It has been a particularly unruly past few months for Cambodia’s government-aligned tycoons.
Duong Chhay, the scion of a tycoon family and someone with a long history of violence punctuated by brief stints in prison for assault, was caught on camera this year viciously beating his wife, who went public with her accusations after filing for divorce.
A more public controversy erupted in early May when Mean Pich Rita, a university student and a former competitor in Miss Grand Cambodia, was arrested after being accused of theft by Heng Sear, a prominent businessman.
Pich Rita subsequently live-streamed on Facebook her own accusations that Heng Sear had raped her, igniting a tense debate on social media about the power held by Cambodia’s business elite as well as issues of gender inequality.
Less in the limelight, recent months have seen the collapse of an alleged “Ponzi scheme” investment firm run by a very well-connected business family, as well as tycoons arrested for flouting pandemic restrictions.
Cambodia’s Court of Appeal this month released businessman Kith Theang – brother of the immensely powerful and connected Kith Meng – who was sentenced two years ago for being a leader in a drug distribution ring centered in the capital Phnom Penh.
His original four-year prison sentence was reduced to two years this month and he was quietly released.
Despite their spotty personal records, many of these tycoons have been awarded the royal honorific oknha, meaning nobleman or lord, granted by royal decree to civilians who contribute at least US$500,000 to Cambodia’s government.
Usually, however, this money is donated to the coffers of the long-ruling Cambodian People’s Party (CPP), which is then invested in election campaigns or party-funded development projects.
Tycoons behaving badly
On May 17, Prime Minister Hun Sen ordered the establishment of an inter-ministerial working group to examine how the honorific titles are awarded, signaling a potential purge of Cambodia’s tycoons in the coming weeks or months as the government attempts to ride a populist wave against economic elites.
Businessmen behaving badly is hardly novel in Cambodia. They are routinely in the news for getting into fights, being caught in extramarital affairs or accused of fatal hit-and-run accidents.
After accusations emerged in March about Duong Chhay allegedly beating his wife, Hun Sen petitioned for his oknha title to be removed and wrote a lengthy Facebook post titled “Why is Duong Chhay so cruel?”
In early 2020, however, Hun Sen had praised Duong Chhay for having turned his life around, “transforming himself into a philanthropist,” after twice being jailed for assault in previous years, sentences that were greatly reduced by judges after conviction.
In Dong Chhay’s conviction in 2015 for beating the son of another tycoon, the logging-giant Try Pheap – for which he was given a one-year sentence that was swiftly shortened to four months pre-trial – Hun Sen claimed in 2017 that the conviction showed “we are not the people’s bosses but are the ones who serve the people honestly.”
It is most probable that Hun Sen’s government is now acting against the unruly tycoons because of public perceptions surrounding the pandemic – hundreds of thousands of Cambodians have lost their livelihoods and the country’s economy contracted last year for the first time in decades.
In the current climate, the public seems in no mood to accept that the wealthy are a law unto themselves.
In 2020, Transparency International ranked Cambodia the 18th most corrupt country in the world and worst in Southeast Asia. On the 2019 Basel Anti-Money Laundering Index, Cambodia was rated as being the 16th worst risk for money laundering, a slight improvement from the previous year.
Politics and business elites
However, the government’s apparent determination to crackdown on the actions of the business elite is part of a larger trend that finds the tycoons increasingly less important to Cambodia’s political bosses.
Indeed, it is part of a much broader shift in power dynamics between the political and business elites since the 1990s.
In 1994, as the country’s three-decade civil war was coming to an end, the government mandated that any tycoon who donated $100,000 to the state would receive the royal honorific oknha, which in centuries past was reserved for those who performed exceptional service to the Cambodian state.
The argument at the time was that tycoons would play a leading role in the country’s development and capitalist transition, at a time when Cambodia’s GDP was one of the smallest in Asia and the government relied almost entirely on foreign aid.
However, the coalition government between the CPP and royalist Funcinpec of the 1990s had little option other than to find some political space for the country’s tycoons, many of whom had grown immensely rich and powerful during the 1980s when Cambodia was ruled as a quasi-socialist state under the differently-titled CPP.
No one typified this more than Teng Bunma, the Sino-Khmer businessman and owner of Thai Boon Roong conglomerate. He was also alleged to have been a major player in illegal activity, including drug and gun smuggling.
Teng Bunma gained notoriety when, in 1997, displeased by the service of aircraft crew who had apparently lost his luggage, he pulled out an automatic pistol and shot out the tires of the Royal Air Cambodge Boeing 737-40 that had just landed at Pochentong International Airport after a flight from Hong Kong.
He owned many of the capital’s most important hotels as well as the popular Rasmei Kampuchea newspaper and was elected as the first president of the Cambodian Chamber of Commerce in 1995.
Playing politics
In 1994, he gave the government an interest-free loan to help make up a budget shortfall. He also donated a bullet-proof Mercedes limousine to Hun Sen, and a $1.8 million aircraft to Norodom Ranariddh, the joint prime minister between 1993 and 1997.
It has also been alleged that Teng Bunma was also a financier of a band of politicians who launched a failed coup against Hun Sen in 1994, and was thought to have been close to Hun Sen’s rivals within the CPP, Interior Minister Sar Kheng and National Assembly-chair Chea Sim.
