
christened Spean Ches, or Burning Bridge. "When
the eviction notices were served on us in
September 2006, we were determined to fight,"
she says. She could not bear to lose everything
again. "We lodged a complaint with the Senate
Committee on Human Rights that ruled it was a
matter for the courts." But the Sihanoukville
governor's men did not wait for a court order.
They turned up at the seaside village in April
last year, Aom Heat says, and, "they burned down
26 houses and bulldozed 86 more, destroying all
the pots and pans, clothes and food supplies. We
were in a blind panic." Thirteen injured men
were arrested and jailed, including one of Aom
Although made homeless, they were
charged with "wrongful damage of property", and
nine of them found guilty without witnesses or
evidence produced. Despite having served their
time while waiting for the case to be heard, the
men were thrown back into jail pending an appeal
from the prosecution, who complained they had
been dealt with too leniently.
No one can
agree what impact the foreign land sales will
have on the Cambodian economy because so little
information is made public. Although Cambodia is
nominally a democracy that has held three
general elections to date, and has a nominal
opposition party, the CPP parliamentarians and
cabinet are remote and dismissive of their
They are not required to report on their
interests or assets, making it impossible to
deduce how much Hun Sen and his cabinet have
personally benefited - although the World Bank
reported last year that corruption, coupled with
a lack of transparency, was "choking economic
land sell-offs, members of the government and
its allies have been splashing huge sums around.
A Korean developer told us that when he marketed
Phnom Penh's first skyscraper, the 42-storey
Gold Tower project in February, all two dozen
£750,000 penthouse suites were bought within 24
hours by "an honour roll of the CPP and its
friends in the military".
There are other
telltale signs, such as the canary yellow
Hummers and hi-spec Range Rovers with
blacked-out windows that rumble around Phnom
Penh, in a country where the average annual
income is less than £150.
Taylor, the director of Global Witness, an
international NGO that was forced to leave the
country last year, having accused the CPP of
running a logging racket, paints a depressing
picture: "A shadow state has grown up, a
government that misappropriates public assets,
extorts from businesses and manages an extensive
It is administered by senior
ministers who are fluent in the jargon of good
governance and sustainable development." One of
Hun Sen's closest advisers, who requested
anonymity, disagrees, telling us: "Hun Sen
believes that liberal democracy is unsuited to a
country whose skills have been drained and
demographics wildly skewed by the Khmer Rouge."
comes down to how much money you have in your
pocket, according to Doug Clayton, from Leopard
Asia, a fund of Swiss and British bankers that
is about to invest £25m in Cambodia. "This kind
of money opens any door," he says. How does
Clayton pitch the Hun Sen brand back home?
"Candidly? In investment circles, no one knows
anything about this place. It's off the radar.
In our pitch I talk up the new economic figures.
I talk up stability." Clayton adds: "When the
dust settles, the government here will probably
end up looking something like the one in
Singapore." There, Lee Kuan Yew served as prime
minister from 1959 to 1990. Cambodian pollsters,
looking to the general election that will run
this July, predict a clear CPP victory, putting
Hun Sen at the helm for many more years, too.
this mean for people such as Sang Run, who is
now surviving in a makeshift home behind
Independence Beach? Has the legacy of the Khmer
Rouge been purged? Naly Pilorge, director of
Licadho, a local human rights NGO, thinks not:
"Everyone claims Cambodia has come through the
period of barbarism, but the sadism is still
bubbling beneath the surface. Extreme violence,
greed and disregard for the most basic human
rights - of giving people a place to live - are
still with us daily. The methods of the past are
being used to dictate our future."
Crisis In The City
article appeared in
the Guardian on
Saturday April 26 2008 on p30 of the
Features & Comment Section. It was last
updated at 00:08 on April 26 2008.
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