Having your personal advisor indicted by the U.S. Justice Department for orchestrating the largest fraud in history would be career poison to most prime ministers. Not so for Cambodia’s Hun Manet. Under the protection of his government—and that of his father, Hun Sen, before him—a network of more than 250 scam factories has taken root across the country.
Staffed largely by what the United Nations estimates to be more than 100,000 trafficked and forced laborers, these industrial-scale fraud operations rake in billions of dollars a year. Much of that cash is hoovered up by Cambodia’s entrenched patronage politics, propping up a dynastic regime that couped its way to power in 1997 and has not shied away from repressive strongman tactics to maintain what Human Rights Watch has described as its “single-party state.”
One scam lord typified this relationship more than any other: Chen Zhi.
On Oct. 14, though, Chen lost his halo. In a coordinated effort, the British and U.S. governments unveiled a sanctions package against Chen’s Prince Group. For the past decade, Chen had allegedly presented his multibillion-dollar company as a legitimate, socially conscious conglomerate—and donated millions of dollars each year to the Cambodian government. The Prince Group issued a statement on Nov. 11 denying any involvement in wrongdoing by itself or Chen.
Born in China roughly 37 years ago, Chen ascended heights beyond fantasy for most Cambodians. He has founded a company that according to the indictment manages scam compounds with the interior minister and bought the land for another compound from the daughter of a top army general. In the political arena, Chen’s role as advisor to the current and former premier has given him a rank within the government equivalent to a cabinet minister—he even traveled with former premier Hun Sen on an official visit to Cuba.
The Prince Group was, the U.S. Treasury claimed, merely a front for a “laundry list of transnational crimes,” including the operation of “industrial scale cyberfraud operations” which were “reliant on human trafficking and modern-day slavery” for their staffing.
The allegations line up not only with my own reporting on the Prince Group over recent years, but also with the contours of what’s been called an “epidemic” of fraud and forced labor across the region.
Most often practicing a particularly cruel form of romance scam known chillingly as “pig butchering,” organized crime groups have taken root in the region from strife-ridden Myanmar to the Philippines. They allegedly operate out of compounds that at first glance resemble business parks, until closer inspection reveals the barred windows and security guards that prevent the trafficked workers from escaping.
At the same moment that the U.S. Treasury Department announced its sanctions, federal prosecutors in New York unsealed a 26-page indictment accusing Chen of being the group’s kingpin—overseeing everything from money laundering and the bribing of government officials to forced prostitution and torture. A separate court filing revealed $15 billion of cryptocurrency had been seized from Chen as the proceeds of crime.
He may be down, but it’s far from certain that Chen has been knocked out. As you read this, analysts are watching billions of dollars in crypto get shuffled between online wallets linked to the Prince Group’s leader, tantalizingly outside the reach of Western law enforcement. U.S. sanctions carry a power beyond their legal force, which on paper extends only to transactions with Americans or passing through U.S. banks.
Nonetheless, there are plenty of places that will still handle a sanction target’s money—from the money launderers alleged to be the arteries of the Prince Group organism to Hong Kong, which has long insisted that unilateral U.S. sanctions have no legal standing there. Chen certainly has the means to continue operating, albeit at reduced scale. The real question is how much longer his patrons in the Cambodian government will view him as an asset rather than a burden.
Standing accused of being the world’s wealthiest criminal—the $15 billion seized by the U.S. Department of Justice alone eclipses the $12.6 billion that the United States demanded from Mexican drug kingpin El Chapo—Chen’s fate speaks to a wider conundrum facing Phnom Penh’s leaders.
Cambodia’s legitimacy as a state is already running threadbare, since it dissolved its only meaningful opposition party and imprisoned its leadership in 2017. The power consolidation continued with the passing of the premiership from father to son six years later. That legitimacy will be soon worn out if it continues to be known as a haven for modern-day slavery and cybercriminals. But equally important is the question of whether the ruling Cambodian People’s Party can maintain its grip on power without the illicit revenue streams provided by alleged crime bosses such as Chen.
This would not be the first time that a politically connected Cambodian accused of being a scam operator has been called out. Earlier this year, as a border conflict with Thailand thundered to life, police in Bangkok raided the mansion of Kok An, a senator from the Cambodian People’s Party, as part of an investigation into his ties to fraud compounds in the western Cambodian city of Poipet. (While Kok An has not publicly responded to the allegations, the Cambodian government has denied he has any link to scam operations.) The South Korean government has been grumbling ever louder about its citizens being trafficked to—and, occasionally, killed in—Cambodian scam factories. And in September 2024, the U.S. even sanctioned another senator, Ly Yong Phat, over his alleged involvement in the industry. (Ly Yong Phat denies these allegations.)
