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The U.S. Treasury has sanctioned Cambodian mogul, senator and ruling Hun family confidante Ly Yong Phat and five associated businesses, making Ly the most senior gambling-linked political identity subject to Magnitsky sanctions in the Southeast Asia region to date.
The Department of the Treasury’s Office of Foreign Assets Control (OFAC) on Thursday (September 12) listed Ly, his business empire L.Y.P. Group and the Ly-controlled O-Smach casino-resort on the northern Thai border for their direct “role in serious human rights abuse” involving trafficked and forcible labour in online scam operations.
OFAC also sanctioned three of Ly’s major Cambodian assets: the high-profile Phnom Penh Hotel, the Garden City Hotel in Phnom Penh, and the casino-hosting Koh Kong Resort on Cambodia’s extreme southwestern border with Thailand.
“Today’s action underscores our commitment to hold accountable those involved in human trafficking and other abuses, while also disrupting their ability to operate investment fraud schemes that target countless unsuspecting individuals, including Americans,” said Bradley Smith, the Treasury’s acting under-secretary for terrorism and financial intelligence, in a statement.
The statement said the O-Smach Resort has hosted cyber-scamming operations since 2022 and has been raided on multiple occasions over “extensive and systemic serious human rights abuses”, rescuing enslaved workers from around Asia.
Workers under duress “who called for help reported being beaten, abused with electric shocks, made to pay a hefty ransom, or threatened with being sold to other online scam gangs”, it said.
“There have been two reports of victims jumping to their deaths from buildings within O‑Smach Resort.”
The Magnitsky listing for Senator Ly, 66, his conglomerate and his primary hospitality assets means that U.S. nationals, financial institutions and other entities cannot do business with Ly, the five companies, or any entity in which he or his businesses have a majority stake.
In addition, any assets of Ly and the five companies in the U.S. are now frozen, and Americans with interests in these assets must report them to OFAC.
They are the first sanctions targeting major Southeast Asian government-proximal gambling identities since the 2018 listing of Zhao Wei, owner of the Kings Romans Casino in Laos’ Golden Triangle Special Economic Zone, along with Zhao’s wife, two casino officials and various linked businesses.
OFAC has also sanctioned former Macau triad boss “Broken Tooth” Wan Kuok-koi and his growing Cambodian interests, and sanctioned Dara Sakor casino-resort developer Union Development Group, a Chinese state-owned entity, for “seizure and demolition of local Cambodians’ land”.
Ly, a Cambodian-born ethnic Chinese and dual Thai national, allegedly flourishes in illegal industries with the protection of complicit courts, police and a bevy of military and political contacts, including former strongman Prime Minister Hun Sen and his son, current Prime Minister Hun Manet.
Jacob Sims, a visiting expert on transnational crime at the United States Institute of Peace, wrote in The Diplomat on Friday (September 13) that these illegal industries include online gambling (illegal since January 2000 and now grouped with cyber-scamming activity in general), sand dredging, deforestation, tobacco smuggling and money laundering.
The Cambodian state and the ruling Cambodian People’s Party (CPP), with its “criminally extractive authoritarianism”, have been “accessories to Ly Yong Phat’s abuses from the beginning”, Sims wrote, adding that Ly enjoys permanent membership of the CPP Central Committee.
“In the perpetration of these crimes — evidence of which spans decades — the collateral damage has been and continues to be substantial.
“Land grabbing, forced displacement, child labour, human trafficking, numerous wrongful deaths at his properties, and sweeping environmental devastation are just a few examples.”
The U.S. sanctions suggest that Washington is tiring of softly-softly diplomacy with the ruling Hun family, a trend Sims says will have limited short-term effects on criminal elements in the Cambodian establishment outside of freezing of U.S.-based assets and increasing caution among Cambodia’s Thai networks.
However, “it is certain that these sanctions will destabilise the Cambodia-U.S. bilateral relationship”, he wrote.
“While historic and bold, an isolated sanction against a powerful bad actor is unlikely to materially shift the incentives guiding Cambodia’s state-affiliated transnational crime industries. There are many, many more actors who also merit sanctions.”
In any case, the sanctions further highlight the nexus in Cambodia between online gambling and transnational organised crime, as well as between criminalised governance and the refusal of local officials to comprehensively deal with cyber-scamming compounds and/or online gambling operations.
Cambodia has also been a conduit in the migration of cyber-scamming and online gambling syndicates and associated human trafficking into Laos and Myanmar.
The pending shutdown of regulated foreign-facing online gambling operations in the Philippines therefore raises the possibility of increased illegal activity in Cambodia and the rest of mainland Southeast Asia as grey operators pivot to safer locations.
The degree of impunity enjoyed by Cambodia's most powerful and protected criminals can lead to startling displays of brazenness, as the EU and the UN found to their embarrassment earlier this year.
A joint EU-UN project addressing human trafficking and violence against women and children in Southeast Asia was to be launched in Cambodia on May 3.
But the launch was postponed when The Associated Press pointed out to UN officials that the location selected by the Cambodian government, the Phnom Penh Hotel, was controlled by a conglomerate linked to human trafficking.
