PM Says ‘Social Funds’ In National Budget

After weeks of scrutiny of the government’s handling of payments from oil and mining firms, Prime Minister Hun Sen told an international mining conference yesterday that funds received from private companies go directly into the national budget.

The premier also said that extracting oil from the Tonle Sap lake would be unavoidable if resources are one day discovered in the environmentally sensitive area.

“I met with the IMF, World Bank and ADB and I told them that any revenue resources will be placed into the national budget framework,” Mr Hun Sen said, referring to so-called “social fund” payments.

“We don’t separate it,” he said, but provided no details as to where the social funds are deposited and how much has been received by the government to date.

In April, Australian media reports said the miner BHP Billiton was under investigation by US authorities for possible bribery in Cambodia. Mr Hun Sen said last month that BHP had given $2.5 million toward a “social fund,” which included an irrigation project in Pursat province. Mr Hun Sen also announced last month that French oil giant Total had paid $8 million into a social fund and $20 million to the government as a signature bonus.

UK-based environmental watchdog organization Global Witness, which has been monitoring Cambodia’s natural resources sector, said that the BHP money has never shown up on the government’s books. Government officials have also not identified where the Total money is located.

Mr Hun Sen yesterday reserved his strongest words for Global Witness.

“In the last few days, there is a group of thieves in London who have asked where the social fund is,” Mr Hun Sen said. “The social fund is here and is included inside the national budget. I would like to clarify that, otherwise it is a headache.”

“We don’t have any money yet, they [Global Witness] think we are thieves,” the premier added.

Mr Hun Sen said that problems between the government and Global Witness stemmed from a “sex scandal” involving a female employee at Global Witness.

“Who is Global Witness? I would like to announce publicly that Global Witness and the government had a problem stemming from the sex scandal of a Global Witness staff member before Cambodia hired Global Witness. Now they are attacking us,” the prime minister said, without elaborating on the sexual allegations or the name of the woman alleged involved.

The government hired Global Witness as its independent forestry monitor in 1999 but the organization was expelled from Cambodia in 2005 over its outspoken criticism of illegal logging.

“Don’t talk too much. Cambodia’s government is not a child,” Mr Hun Sen said. “Now they [Global Witness] are shouting corruption while we don’t have any money.”

In a statement yesterday Global Witness said the premier had missed the point.

“It’s unfortunate that Prime Minister Hun Sen used the opening speech at such an important national conference promoting Cambodia’s mining sector as a stage to personally attack us, rather than focus on how his government is going to implement the critical reforms needed for transparency and accountability in the industry which Cambodian people, its civil society, its international donors and the companies themselves are calling for,” the organization said in an e-mailed statement responding to Mr Hun Sen’s remarks.

Global Witness also appeared mystified by the premier’s reference to a sex scandal.

“In terms of the specific sex scandal statement he made–we have heard on the grapevine previously that he has made similar allegations but we have no idea of the specific details of what Prime Minister Hun Sen is referring to,” Global Witness said.

The SRP has called for answers on the government’s oil and mining social funds and in particular for explanation of official dealings with BHP and Total.

Sam Bartlett, regional director for Europe and Asia at the Norway-based Extractive Industries Transparency Initiative, said yesterday that the full publication of company payments and government revenues from oil, gas and mining would go a long way toward preventing such criticism of the government.

“A little bit of transparency also leads to lots more questions,” he said, referring to the government’s open announcement of Total’s $28 million payment. “It would also be useful to have details about all the payments.”

Mr Bartlett also said the government’s releasing of information in dribs and drabs provided an unfair playing field for companies competing against each other. “It’s not fair that one has to declare the amount and another doesn’t,” he said.

The government has announced its desire to adopt the principles of the EITI–which require complete transparency from revenues generated from the extractive industries–but has not yet expressed its desire to become a full member of the organization.

“I think there is some sort of reluctance to move to that sort of level,” Mr Bartlett said, adding that the EITI would be more than happy to welcome the Cambodian government if it decided to become a member.

Mr Hun Sen also told members of the audience yesterday that if oil exploration in the Tonle Sap lake proved successful, drilling would be hard to resist.

“If we find out there is oil treasure in the Tonle Sap lake, we can’t abandon it,” he said.

Earlier this month the government’s petroleum authority signed an agreement with Japan’s natural resources exploration agency to conduct a geologic survey inside an onshore oil block to the north of the Tonle Sap lake.

Government officials responsible for disaster management and for the lake’s environmental protection said earlier this month they were unaware of any disaster preparedness planning related to oil exploration and extraction in the lake.

Mr Hun Sen said yesterday that the government would avoid any risk to the environment by taking the proper precautions. “This is the exploration study stage and we must have a real environmental assessment study. Otherwise it will be a disaster,” he said.

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