Why did the Rule of Law fail at the Riverfront in Phnom Penh?

I had written on 26 July 2011 that international indices are often rejected in Cambodia – and this happened also with the Rule Of Law Index published by the World Justice Project.

As Cambodia was ranked last for effective regulatory enforcement, access to civil justice, absence of corruption, and property rights, there was no concern expressed by the related Cambodian official institution, looking how to move away from such negative indicators – but the report was flatly rejected:

An officer of the Anti-Corruption Unit refuted the Cambodia related report because there was no reference to the work of this institution: “This group has no idea what we are doing. Some people just see the rich and assume that the rich are corrupt.”
A secretary of state of the Ministry of Justice called the Cambodia ranking “baseless” – “They just heard certain information and wrote the report” without talking to a minister or related officials. [Cambodia Daily – 15.6.2011]

I was questioned why I pick up such “baseless” reports?

I did it because that report relates to some basic problems in regulatory enforcement, in appropriately attaining civil justice, and in the violation of property rights.

The following is not an attempt to enter into an intellectual argument, but just to present some recent happenings, and what became known to the public. [Thanks to the reporting in The Cambodia Daily, 26 to 29 July 2011 for this publication.]

On 26 July 2011 it was reported that the demolition of a building at the riverfront Sisowath Quay and subsequent digging on the site by the Vattanac Properties company had resulted in severe damages of an adjacent building. The construction process had started already in mid April, but though some businesses and residents had started to complain since early June to the Daun Penh District office, the authorities did not initiate any supervision of the process. Now eleven shops and apartment units have been forced out – among them the New Sai Travel agency, the German restaurant Edelweiss, the Pop Cafe, and the fashion boutique Lady Penh Designs – as the affected building is considered to be beyond the possibility of repair and may collapse any time.

Now closed German restaurant Edelweiss - in the past preseted on German TV and in many newspapers

Now closed German restaurant Edelweiss - in the past reported on German TV and in many newspapers

At a meeting on 25 July 2011 between the Daun Penh District Deputy Governor Sok Penhvuth and other municipal officials, affected parties, and the Vattanac company, the Deputy District governor said:

“Firstly, the company must postpone construction immediately.” – And the district would appeal to the municipality if the construction would continue. “If they keep on constructing, we have the administrative actions to confiscate their equipment.”

But Vattanac representatives said they would not halt construction, in spite of the order by the district authorities.

The conssstruction site, cut between two buildings

The construction site, cut between two buildings

At the same meeting, also the following information became public:

  • Vattanac had not yet contacted the victims of their action – that means no assistance or compensation has been offered to the closed shops and to the persons who had to move out – but a Vattanac representatives promised that this would happen after one week.
  • Vattanac did not have the proper authorization to start construction – according to both the district, and the municipal Department of Construction. But according to Secretary of State Phoeung Sophean of the Ministry of Land Management, his ministry had approved a building license, but he did not know when this had happened, nor what was to be build at the site. And in addition: municipal officials had not been informed about the construction authorization – nor about what was to be built. The Deputy Bureau Chief for Construction of the Phnom Penh Municipality Khon Sothavuth had been prevented from visiting the construction site, predicting that “regardless of whether Vattanac begins rehabilitation efforts on the damaged buildings, they would still collapse.”
  • On 28 July 2011 it was reported that Vattanac construction equipment had been confiscated.
  • By 28 July 2011, Mr. Sophean said that the whole construction project was “completely illegal… They do not have permission to construct, but they started anyway,” adding that it is now known that Vattanac plans to build a four-story hotel, while previously it was said they planned to build a branch of the Vattanac Bank.
  • Strangely enough, the representative of Vattanac Prak Sideth did not want to comment on the case, saying “I don’t know; you ask the government.” – Is this a hint that there may have been a higher level collusion, bypassing the procedures on district, municipality, and ministry levels?

It is also worthwhile to note is that Vattanac Properties is not a small, inexperienced business – it is part of a family owned group of companies that include Vattanac Bank, and Progress Import and Export, partnering with Cambodia Breweries of Anchor and Tiger beers.

Vattanac Properties is also engaged in the creation of two 18-hole championship-standard golf courses and a a luxury resort 15 km out from Phnom Penh.

But Vattanac Properties is also building a 38-stories bank and office building Vattanac Capital Project on Monivong Boulevard in Phnom Penh, with technical cooperation by the Korean company Posco E&C. Vattanac is not a company not knowing how to handle very big projects.

Vattanac Capital Project

Vattanac Capital Project

The building now under danger of collapse is one of the oldest “shop house” buildings in Phnom Penh, dating back to the French colonial era constructions of historical value. On its northern end, it is the seat of the internationally known Foreign Correspondents Club.

At the right end of the building the Foreign Correspondents Club

At the right end of the building the Foreign Correspondents Club

It will probably take some time before it is clear how it was possible that one of the biggest conglomerate companies in Cambodia, said to have built its original financial strength from gold trading, was able to engage for quite some time in publicly visible activities without raising any questions about the legality of its actions. The World Justice Project was obviously not wrong in its data analysis – data collected according to the same pattern in 66 countries – indication that Cambodia might improve its enforcement of regulations, improve the access to civil justice so that victims will not have to wait for assistance when they are suffering from the actions of others damaging their property, and it will be important to clarify how all this could go on without official intervention – before things were beyond control.

It would be good to see also how the Anti-Corruption Unit of the country is – by now – seeing its verdict against the Rule of Law Index, about which one of its officers had said: “This group has no idea what we are doing. Some people just see the rich and assume that the rich are corrupt.” And from the Ministry of Justice the Cambodia ranking had been called “baseless.”

One can only hope that the authorities, at different levels, will look more carefully into international indexes, based on verifiable data, as helpful tools to work on problems keeping Cambodia in the lower range of international comparative research.

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