Cambodia Finds 'Systematic Collusion' and Misuse in Local Development Projects

The Interior Ministry has identified “systematic collusion” and “misuse of commune funds’ development projects” in “a lot of provinces,” following similar irregularities found in the controversial solar street lights case in Kampong Chhnang province. Suos Prathna, director-general of the General Department of Administration, stated that inspections conducted not only in Kampong Chhnang but also in other provinces revealed that the situation is no different. Last month, three senior officials were demoted for their alleged involvement in the solar street-light procurement scandal. Prathna described the irregularities in local project implementation as “systematic collusion” involving bid document manipulation, fraudulent documents, false data, misuse of financial procedures, and public procurement. This included “excessively inflated prices” compared to previous bids and unauthorized budget additions concentrated on high-unit-cost items, driving project prices “significantly above market rates.” He urged sub-national leaderships and provincial governors to focus on improving the management of development project funds, warning of legal action if necessary. “If this situation remains unchanged, the Interior Ministry under the leadership of His Excellency Sar Sokha will take legal action against officers involved in the collusion,” Prathna said. Minister Sokha highlighted that delays in budget resource transfers have forced some commune or sangkat administrations to wait until the third quarter budget allocation to secure sufficient resources for project development. “I think 24 years is long enough; it is time to strike at the root of the problem. There is involvement of both national and sub-national levels when we talk about timely budget transfers, especially ensuring the proper implementation of bidding on road construction and local development within their commune,” Sokha said. Each commune was allocated $5,000 in 2002, a figure that has dramatically increased to $200,000 per commune. Annually, approximately 2,200 local projects are completed, including road repairs, small bridge construction, schools, health centers, and small-scale irrigation, all aimed at enhancing livelihoods and reducing poverty. Mar Sophal, policy and law program and CSOs’ working budget group manager at NGO Forum, identified four core factors contributing to collusion and document falsification: lack of local capacity and independent oversight, delayed post-audit controls, budget growth and development demands, and the absence of whistleblower protection. “Rapid budget increases paired with lagging capacity and integrity among officials created lucrative opportunities for exploitation,” he noted. Sophal added, “The fact that certain communes were able to add funds to contracts that had already been awarded without undergoing new procurement procedures, and inflated contract prices above market value, shows loopholes in local checks and balances.” The government should address these issues by enforcing open contract standards, strengthening social accountability, and establishing legal measures and penalties, he suggested. San Chey, executive director of the Affiliated Network for Social Accountability (ANSA), stated that public financial management reforms must be conducted openly, with relevant stakeholders monitoring public budgets. He called on authorities to take strict action against irregularities, particularly fraud and corruption. “We have observed that some companies win bids in some locations despite having limited capacity, and create many companies to manipulate the bidding process to gain profit and use the funds to bribe project owners,” Chey said. Some scandals involve contractors who have damaged their credit while carrying out commune projects but, instead of being blacklisted, simply set up new companies or register under different names while remaining the actual operators.