Vattanac: A Tale of Two City Developments

Vattanac may still be a family business, but a symbol of its big aspirations can be seen emerging from Phnom Penh’s skyline on Mo­n­i­­vong Boulevard, where the company is building a 38-story tower that will house its headquarters next year.

The tower, which was designed by renowned international architects TFP Farrells and is being built by South Korea’s Posco E&C, is perfectly positioned in the heart of Cambodia’s emerging central business district.

Any firm would be proud of the project, which includes plans for a six-story building separate from the main tower that will appear as if it is suspended in midair.

However, a few blocks east on the city’s historic Sisowath Quay, Vattanac is involved in a very different type of property development, and a controversy that seems out of character with the company’s hard-earned reputation for professionalism.

Just over a month ago, riverside residents and business owners inside a block of 1920s colonial-era shophouses began making complaints to Daun Penh district officials that building work on a site owned by Vattanac Properties Ltd Co was causing structural damage to their properties.

Despite their complaints, the company continued working, and cracks in the walls and floors of the adjacent historic building began to widen.

Municipal officials said Vattanac Properties started work on the site without building permission from City Hall. A Ministry of Land Management official said yesterday that the company didn’t have building permission from his ministry either.

On Tuesday, police and military police descended on the site and confiscated construction equipment in a bid to force the company to comply with a Daun Penh district order to cease work while an investigation into the damage was undertaken.

Work has now ceased at the Vattanac riverfront site, but extensive damage to the nearby buildings has put them in danger of collapsing at any moment, district and ministry officials say.

The contrast in styles between Vattanac’s ultra-professional skyscraper project on Monivong Boulevard and its anomaly on the riverside has befuddled local business and banking officials who described Vattanac as a company that has long played by the rules and implemented a strict and professional corporate strategy.

“They are a very high profile company. They are thinking about high quality. Everything is done to international standard quality,” said Sung Bonna, CEO of Bonna Realty Group and president of the Cambodia Valuers and Estate Agents Association.

“So far, what I have seen is they always used international companies,” Mr Bonna said.

Vattanac, which is now a large conglomerate that includes banking, garment factories and real estate, is said to have made its fortune in the early 1990s in gold trading.

The owners, Sam Ang and his family, gradually pieced together what today is a consortium of serious and respected companies inside Cambodia’s small but growing economy.

Mr Ang’s wife, Chhun Leang, is a major shareholder and president of Vattanac. Her son Sam Ang Vattanac, after whom the company is named, is also one of the founding director’s of Vattanac Bank and director of Vattanac Properties. He has a master’s degree in engineering, economics and management from Oxford University in England. Vattanac Properties is responsible for both the Vattanac tower and the Sisowath Quay site.

The family owns Vattanac Bank, which launched in 2002 with a $13 million investment. Vattanac Bank has two branches in Phnom Penh and one in Siem Reap, and as of the end of 2010 had accumulated total assets of $204 million. The firm also has stakes in real estate companies and industrial parks in Dangkao district, and is the local partner for Cambodia Brewery Limited, which brews the Anchor and Tiger beer brands, staples of nearly every restaurant and bar in the country.

Vattanac has even teamed up with former Masters gold champion Nick Faldo to build two 18-hole PGA standard gold courses on the outskirts of Phnom Penh.

According to the National Bank of Cambodia, Vattanac Bank has been a serious and professional contender in Cambodia’s banking sector.

“They meet all the requirements,” said Ngoun Sokha, director general of the National Bank of Cambodia.

Vattanac’s intentions for its riverside site are unknown (a bank and a hotel have been mentioned), but it is the firm’s stony silence in the face of the collapsing Sisowath Quay buildings that has most surprised — and is of greatest concern to — the affected property and business owners.

In a meeting at Daun Penh district offices on Monday between the affected property owners, government officials and Vattanac representatives, two staff members of the firm apologized for the damage, saying that the project had been poorly managed. Not up for discussion, however, was how Vattanac would compensate the property owners for the damage.

A representative of Vattanac, who attended the meeting in the district office, refused several requests for comment this week. Mr Ang, chairman of Vattanac Bank, is currently out of the country, while a request for an interview with his son, Mr Vattanac, went unanswered.

In the meantime, the Sisowath Quay property owners can only hope that their buildings don’t come crashing down while they wait for district authorities to broker a compensation agreement from Vattanac.

It would be customary for a company with good corporate governance to visit those affected by such a project and settle the matter out of court with proper compensation, said Kong Pisey, chief technical advocate for the Cambodia Defenders Project, an organization that provides free legal aid services.

“They must pay compensation,” Mr Pisey said.

Going to court would not be a solution, he said.

“If you go directly to the court, how much time would that take? At least one year and you don’t get a result. Even if you do get a result it could be a bad result,” he said.

Mak Sitha, the owner of a silk boutique located on the Sisowath Quay block called Lady Penh Designs, is still unsure about whether or not the building housing her business will survive and has still not been approached by Vattanac about compensation.

She has, however, been receiving support from concerned members of the public who are now aware of the situation she and others are facing.

“People have read [in the newspaper] about my problem and have come to my shop to buy my stock,” she said.

“It is very kind of them, but it is not enough.”

 

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