Multiple Cambodian tycoons are under fire for alleged fraudulent real estate sales to thousands of people who are struggling to pay back loans from microfinance institutions and banks used to invest in land or gated community projects.
In the most prominent cases, two “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. Hy Kimhong, director of Piphup Deimeas Investment Co., and Chea Saron, director of Chea Saron Realty Co., could spend two to five years in jail if convicted in Cambodian court.
At least two other tycoons, including music producer Leng Navatra and Nuon Ak, have faced social media criticism or complaints with local authorities over real estate projects that frustrated investors say have been slow to deliver.
In Kampot province, in the southern part of the country, on the Gulf of Thailand, Kimhong, who is also the director of microfinance institution AMZ, faces more than 1,000 lawsuits alleging Piphup Deimeas cheated families out of a total of $21 million. Locals in Kampot’s Chhuk district told VOA that Piphup Deimeas employees have traveled house-to-house for at least three years, promising monthly dividends for investments in land plots.
Oy Chantha, 62, took out $20,000 in microfinance bank loans for his son 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.
Around the Chhuk district, farmers and sellers who invested suddenly had money to spend. They bought new cars and motorcycles. They quit their jobs at the market. They hosted parties. But in April, the cash flow stopped.
Now Chantha said he is considering selling his cows and motorbikes to pay back the loans. If he cannot do so, he said, he fears his house and farmland — which he put up for collateral — could be seized.
“I can’t sleep,” he told VOA. “I’m the one who has to pay. … I’ll be nothing. I’ll be zero.”
Kimhong, who was also named as an adviser to outgoing National Assembly President Heng Samrin in February, has maintained his innocence. On Aug. 7, he was arrested with 13 associates, but a viral Facebook video showed him, handcuffed, telling police that “I still think that I can handle it,” meaning that he still thought he would be able to get people their back dividends soon.
“The word cheat is not correct — you can say delaying,” Kimhong said in the video. “This is delaying. … We promise that we will make it back smoothly by August.” AMZ representatives did not answer a phone call from VOA, and Piphup Deimeas posted on its Facebook page on August 8 that its employees were taking time off.
In another case playing out in Kampot and neighboring Takeo province, at least 2,000 families have accused local tycoon Chea Saron, director of Chea Saron Realty Co., of fraud after buying into “borey,” or gated community projects, and land plots they say never came to fruition.
Heng Ith, 65, first invested $10,000 in 2020 with the promise of a spot in a borey, and started receiving $250 back monthly in dividends. Encouraged by the steady flow of money — and Saron’s “convincing” team — she told VOA she invested more and more. An associate of Saron’s would drive her to microfinance institutions and banks, including BNK, Prasac and Hattha, to get loans, and take her directly to Saron’s local office afterward, she said.
But the borey — which locals identified as a group of unfinished blue buildings off a busy road in the same district — stopped construction months ago, and in December, investors like Ith stopped receiving payouts. Then in April, Saron and eight associates were arrested and charged with fraud, accused of cheating people out of a total of about $40 million.
Ith still owes $57,000 in microfinance loans with her home as collateral and has sold off jewelry to make payments. The lenders have stopped their daily visits since Saron’s arrest.
“If they want to boil us [alive], or do whatever they want to do with us, it’s up to them,” Ith said. “Where can we get the money?”
Accusations of real estate fraud are not new in Cambodia, where the loose regulatory environment 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.
Small-time oknhas may start real estate schemes to build up their image but lack money or experience, Sylvia Nam, a former assistant professor at the University of California, Irvine, who has studied real estate speculation in Cambodia, told VOA.
“People are being sold a project by somebody with deep connections — or somebody who presents themselves as though they have deep connections — but maybe those connections aren’t actually that deep,” Nam said.
“The line between what is legitimate versus illegitimate only comes at the moment of success. And even the moment of success is actually kind of unclear,” she added.
The accusations also come at a time of overall stagnation in construction.
Ross Wheble, country head at real estate consultancy Knight Frank Cambodia, told VOA that high inflation and the U.S. Federal Reserve’s recent interest rate hikes had a “direct impact” on Cambodia’s real estate sector, particularly borey projects, where buyers have struggled to make repayments on properties.
“This has led to a slowdown of construction, particularly within the residential sector, with many developers now struggling with cash flow,” Wheble said.
Ung Chhay, spokesman for Kampot province and deputy provincial governor, told VOA that he could not estimate how many people have been affected by fraudulent land investment schemes but that “many families” had suffered. Victims have also emerged in a handful of other provinces.
We have taken measures by compromising with the financial institutions, like banks, to ask them to be understanding," Chhay said. "The banks understand and have weakened their measures[to collect on loans] while we wait for a solution.