US Sanctions Chinese State-Owned Firm Over Land Seizure, Corruption in Cambodia

September 15, 2020 Updated: September 15, 2020

The U.S. Treasury Department on Sept. 15 sanctioned a Chinese state-controlled firm for seizing land from Cambodians for projects aimed at advancing Beijing’s geopolitical ambitions.

Union Development Group Co., or UDG, is constructing a $3.8 billion resort called Dara Sakor, a state-backed investment zone spanning 90,000 acres and would cover around 20 percent of the country’s coastline.

The project, which would include the largest airport in Cambodia once completed, has been touted as a flagship project in the Belt and Road Initiative (BRI)—the Chinese regime’s massive global infrastructure strategy to pump up geopolitical power.

Cambodian government spokesperson Phay Siphan has said the resort could be converted into a military base, the Treasury Department noted.

The sanction on UDG was imposed under the Global Magnitsky Act, which enables the United States to target gross human rights abusers and corrupt foreign officials. The action would block any U.S. transaction with the firm and freeze property belonging to the company on U.S. soil.

cambodia worker
Cambodian and Chinese workers dump garbage outside a construction site in Sihanoukville, Cambodia on Feb. 16, 2020. (Paula Bronstein/Getty Images )

The Tuesday statement said that the Chinese company had falsely registered as a Cambodian-owned entity to acquire a 99-year lease, but then “reverted to its true ownership and continued to operate without repercussions,” adding that it conducted some of the activities through corrupt individuals, including Kun Kim.

Kim, a former Cambodian army chief, who was also placed on the Treasury Department’s sanction list, was described as being “instrumental in the UDG development and reaped significant financial benefit from his relationships with UDG.”

“Today’s action demonstrates how the Chinese Communist Party co-opts companies to expand its influence, including by working through corrupt officials to use military force against innocent people in a blatant attempt to secure illicit financial gains,” Secretary of State Mike Pompeo said in a Sept. 15 statement.

The Dara Sakor resort’s potential military use, he said, “would go against Cambodia’s Constitution and could threaten Indo-Pacific stability, possibly impacting Cambodia’s sovereignty and the security of our allies.”

The UDG and the Cambodian military had cleared the land through violent means, officials added.

“UDG-funded activities have forced Cambodians from their land and devastated the environment, hurting the livelihoods of local communities, all under the guise of converting Cambodia into a regional logistics hub and tourist destination,” the U.S. Treasury stated, adding that, like other BRI initiatives, the activities “have disproportionately benefited the PRC, at the expense of the Cambodian people.”

The sanction is part of a U.S. campaign to penalize firms aiding Beijing’s overseas military expansion.

On Aug. 26, the Trump administration took action against 24 Chinese state-owned companies involved in aiding Chinese military aggression in the disputed waters of South China Sea, where the regime has constructed more than 3,000 acres of artificial islands featuring military weapons such as anti-ship missiles.

Two days later, the Pentagon identified 11 other Chinese firms, including construction giant China Communications Construction Company, as backed by the Chinese military.

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