A south Korean government company may take over shares in the Camko City development following the unraveling of a savings bank that has invested in the project, Camko Bank president Kim In-hong said yesterday.
South Korea’s Joong Ang Daily reported this week that prosecutors in the country had claimed that Busan Savings Bank, which faces a wide-ranging corruption investigation that has ensnared its top executives, had set up a series of companies to fund the Camko City project, pouring in US$459 million so far through nine different shell companies.
Located in the capital’s Russei Keo district, the $2 billion Camko City development is set to include homes, shopping areas and the Kingdom’s coming stock exchange, and is slated for completion by 2018.
Construction on the project, one of the largest foreign investments in the Kingdom to date, has been stalled since last October, however.
With the South Korean government having frozen Busan Savings Bank’s operations and the arrest of a number of major shareholders, the continued financing of Camko City has been called into question.
Camko Bank’s Kim said yesterday, however, that he did not believe this would be a problem because the Korea Deposit Insurance Corporation, which acts as a guarantor for depositors’ funds in South Korea, would step in.
“The government company will take over Busan’s shares, and it will be expected to keep going,” Kim said, adding that the effect of the lost investment from Busan would also be cushioned by other investors in the project.
South Korean embassy officials declined to comment yesterday.
Nam Shik-kang, chairman of the Korean Chamber of Commerce in Cambodia, said that given the scale of the project, and of Busan’s investment, it would be difficult for a private institution to fill in the gap.
“Other small shareholders cannot make up for the loss,” he said, recommending that the South Korean government step in.
Sung Bonna, president of the National Valuers Association of Cambodia, said a prolonged construction slowdown at Camko City could lead to further concerns from potential customers about the already-stalled project.
“It will affect the developer, and especially the confidence of the buyer, the trust … for the buyer to invest in it,” he said.
Camko Bank itself, Kim said, is “not involved" in any projects with Busan Savings Bank, though Camko Bank has made arrangements to provide consumer loans for customers who purchase homes at Camko City.
Busan is listed as an investor in Camko Bank on the Camko Bank website, though Kim said Busan held just a 19 percent stake, and that the problems it is facing would not affect his own institution.
“We are not involved with any projects which Busan Savings Bank initiated, and we don’t have any risk at the moment,” he said. “Busan Savings actually has no power to control Camko Bank.”
National Bank of Cambodia director general and spokeswoman Nguon Sokha said yesterday that NBC officials were investigating the case but had yet to discover any irregularities regarding Busan’s involvement in the local banking sector.
“Our people are aware of the issues and they’re working on that,” she said.