US Sanctions China-Backed Company Building Mega-Resort in Cambodia

The United States on Tuesday, Sept. 15 imposed sanctions on a Chinese company developing the $3.8 billion Dara Sakor tourism complex in Cambodia, as Washington tries to thwart Beijing’s influence in Southeast Asia.

The U.S. Department of Treasury announced it blacklisted Union Development Group Co., Ltd. (UDG) over “seizure and demolition of local Cambodians’ land for the construction of the Dara Sakor development project.”

In May 2008, UDG secured a 99-year lease from the Cambodian government to build a port, airport and tourism facilities on park land southwest of the country, along the Gulf of Thailand to start the controversial project, which has faced criticism for years.

The U.S. claimed the state-owned Chinese companies violated human rights when it grabbed land from Cambodians and prevented farmers from planting rice. 

“After falsely registering as a Cambodian-owned entity in order to receive land for the Dara Sakor development project, UDG reverted to its true ownership and continued to operate without repercussions,” Secretary Steven T. Mnuchin, said in a statement.

The U.S. also expressed concerns that China was using the project, which is billed under the Belt and Road initiative, to advance its military interests in the region, saying it could “threaten regional stability.” 

The timing of the sanctions coincides with mounting speculation that China wants to use Dara Sakor for those purposes - including possible military installations - despite repeated denials from Beijing and Phnom Penh.

But other locations have also been rumored.

The Wall Street Journal reported in July 2019 that China sealed a secret deal with Cambodia to build a naval outpost in Sihanoukville that Beijing can allegedly use for 30 years. 

Cambodian leader Hun Sen is a staunch ally of Chinese President Xi Jinping, who does not condemn the country’s human rights record and offers it generous loans, development aid, and military exchanges.

The sanctions placed on UDG are the latest action from the U.S. government based on the Global Magnitsky Act, which targets perpetrators and supporters of serious human rights abuse and corruption

Last year, Cambodian businessmen Try Pheap and Gen. Kun Kim and their companies were sanctioned by the U.S. over alleged illegal logging and illegal extraction of natural resources. 

VICE News has yet to receive comments from UDG.