The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) said Tuesday (Sept. 15) that Chinese state-owned entity United Development Group (UDG) has been designated for sanctions for appropriating and destroying local people’s land in Cambodia in the development of the Seven Seas Project.
The office designated the state-owned entity under Executive Order 13818, which builds on and implements the Global Magnitsky Human Rights Accountability Act, which targets perpetrators and supporters of serious human rights abuses and corruption.
In a statement, the Ministry of Finance said that some of the activities of Ullian were conducted through a senior Cambodian general, Kun Kim. The general was designated for sanctions by the U.S. Treasury Department on Dec. 9, 2019, for his involvement in corrupt practices.
U.S. Treasury Secretary Mnuchin said in a statement: “After falsely registering as a Cambodian-owned entity in order to acquire land for the Dara Sakor development project, Ullian resumed true ownership of the project and continues to operate without consequence. The United States is committed to using all of its authority to crack down on these practices wherever they occur.”
The Treasury Department said the land provided to Ullian extends to Cambodia’s protected Potong Sago National Park. Ullian, through General Guan Kim, used Cambodian troops to intimidate local villagers and clear the land Ullian needed to build the Seven Seas project. The statement from the Ministry of Finance also said that General Guan Kim played an important role in Ullian’s development project and earned significant financial benefits from it.
The Seven Seas Resort is a $3.8 billion project developed by China’s Tianjin Ullian Development Group in Cambodia’s Kokong province, and on May 9, 2008, the company signed a 99-year lease agreement with the Cambodian government for 36,000 hectares of land. Zhang Gaoli, then a member of the Political Bureau of the CPC Central Committee and Secretary of the Tianjin Municipal Party Committee, attended the signing ceremony of the land transfer for the project. After Chinese leader Xi Jinping launched the “One Belt, One Road” initiative, this development project has evolved into the “Cambodia-China Comprehensive Investment and Development Pilot Zone”, which is regarded as a model of Cambodia-China economic cooperation and “One Belt, One Road”. ” Key Demonstration Project.
In a statement on Tuesday, the U.S. Treasury Department said, “China is using this project in Cambodia by Ullian Group to further its ambition to project power globally. Ullian-funded activities force Cambodians off their land, destroy the environment, and undermine the livelihoods of local communities, all under the guise of turning Cambodia into a regional logistics hub and tourist destination. Like Beijing’s Belt and Road Initiative, these activities disproportionately benefit China at the expense of the Cambodian people,” the statement said.
Cambodian government spokesman Phay Siphan’s media reports that the Seven Seas could be converted into a military asset is another concern, the statement added.
Phay Siphan had vehemently denied that the project had anything to do with the Chinese military in an August 2019 interview with the Voice of America’s Chinese Desk in his Phnom Penh office about questions raised by the Seven Seas project. He insisted that the large airport in the Seven Seas, built by Ullian Group for the future, could bring an increase in Chinese tourists.
In the interview, he said, “Tell me, what do we need the Chinese military for?”
The U.S. Treasury Department did not specify Paixipan’s remarks in a statement Tuesday. A July 2019 Bloomberg report on U.S. concerns that the resort could become a Chinese naval base quoted Paixipan as saying, “The Seven Seas is civilian, there is no base at all. It has the potential to be converted, but you can convert it to anything.”
The U.S. Treasury Department said, “A permanent military base in Cambodia by the People’s Republic of China has the potential to threaten regional stability and undermine prospects for the peaceful resolution of disputes, the advancement of maritime security, and freedom of navigation and flight.”
The statement said Tuesday’s action was taken to “demonstrate U.S. support for a free and open Indo-Pacific region and the sovereignty of the Cambodian people. The United States is actively taking steps to discourage exploitative Chinese investment and stands with our partners and allies in Southeast Asia.”
All property and interests in property in the U.S. or owned by U.S. persons owned by Treasury-designated entities, as well as 50 percent or more of the entities owned directly or indirectly, individually or jointly with other sanctioned persons, will be frozen and must be reported to the Treasury Department’s Office of Foreign Assets Control.
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