Cambodia's oil and mineral wealth sold to corrupt elites: watchdog

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Over 75 companies are working in Cambodia's extractive sectors including Australia's BHP Billiton

BANGKOK (AFP) — Cambodia's political elite has captured the country's oil and mineral wealth, putting its economic future at risk while international donors turn a blind eye, an environmental watchdog said Thursday.

London-based Global Witness said impoverished Cambodia has enough natural wealth to wean itself off foreign aid but that international donors must do more to ensure the assets are properly managed.

In its new report entitled: "Country for Sale", the group said earnings from oil, gas and minerals were being "jeopardised by high-level corruption, nepotism and patronage" in allocating and managing the assets.

"The same political elite that pillaged the country?s timber resources has now gained control of its mineral and petroleum wealth," said Global Witness Campaigns Director, Gavin Hayman.

"Unless this is changed, there is a real risk that the opportunity to lift a whole generation out of poverty will be squandered," he added.

The Cambodian government banned a previous damning report published by Global Witness on Cambodia's forests in June 2007, which claimed the same elites were illegally logging the nation's forests.

No investigation followed the report and the group says it has been repeatedly threatened and refused reentry to the kingdom.

In its new report the group said oil, gas and mineral assets had been parcelled out by a small number of powerbrokers surrounding Prime Minister Hun Sen and other senior officials.

It also suggested that millions of dollars paid by oil and mining companies to secure access to the resources may be missing from national accounts.

Cambodian government officials were not immediately available for comment Thursday.

"Companies need to come clean on what they have paid to the government to secure access to these natural resources, or risk becoming complicit in a corrupt system," said Hayman.

So far more than 75 companies are working in Cambodia?s extractive sectors, the report said, including some internationally known operators such as Chevron and BHP Billiton.

Last month international donors pledged nearly one billion dollars in development aid to Cambodia, their most generous aid package ever to the impoverished Southeast Asian nation.

But Hayman said donors had been "spineless" in failing to secure new governance measures for natural resources or finalise an anti-corruption law after more than a decade of discussions.

"Every year they ask for progress, every year there's failure to make progress," he said.

Cambodia expects to begin oil production of its offshore fields in 2011, following the discovery of oil in 2005 by Chevron.

The kingdom is sitting on an estimated hundreds of millions of barrels of crude -- and three times as much natural gas -- but it remains unclear how much of the black gold can actually be recovered.

"Everything that we know about the sectors and the way in which they're developing so far indicates that once real money does start to flow it's not going to go in the right direction," said campaigner Eleanor Nichol.

The IMF predicts that annual oil revenue in Cambodia will increase from about 174 million US dollars in 2011 to a maximum of 1.7 billion dollars in 2021 before dropping off.

Meanwhile 403 million dollars worth of mining investment was approved in 2006 and more than 100 exploratory mining contracts have been allocated.

Many of these are on controversial sites including disputed land on the border with Thailand and the ecologically important Tonle Sap Lake, a UN-protected Biosphere Reserve providing livelihoods to two million Cambodians.

Global Witness called for a moratorium on the awarding of new oil and mining concessions, an audit of all existing contracts and full transparency in future agreements.