Ly Chhuong Construction Co Ltd has allegedly circumvented the proper bidding process and secured a batch of contracts through what has been called a ‘build first, settle later’ scheme. LY CHHUONG
Prime Minister Hun Sen has ordered state institutions at every level to immediately halt all public development projects with construction and infrastructure contractor Ly Chhuong Construction Co Ltd, and warned that provincial governors that continue to deal with the company could be sacked.
The premier was speaking at a groundbreaking ceremony on January 3 for a major infrastructure upgrade project on the 148km National Road 48, which runs northwest from Preah Sihanouk to Koh Kong province.
Ly Chhuong Construction has allegedly circumvented the proper bidding process and secured a batch of contracts through what has been called a “build first, settle later” scheme.
Hun Sen said these acquisitions constituted as acts of corruption, ordering all provinces owing money to the company to repay their debts within 20 years, without any assistance from the central government.
He ordered the company to immediately discontinue its scheme or risk being put on a blacklist, and warned that provincial governors who award public infrastructure projects without following the proper protocol would be “responsible before the Royal Government”.
“I was shocked when the Minister of Economy and Finance reported on debts owed by different provinces to the Ly Chhuong company. I’m overwhelmed by this practice of carrying out projects first and settling later,” he said.
He argued that such payment deferral schemes can easily be mimicked by other companies and “become cancerous”, which he said could potentially increase the state’s public debt.
“I’m giving the categorical order that all such projects that have not been implemented yet have to be scrapped immediately. Rescind the contracts post-haste, they’re not recognised by the provincial governor or anyone else, they are to be nullified,” the premiere said.
He stressed that the Royal Government in 2022 would further push for in-depth reforms to improve financial management.
“I’ve set a New Year’s resolution to promote public financial management reforms and strictly follow the laws and regulations concerning the use of the budget.
“That’s why I ask all institutions at the national level, and to a greater extent, those at the sub-national level, to strictly observe the standards related to financial management,” he said.
Addressing municipal and provincial governors, the prime minister underlined that all projects must undergo proper tender and bidding procedures, and require prior approval of the Royal Government if funded by the state budget.
The Post could not reach Ly Chhuong Construction for comment by press time.
Transparency International Cambodia executive director Pech Pisey told The Post on January 3 that the episode highlights a number of shortcomings in the capacities of sub-national officials.
Such behaviour by a company sets alarm bells ringing for stakeholders, he said, advocating for Ly Chhuong Construction to be placed on a blacklist, barring it from working with public institutions.
In the interest of an effective systematic resolution, Pisey called on the government to get to the root of the matter and unearth the truth regarding the specific sub-national officials involved in awarding development contracts under “build first, settle later” deals, before taking potentially unwarranted action.
National or sub-national officials that hire companies connected to their circles to build or develop a state project – and unduly inhibit other entities’ abilities to bid on the contract – undermine transparency and create an unfair playing field for businesses that may have better qualifications or distinct advantages for the undertaking, he said.
