... The 50-hectare Koh Damlong, also known as Potato Island, some 55 km southwest of Sihanoukville, literally buzzed with activity during a visit earlier this month, as shirtless workers squatted over planks of wood shipped from the mainland, shaping them with circular saws and power sanders. Others raked a network of rock-lined paths and plucked detritus from the beach. One group of workers sat amid an explosion of cardboard and polystyrene packaging, assembling newly purchased ceiling fans. A stack of mattresses had been staged in a jungle clearing. The smells of saltwater, sawdust and marijuana mingled in the wind. All the while, Mr. Polonsky’s guests frolicked in the froth...

Koh Damlong is one of seven islands (not counting his private island, Koh Dek Koul) that Mr. Polonsky has acquired off the Cambodian coast, with the intention of turning the entire archipelago into a $1 billion eco-tourism destination...

Guessing and preemptively accommodating the wants of Mr. Polonsky—whose cherubic mug has graced Interpol’s “Red Notice” list of most-wanted criminals since he was charged last year with embezzling millions from investors in a Moscow apartment complex —seems to occupy most of the energy of his entourage, a rotating menagerie of mostly beautiful women and hardened men...

Funded by Mr. Polonsky, he explained, the Underwater War Museum is to be an artificial reef made up of aging Cambodian military hardware, each tank or helicopter simultaneously playing host to undersea creatures and educating divers in the country’s violent past.

“We have a war history,” he said. “Nobody has a [similar] war history and they don’t want to create a war for their country to create an artificial reef that’s called Underwater War Museum like us.”

The project—which Mr. Kann this past week pitched to a variety of government bodies in Phnom Penh and whose proposal was to be formally submitted Friday to an inter-ministerial committee overseeing coastal development—aims to draw a new breed of hydrophilic visitors to Cambodia.

“Automatically, it will attract a lot of divers, and you know tourist divers are high-class,” he said. “They are not backpackers, they spend more money.”