THE two Co-Defense Ministers, Tea Banh and Prince Sisowath Sirirath, authorized two

former Khmer Rouge commanders to import 30 million liters of gasoline across the

Thai Cambodian border, according to documents obtained by the Post.

However sources within RCAF said the two men were forced into signing the authorization

having been told it was part of the Government's enticement for a group of Khmer

Rouge to defect.

The move has angered foreign oil companies operating in Cambodia, with one industry

representatives saying they had suspected such an arrangement for some time. They

said that it skewed the competitive market in Cambodia and was unfair.

Cambodia uses about 150 million liters of gasoline annually. The official Customs

Department figures show a decline in gasoline consumption over the past few years.

Oil industry sources said there does not appear any reason for the drop in consumption

so therefore it was assumed there were substantial amounts of gasoline being smuggled.

The authorization letter signed by both co-ministers, dated 16 September 1999, says

the commanders of the 19th and 20th divisions can import 30,000 tonnes of gasoline

over the next two years.

The commanders, Bin Phirum of division 20 based in Malai, and Srey Soben of division

19 based in Sampov Loun, were required to pay tax on the imports. However RCAF sources

said the tax has never been paid, a loss to the country of more than $8.5 million

over the entire 30,000 tonnes. Tax on gasoline is assessed at $256 a tonne.

A senior RCAF official said at the time the letter was signed senior RCAF officials

were concerned that no-one would actually ensure the conditions of the amount limit

or the taxation requirements would be complied with.

"Of course, it is like the illegal logging, the same authorization is used again

and again," the official said.

The two ministers were apparently told there was a letter from the Council of Ministers

explaining that the authorization should be granted because the Government did not

have enough money to provide the food, clothing and salaries as promised as part

of the defection of KR in the Samlot area.

"RCAF and the Defense Ministry could not support them so all we could do was

to let them import gasoline," the source said.

"We thought we were helping the peace process."

However the official said a check of RCAF's archives showed that the letter from

the Council of Ministers referred to on the authorization was an irrelevant document

relating to roading.

He said senior RCAF officials now believe that the fuel being imported was destined

for mainstream distribution, possibly through the Tela gas station network in which

the RCAF deputy commander in chief, Kun Kim, and Hun Sen's son-in-law, Moeung Sopheak,

have substantial financial interests.

The source said that the more than $7 million required to buy the gasoline from Thailand

would be beyond the grasp of former KR divisional commanders, so a wealthy patron

would be required.

The suggestion that Tela was filling that role was vehemently denied by Tela deputy

director-general Nguon Leng.

"My company has never bought any oil from Thailand - not one liter," he

said.

He also denied any contact with the military and asked the Post not to print anything

that might adversely affect the company's reputation.

Oil industry sources said that Tela involvement was possible, but that it would be

out of character for the company, which usually sourced most of its product via Vietnam

and barged it up to Phnom Penh.

The source said that to bring that amount of gasoline across the Thai border would

require three trucks a day for two years and that would probably have been noticed

by now unless it came via Pailin.

The RCAF source said it was unlikely the gasoline would have been sold to Sokimex

because they also source most of their petroleum products from Vietnamese companies

with whom they have had a long-term relationship and enjoy advantageous prices.

Neither of the co-defense ministers could be contacted for comment.

Government spokesman Khieu Kanharith dismissed the letters, saying that they: "were

signed in 1999 and it is now 2000 so why are you asking me about this?"

He also asked if the Post could find any company selling the gasoline to contact

him and he would investigate it.