Few big deals are done in Cambodia without the ultimate sanction of Hun Sen, the one-eyed, former chain-smoking Khmer Rouge commander who has ruled the former French colony largely unchallenged for the past 30 years. Under Hun Sen, his family and a clutch of their sycophantic cronies, Cambodia has earned a ranking by Transparency International as of one of the most corrupt nations in the world. Cambodia's Phnom Penh was a magnet for Western companies wanting to expand their empires into Asia. Credit:Ben Rushton For the two Tabcorp agents, this was a world away from their sedate headquarters off Melbourne's St Kilda Road. The gambling behemoth runs the TAB brand in Victoria, NSW and the ACT and Keno through licensed venues the length of the eastern seaboard of Australia with annual revenue in excess of $2.1 billion. Its website boasts squeaky clean ethical standards, vowing to "conduct business honestly, with integrity and in compliance with legislation, regulation and Responsible Gambling Codes". Now, Tabcorp is facing serious questions about whether it lost its ethical way on the road to Phnom Penh - a journey that is likely to be examined closely by Australian and United States anti-corruption authorities. Also facing the prospect of police scrutiny is a man who has responsibility for upholding the highest standards in a key pillar of the Australian financial system. Elmer Funke Kupper is the chief executive and managing director of the ASX Group – the Australian Securities Exchange – a board member of the Business Council of Australia and one of the highest-profile and – on an annual salary of $3.5 million – highest-paid corporate leaders in Australia.

Elmer Funke Kupper. Credit:Jesse Marlow Back in 2009, Elmer Funke Kupper was chief executive and managing director of Tabcorp. The Dutch-born former McKinsey consultant had been recruited in 2007, during a period of rapid growth that saw Tabcorp acquire Sydney's Star City hotel and casino, merge with the Jupiters casino chain in Queensland and complete the acquisition of Tab Limited in NSW. Cambodia's Hun Sen has ruled the country for the past 30 years. Credit:AP Now Tabcorp was looking to stretch its wings beyond the saturated gambling market of eastern Australia and Funke Kupper had just the CV for the task. For three years before being hired by Tabcorp, Funke Kupper had been a senior executive at ANZ Bank, including a period as group managing director of Asia-Pacific. In that role he had his first dealing with the Hun Sen regime, and the experience most likely informed Tabcorp's proposed Cambodian venture.

One of Funke Kupper's touted successes with ANZ was the negotiation of a deal in 2004 to enable the bank to set up shop in Phnom Penh. To seal that deal, ANZ signed a joint venture partnership with Cambodia's Royal Group, a conglomerate run by Kith Meng, a businessman with impeccable ties to Hun Sen. At the time, Funke Kupper, a tall, trim man with a strong jaw and fit frame, was still a relatively young executive, albeit one already building a reputation as a savvy, smart deal-making businessman. He had helped ANZ navigate the Asian financial crisis and was touted by some as the man most likely to become the bank's next chief executive. Kith Meng, who runs Cambodia's Royal Group. Credit:Scott Morton The Cambodian joint venture also suggested he was not opposed to taking risks in foreign markets. But Kith Meng was not a man in the mould of ANZ's typical global corporate partners. He was well known to Cambodian business insiders, Western embassies and spy agencies as a man with strong ties to the underbelly of Cambodia's political and business world. A US embassy cable revealed by Wikileaks well after the ANZ deal described Kith Meng as "Mr Rough Stuff" and a "ruthless gangster… notorious for using his bodyguards to coerce others into brokering deals". ANZ was also warned directly about its business partner. Fairfax Media has learned that a confidential due diligence report the bank ordered on Kith Meng cautioned that the US embassy, and other credible sources, had major concerns about his links to corruption. ANZ responded by conducting a further due diligence inquiry, including interviewing Kith Meng, before deciding the claims about him could not be verified.

