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U.S. imposes sanctions on Chinese firm over Cambodia project

WASHINGTON/PHNOM PENH (Reuters) - The United States has blacklisted a Chinese developer of a port, airport and resort complex in Cambodia, saying it was built on land seized from local people and there were “credible reports” it could be used to host Chinese military assets.

FILE PHOTO: An airport construction site is seen in an area developed by China company Union Development Group at Botum Sakor in Koh Kong province, Cambodia, May 6, 2018. REUTERS/File Photo

Union Development Group Co. Ltd is building the Dara Sakor complex in a national park on the Cambodian coast, with a runway capable of taking some of the world’s biggest planes.

The Chinese real-estate development company describes it as the largest regional development project in China’s global Belt and Road infrastructure initiative.

The company and the Cambodian government have repeatedly denied Western media reports that the project has military aims.

U.S. Secretary of State Mike Pompeo said there were “credible reports” that Dara Sakor “could be used to host (Chinese) military assets”.

“If so, (this) would go against Cambodia’s constitution and could threaten Indo-Pacific stability, possibly impacting Cambodia’s sovereignty and the security of our allies,” he added in a statement on Tuesday.

The U.S. Treasury Department described the company as a Chinese state-owned entity, and said it had at one point falsely registered as Cambodian-owned to get land for the project, had forced Cambodians from their land and devastated the environment.

China’s embassy in Cambodia condemned the U.S. sanctions.

“It not only undermines legitimate business interests, but is a complete violation of Cambodia’s sovereignty,” it said on its Facebook page.

Union Development Group did not respond to requests for comment. It is registered in Cambodia as a private limited company. Its website says Union Group was formerly known as Tianjin Wanlong Group, a Chinese real estate developer.


Southeast Asia has become one front of growing tensions between the United States and China, with the rivals at odds over Beijing’s territorial claims in the South China Sea and upstream damming of the Mekong River.

The U.S. Treasury Department statement cited Cambodian government spokesman Phay Siphan as having said Dara Sakor could be converted to host military assets.

It did not say when he said this. In a 2019 Bloomberg News article, Phay Siphan said: “Dara Sakor is civilian - there is no base at all. ... It could be converted, yes, but you could convert anything.”

Phay Siphan said he had been misquoted by the Treasury Department.

“It’s fabricated information and is unacceptable,” he said on Facebook, adding that UDG’s project was legal and beneficial.

Cambodia’s government has repeatedly said the country will not serve as a base for any foreign army. It has become one of China’s closest regional allies in recent years.

The U.S. sanctions were imposed under the Global Magnitsky Act, which allows the U.S. government to target human rights violators worldwide by freezing assets and prohibiting Americans from doing business with them.

The Belt and Road initiative is China’s flagship campaign to build infrastructure across Asia, linking it to Europe. Work began on the Dara Sakor project in 2008 after Cambodia leased 45,000 hectares (111,200 acres) in a national park to the Chinese company for 99 years.

The company said it planned to invest $3.8 billion (2.93 billion pounds), building a resort with residential areas, businesses and industry.

Additional reporting by David Brunnstrom in Washington; Editing by Matthew Tostevin and Emelia Sithole-Matarise