Financial Crime World

Money Laundering Scandals Rock Cambodia’s Real Estate Industry

Fraudulent Real Estate Sales Expose Tycoons’ Alleged Schemes

A growing number of Cambodian tycoons are facing allegations of fraudulent real estate sales, leaving thousands of people struggling to pay back loans from microfinance institutions and banks used to invest in land or gated community projects. Two prominent “oknhas” - tycoons who have given at least $500,000 to the government - have been arrested and charged with fraud in separate schemes after families in multiple provinces accused them of reneging on promised monthly dividends from land investments or homes promised in gated community projects.

Arrests and Charges

  • Hy Kimhong, director of Piphup Deimeas Investment Co., and Chea Saron, director of Chea Saron Realty Co., have been arrested and charged with fraud.
  • They could face two to five years in jail if convicted.

Victims’ Stories

Kampot Province

  • Over 1,000 lawsuits have been filed against Piphup Deimeas Investment Co. alleging it cheated families out of a total of $21 million.
  • Locals in Kampot’s Chhuk district told VOA that Piphup Deimeas employees traveled house-to-house for at least three years, promising monthly dividends for investments in land plots.

Oy Chantha’s Story

  • Oy Chantha, 62, took out $20,000 in microfinance bank loans to invest in Piphup Deimeas.
  • At first, they received steady dividends that boosted their income from selling banana rice cakes and allowed Chantha to keep up with $500 monthly loan payments.
  • But around April, the cash flow stopped.
  • Now Chantha is considering selling his cows and motorbikes to pay back the loans. If he cannot do so, he fears his house and farmland could be seized.

Chea Saron’s Case

  • At least 2,000 families have accused local tycoon Chea Saron of fraud after buying into “borey” projects.
  • Victims have also emerged in a handful of other provinces.

Broader Impact

Regulatory Environment

  • Cambodia has a loose regulatory environment that has spawned get-rich-quick schemes and ambitious projects aimed at enhancing tycoons’ reputations.
  • Many projects have failed to materialize over the years, including a tower developers promised would be the tallest in Southeast Asia and sprawling resorts along the southern coast.

Real Estate Sector

  • The real estate sector has been affected by high inflation and the U.S. Federal Reserve’s recent interest rate hikes.
  • Ross Wheble, country head at real estate consultancy Knight Frank Cambodia, said that these factors have led to a slowdown of construction, particularly within the residential sector, with many developers now struggling with cash flow.

Overall, the allegations of real estate fraud in Cambodia highlight the need for stronger regulations and greater transparency in the industry.