When Elmer Funke Kupper announced the partnership with Kith Meng, he declared in a media statement: "This is a win-win opportunity for Cambodia, Royal Group and ANZ. It creates the opportunity to bring modern banking systems and services to Cambodia to assist the nation's economic development and a new business for Royal Group," In around 2009 – two years after his switch from banking to gaming – Funke Kupper oversaw the Tabcorp decision to examine launching an online gaming business in Cambodia. Tabcorp hoped it could be operated by its subsidiary Luxbet, a Northern Territory-based racing and sports betting agency that had been established the previous year. Greg Purcell was a senior consultant hired to help Tabcorp plan its Cambodian strategy Credit:Scott Morton Others involved in planning the Cambodian strategy were Funke Kupper's, right-hand man and leading Australian business figure, Robert Nason, and a senior consultant hired to assist the gaming giant, Greg Purcell, who would go on to head New Zealand horse racing. According to well-placed sources assisting an investigation by Fairfax Media, Tabcorp hoped to access the lucrative Asian gambling market in the lead up to the 2010 soccer World Cup.

In terms of revenue potential, the move made perfect sense for Tabcorp. Online sports betting in Asia was booming and the huge FIFA event was just around the corner. But the usual risks also loomed large. Tabcorp needed local support and a government-approved licence to set up shop in one of the world's most corrupt countries. The company should have been in little doubt that success would require the approval of Hun Sen or at least senior members of his court. "Prime Minister Hun Sen's family occupies a dominant position in the Cambodian political system and as such enjoys a huge amount of control of the Cambodian economy," says Cambodia analyst Sebastian Strangio. "Its business interests range into just about every section of the Cambodian economy. Dozens of companies control these business interests, often under the control of Hun Sen's children or his wife." A Fairfax Media investigation can reveal that Tabcorp reached out to a consulting company connected to one of Hun Sen's sisters. One of Hun Sen's nephews, who served in Cambodia's military, is understood to have also helped facilitate this arrangement. The process included a large payment made in 2010. Tabcorp allegedly authorised the transfer of $200,000 to an account in the United States controlled by the Cambodian consulting firm. Sources close to US law enforcement agencies say these funds were then sent on to Cambodia at the direction of the firm linked to Hun Sen's sister.

The Tabcorp transaction may have broken both Australian and US anti-bribery laws, which prevent a benefit being given to a foreign official or their representative in order to obtain a business advantage. Anti-corruption authorities around the world have for years warned firms to be wary of making large payments through third party accounts to obtain the backing of a corrupt government. Nowhere is the risk greater than in Cambodia. "Payments to facilitate services, payments to gain access are pervasive in Cambodia. They dominate at the grass roots of society and they run all the way up to the top levels of government," says Sebastian Strangio. Fairfax Media's investigation has confirmed that some senior staffers within Tabcorp raised, and documented, reservations about the legality of the $200,000 transaction.

So who approved it? When Fairfax Media called Funke Kupper, he declined to discuss what, if anything, he knew of the $200,000 payment. "I can't recall anything like that. You should always contact the company in relation to these matters." Nason said he was aware of the strategy to potentially enter Cambodia, but knew nothing about any payment. (The $200,000 payment was made after Nason left Tabcorp and joined Telstra and there is no suggestion he knew of it). Purcell said he could not go into the specifics of his work with Tabcorp, but said any transactions would have been handled by the firm (He could not have authorised any Tabcorp payment as he was only a consultant). "I provided consultancy advice to Tabcorp between 2006 and 2010 across a large number of wagering projects," Purcell said.

"Any advice I provide relating to any business transaction was always premised on transparency and sound business practice. I understand that decisions around all of these projects and transactions were appropriately made by Tabcorp, in accordance with a high standard of corporate governance. "Standard confidentiality and commercial considerations prevent me from making any further comment." Loading In 2011, many months after the payment was made, a high-level decision was made inside Tabcorp to abandon its Cambodian strategy (although exactly why this decision was taken is unclear). But Tabcorp, and any employee who was involved in the initial deal and $200,000 transaction, may now face scrutiny not only by the AFP, but by the US Department of Justice, which may have jurisdiction over the deal given funds moves through the US.