Singapore a magnet for cash from politically connected Cambodians

By Jack Adamović Davies

May 19, 2022

In late 2002, Phnom Penh newspapers were awash with rumors that Singaporean anti-corruption officials had identified bank accounts containing $800 million belonging to 26 “powerful Cambodians.” The funds were said to have been uncovered by U.S. investigators on the trail of Osama Bin Laden, who had masterminded the September 11th terrorist attacks the year before.

The story was understandably big news. The sum of money in question was equal to one-fifth of Cambodia’s annual economic output. There was only one problem with it – the U.S. and Singaporean governments refused to acknowledge the existence of the alleged bank accounts or the investigation that had supposedly uncovered them.

Twenty years on, it remains impossible to say for certain whether the originator of that rumor was a courageous whistleblower or an attention-seeking crank. However, analysis of Singaporean corporate and property records has borne out the rumor’s basic claim: Cambodia’s politically powerful and those close to them do have enormous amounts of wealth stashed in Singapore.

RFA has identified Singaporean assets controlled by politically connected Cambodians worth in excess of $230 million. Among the owners of those assets are relatives of Prime Minister Hun Sen, an individual subject to U.S. sanctions, a former cabinet minister, as well as the wives, children and siblings of generals, senators, and secretaries of state.

This will be the first in a series of stories exploring those assets, how they were acquired, what they are used for, and what they can tell us about the relationship between money and power in Phnom Penh.

Cambodian Prime Minister Hun Sen (C) addresses cabinet members at the Peace Palace in Phnom Penh on Sept. 7, 2018. (Photo: AFP)

Big fish

At least 15 Cambodian politically exposed persons, or PEPs, have business or real estate interests in Singapore. PEP is a designation used by anti-money laundering officials to designate individuals who by virtue of their holding public office, or their close relationship to those who do, are more susceptible to bribery and corruption.

As shown below, just nine of those 15 Cambodian PEPs collectively control assets in the city state worth at least $234.6 million. The remaining six are shareholders or outright owners of Singaporean businesses whose true value could not be ascertained. It is unlikely, however, that those businesses are empty shells. Legally, in most jurisdictions – Singapore among them – professionals working in the financial services industries are supposed to perform enhanced due diligence when dealing with PEPs to ensure that their money is clean.

Patrick Alley is the author of Very Bad People, a book about the work of Global Witness, a British anti-corruption NGO of which he is a founding director that got its start in the 1990s exposing graft in Cambodia. For him, RFA’s findings are proof that at least some of Singapore’s financial services professionals are not performing adequate scrutiny of the business they are facilitating.

“There’s no way they’re doing their due diligence. They cannot be because most of the people you’re talking about are PEPs,” said Alley.

Switzerland of the East

Phnom Penh’s powerful are not alone in choosing to locate large amounts of their wealth and business in Singapore. The city state is awash with money from across the region. A 2015 report by the Boston Consulting Group estimated that one-third of all money leaving Southeast Asian countries to be parked offshore ended up in Singapore.

In his 2007 book Asian Godfathers, Joe Studwell said it was Singapore’s willingness to accept cash “with few or no questions asked about where the money comes from” that made it so popular with regional tycoons wishing to “keep funds offshore, fearing – with good reason – that they may one day be the victims of political change.”

“Some money in city state banks is legitimately expatriated capital and some is ill-gotten gains,” Studwell wrote, noting that Singapore – along with Hong Kong – showed, “little interest in separating the two.”

Recent years have seen Singapore take steps to shake off its reputation as a hub for money of questionable origins. In 2017, for example, it signed up to the Common Reporting Standard, an international treaty whereby participating countries agree to exchange information on accounts held by foreign citizens in their banks.

The country still has a long way to go, though, according to the Tax Justice Network, a financial transparency advocacy group.

“Singapore, however, continues to offer a range of secrecy facilities that provide tax avoidance and evasion opportunities, coupled with tax and regulatory incentives,” the NGO wrote in its 2020 report card on the island nation.

Tax Justice Network released its annual 'Financial Secrecy Index' on May 17, ranking the world's offshore financial centers "most complicit in helping individuals to hide their wealth from the rule of law." Having come in fifth place last year, Singapore slid two places to be named third-worst jurisdiction globally, with the report alleging the city state's business practices have become more secretive while enjoying a 9 percent bump in the volume of financial services it provides to non-residents. The United States came in first place this year with "the worst rating ever recorded since the ranking began in 2009."

A spokesperson for the Monetary Authority of Singapore declined to comment for this story, and the Singaporean Ministry of Finance had not responded to a request for comment by publication time.