Over time, however, Hun Sen wooed the tycoon into his own circle of allies. Teng Bunma even boasted of funding Hun Sen’s coup in 1997, which not only removed the coalition Funcinpec partners through force, but also weakened the prime minister’s rivals within the CPP.
“For the clash of 6 July 1997, I called Mr Hun Sen and I talked to him. I gave him one million dollars to do whatever to control the situation,” the journalist Nate Thayer has quoted Teng Bunma as saying.
Teng Bunma also financed the construction of “Hun Sen Park” in Phnom Penh in 1996. In return, the government intervened to award him diplomatic immunity after Hong Kong initiated arrest warrants in 1999 for falsifying immigration documents.
Teng Bunma wasn’t the only tycoon with close connections to the political elite. After the late 1990s, Hun Sen perfected what academics Michiel Verver and Heidi Schnetzinger called in a 2015 paper an “elite pact” between the business and political elites through the oknha system.
In this quid-pro-quo, the tycoons received generous favors from the CPP-controlled government, while the ruling party expected the oknhas to cough up the money to fund its election campaigns and grassroots development.
Using money from international donors as well as domestic tycoons, the CPP government invested heavily in infrastructure works during the 2000s, with many of these schools, hospitals or bridges named after Hun Sen or other senior politicians.
‘Philanthropic state’
The unequivocal message was that all social good flowed from the CPP itself, not from the Cambodian state. And if ordinary people wanted to benefit from this development, they needed to vote CPP, with investment withheld from villages that voted for opposition parties.
The ruling party’s creation of a “philanthropic state” consolidated in the 2000s as the oknha system expanded. Local media reports assert that there were only 20 oknhas in 2004, rising to about 200 in 2008 and more than 700 by 2014.
Three years later, the government promulgated that tycoons would now have to donate $500,000, not $100,000, to purchase the title.
Because a large part of government expenditure came from tycoons – although the majority came from international donors – it also meant the government did not have to tap up ordinary people for tax dollars, creating less of an incentive for the government to be transparent with its finances.
After all, people tend to be less interested in how their government spends other people’s money. Not so, however, when the government is spending your own money. Indeed, Cambodia’s taxation collection as a percentage of GDP was only 10% in 2010.
Equally important, it also bound the business tycoons to their political masters, making the giants of Cambodia’s growing private sector stakeholders in the CPP’s rule.
In neighboring Thailand, for instance, this didn’t happen and by the 2000s several new tycoons, not least the Shinawatra siblings, became political figureheads.
Thaksin Shinawatra and his sister, Yingluck, used their billions to fund their own pro-democracy campaigns, with the former becoming prime minister in 2001 and the latter in 2011. Both were removed from office by military coups.
State finances in flux
By the early 2010s, however, the power dynamics were shifting in Cambodia.
For starters, there was no longer the threat that tycoons would intervene politically against the ruling CPP as Funcinpec’s political fortunes faltered in the 2000s, and the new opposition movement centered around Sam Rainsy, an expelled finance minister who made his name as a graft-buster and enemy of the tycoons.
More fundamental, Cambodia’s finances were also in flux. As its economy and society developed, the government could no longer rely chiefly on foreign aid and private donations for its state operations.
Annual tax revenue as a percentage of GDP climbed from about 10% in 2010 to almost 20% in 2019, at the same time as the country’s GDP rose from $11.2 billion to $27 billion over the same period, according to World Bank data.
Put differently, Cambodia had to accept modern ways of state revenue collection and expenditure, making donations from the tycoons less important for the government.
It should be stressed that tycoon philanthropy remains sine non qua to the CPP’s power, with the ruling party boasting of a meritorious philanthropic state, where all social good is presented as stemming from the CPP, rather than a welfare state where the ruling party is a mere administer of citizen rights.
Last October, after deadly flooding, the CPP organized a business whip-round to collect an estimated $6 million for relief efforts.
If Cambodia’s tycoons aren’t as important as they once were to Hun Sen, and now are seen as a source of embarrassment to his government, a coming purge makes sense.
There is now little chance that, if sidelined by Hun Sen, tycoons can take their money to a rival party, especially after the country’s only viable opposition party was forcibly dissolved in 2017. The prime minister’s rivals within the CPP, including Interior Minister Sar Kheng, have also seen their power fade in recent years.
Hun Sen has also purged the military and police since 2018, streamlining the number of higher-ranked officials. Limiting the number of oknhas would not be out of character, then, and would most likely prompt the tycoons to once again have to demonstrate their loyalty to Hun Sen and his regime.
By thinning the ranks of oknhas, it would also tighten the connections between ruling party and the tycoons who survive the purge.
And the Cambodian government can use this purge in turn to bolster its populist narrative of being on the side of ordinary people – especially as the economy remains fragile during the pandemic – as well as being a regime that tackles corruption and soaring wealth inequality.
All this is playing out as the country heads into local elections next year and a general election in 2023, which many analysts believe will be used as a plebiscite ahead of Hun Sen’s retirement as prime minister, after being in the post since 1985.