The indictment against Chen goes a step further, though. He maintained, U.S. authorities say, a ledger of bribes to government officials—a ledger that the F.B.I. now claims it has in its possession. While the prosecutors were clearly careful not to embarrass Cambodian decision-makers by naming names, they made very clear that they could do so later.
It does not take much sleuthing to deduce the identity of the “senior government official” who, in 2020, Chen allegedly bribed with a multimillion-dollar wristwatch in exchange for a diplomatic passport. (The curious may find interesting this 2020 article about then-Prime Minister Hun Sen’s new Patek Philippe.) The message from the U.S. government officials is clear: Do not test their magnanimity.
Cambodia is being pushed toward a decision between two options, neither without peril. One is to continue business as usual, let the kickbacks keep rolling, and embrace a slow trundle toward North Korea-style pariah status. Better to be the despised yet well-heeled dictator of a mafia state than his impoverished and deposed cousin, the thinking might go.
The other option is to dismantle the fraud factories. There’s hardly a country worth naming today that isn’t losing billions of dollars a year to scam gangs like those that are protected by Phnom Penh, so that’s a big diplomatic win. But it also means shutting down an industry whose revenue—conservatively estimated at $12.5 billion a year—rivals sectors such as garment manufacturing ($9 billion) that make up the backbone of the legitimate economy, which has been struggling more than most to rebound post-COVID-19. There’s a real question to be asked about whether Cambodia’s patronage system could survive going cold turkey on fraud.
Throughout his family’s four-decade grip on power, Hun Sen has positioned himself as the country’s sole guarantor of stability. He seldom tires of taking credit for the end of Cambodia’s civil war in 1998, which he attributes to his “win-win” policy of integrating the disbanding the Khmer Rouge into the regular army and civil service.
But long before the guerillas came out of the rainforest, Hun Sen was hard at work turning Cambodia into a nationwide pyramid scheme, one in which many could enjoy a slice of the kleptocracy pie. In announcing a 2016 investigation into the ruling family’s wealth, accountability nongovernmental organization Global Witness called it “[o]ne of the cruellest ironies of Hun Sen’s model of dictatorship” that it “has Cambodia’s economy so sewn up that Phnom Penh residents are likely to struggle to avoid lining the pockets of their oppressors multiple times a day.” Transparency International describes the country’s patronage system as running “both vertically and horizontally across government ministries.”
For the longest time, it was Cambodia’s natural resources that fueled this graft engine. Most notably, this happened to the country’s forests, which have shrunk by a third since the start of the 21st century, thanks in large part to the government’s habit of parceling them out to loyal cronies—such as Try Pheap, sanctioned in 2019 over allegedly illegal logging operations, only to have another of his companies sanctioned this September over its alleged involvement in forced labor and scam operations. (Try Pheap’s logging company has denied the allegations that it carried out illegal logging.)
All manner of infrastructure was likewise doled out to the highest bidders—one tycoon bought a port concession just to run marijuana through it. The military (one of the world’s largest in per capita terms) is similarly staffed on a pay-to-play basis, with commissions auctioned and business moguls “sponsoring” entire army units. Stability is largely ensured by giving everyone with a gun or a checkbook a stake in the rotten status quo.
This dynamic was turbocharged, though, by the advent of the scam industry. However high the civic price for the past quarter-century of peace, leaving powerful figures—often with armed men at their command—without a chair when the music stops could provoke destabilizing competition between elites.
The legitimate economy has been teetering for a few years now. And this year’s conflict with Thailand has repatriated close to a million newly unemployed migrant workers. This would be an awful time for what is most likely the country’s largest industry to go out of business.
Cambodia also appears to be desperate for U.S. approval, splurging on a smorgasbord of lobbyists in Washington. Beijing, the kingdom’s most powerful and—until now—stalwart ally, is quietly running out of patience, too. Chinese nationals have long accounted for a disproportionate amount of scam victims, as well as the trafficked operators and compound bosses.
Across the region, governments are sick of being stonewalled when they ask Phnom Penh to free their citizens from scam centers.
If Cambodia does look to boost its tattered global standing by breaking with its scam state ways, it may find a history lesson from a narco-state instructive.
In July 2000, struggling through successive droughts, the Taliban announced a ban on opium poppy cultivation by Afghan farmers. It was shockingly effective, and a subsequent survey found harvests were down 94 percent. But despite plaudits from Washington, the Taliban had committed “economic suicide,” according to historian Alfred W McCoy. The prohibition impoverished a further 15 percent of an already poor population, and the U.N. found that it primed local elites “to rebel against the regime” when a U.S.-led coalition invaded the following year.
The Hun dynasty is a family of survivors with a proven track record of doing whatever it takes to hold on to power. For the time being, the scam industry—morally repugnant though it may be—appears to be its best bet.