Singapore’s then-Finance Minister Heng Swee Keat delivering a keynote address at the 8th World Bank-Singapore Infrastructure Finance Summit in Singapore on April 5, 2018. (Photo: AFP)

Time-tested friends

Cambodia and Singapore’s ties run deep and have consistently been rooted in trade and finance. Writing in a 2012 essay on relations between the two countries, Cambodia’s then-Deputy Prime Minister Sok An wrote that, “Singapore has been a time-tested friend of Cambodia.”

It is a friendship, he claimed, that dated to the summer of 1965 and Singapore’s declaration of independence, which Cambodia was “one of the very first countries to recognize.”

Singapore broke off formal diplomatic relations with Phnom Penh following the rise to power of the Khmer Rouge in 1975. It did not, however, follow much of the rest of the world in cutting trade relations.

When in 1976 a ship departed Hong Kong harbor for Sihanoukville laden with 3,000 tons of cargo, it flew a Singaporean flag. The following year, the pariah regime purchased at least $1 million (equivalent to $4.6 million today, adjusting for inflation) of engine oil and lubricants direct from Singapore, according to a U.S. State Department cable published by Wikileaks. Singaporean officials reportedly “expressed great interest in fresh fish purchases [from Cambodia] and offered to buy 30-50 tons per week, as soon as Singapore ships could be found willing to go into Kampong Som.”

While Singapore resumed diplomatic ties with Cambodia in 1992, a 2006 State Department cable suggests the relationship still involved a degree of nose pinching on the part of the city state, despite outwardly friendly relations.

“[Foreign Minister George] Yeo said Cambodia was slowly rebuilding and there was some sense of hope in the country. While Hun Sen was a ‘brutal’ and ‘partially civilized’ man, he was the best leader for Cambodia,” then-U.S. Ambassador Patricia Herbold recounted.

Visiting Cambodian Prime Minister Hun Sen (L) salutes the honor guard while accompanied by Singaporean counterpart Goh Chok Tong during a welcoming ceremony at Singapore's Presidential Palace June 1, 2000. (Photo: AFP)

Figures released by the Council for the Development of Cambodia, which is chaired by Hun Sen, suggest that any misgivings the Singaporean government might have about the prime minister’s civility have not hurt trade. Between 2015 and 2019, the CDC reports Cambodia received just shy of $517 million in Singaporean investment. “The number of Cambodian businessmen visiting Singapore and Singaporean entrepreneurs visiting Cambodia to explore business opportunities is steadily increasing,” Sok An wrote in 2012.

Three years later, his son Sok Puthyvuth, who is also married to Hun Sen’s daughter Hun Maly, became one of those businessmen. In 2015, he established SM Waypoint Pte Ltd in Singapore. That company in turn owns SM Waypoint Co Ltd in Cambodia, which provides surveillance drones to commercial clients.

Like most of the Singaporean firms discovered by RFA to be owned by Cambodian PEPs, SM Waypoint does not publish annual accounts. This makes it next to impossible to ascertain its worth.

Tip of the iceberg

Making it even harder to produce a comprehensive tally of Cambodian politically connected wealth in Singapore is the ease with which it is possible to own assets in the city state anonymously. RFA was able to identify the assets it has through a service provided by the official business registry that allows users to search for company directors and shareholders by name.

There are, however, plenty of ways to own businesses and other assets in Singapore without appearing in those search results. For example, the island’s laws allow for the creation of anonymous, tax-exempt and unregistered trusts through which individuals may control assets without declaring their ownership either publicly or to the authorities.

Moreover, the use of proxy directors and shareholders to disguise ownership is rampant and tolerated.

When Cambodia’s Prince Norodom Ravichak made his abortive bid for French soccer club Saint Étienne last year, documents obtained by RFA showed he did so through a Singaporean shell company owned on paper by a Singapore citizen with no obvious ties to the prince.

Cambodia’s Prince Norodom Ravichak
Cambodian Prince Norodom Ravichak addressed his controversial bid for Saint Etienne soccer club in a Nov. 17, 2021 article in the French sports daily L’Equipe.

While legislation was passed in January to close this loophole by requiring companies to disclose the identities of the individuals nominating proxy directors and shareholders, it remains to be seen how rigidly it will be enforced.

In short, $234 million is almost certainly just the tip of the iceberg when it comes to politically connected Cambodian money in Singapore.

“If this is what’s publicly available,” Global Witness’s Alley said in an interview with RFA last month, “what the hell is going on behind the scenes?”

Graphic illustration: Reuters/RFA
Editing: H. Leo Kim, Paul Nelson, Mat Pennington
Web page produced by: Minh-Ha Le
Produced by Radio Free Asia

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