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Logo of Phnom Penh Post newspaper Phnom Penh Post - Governor denies wrongdoing, and would rather be dancing

Governor denies wrongdoing, and would rather be dancing

N ATIONAL Bank governor Thor Peng Leath has said he does not mind if he is fired

because "I am already 60 years old. I would like to be able to take a cup of

coffee... I would like to travel... I would like to dance."

"I would like

to take a rest, but I can't because the government needs me to be here," said

Leath.

Leath is in the teeth of an escalating banking scandal, following

allegations of impropriety and mismanagement, and foreign bankers have said that

if Leath did conduct the transactions he stands accused of, he certainly should

be fired.

"If this scandal is true they are in no position to control the

bank," said one Singaporean banker here. "This is very serious to the banking

industry."

However, Second Prime Minister Hun Sen released a statement

earlier this week calling the rumors of Leath's sacking "poisonous" and

"evil."

Hun Sen said "so far both Samdech Krom Preah and I have never

discussed and never thought there would be a change in the Governor of the

National Bank." He said Leath could not be removed without the agreement of both

prime ministers.

Leath was appointed governor two years ago in a

political compromise that allowed the governor of the bank to be selected by CPP

and the deputy governor by Funcinpec.

In an interview with the Post on

June 15, Leath said he had already completed his primary goal by getting the

currency stabilized and introducing the new denomination riel. "My first job is

stability. I have reached my goal already. If I go away I will have fulfilled my

contribution."

Leath denied any improprieties in the setting up of the

Credit Bank of Cambodia (CBC).

He said that when CBC shareholders came up

short of capital on May 31, 1994 - the last day new banking licenses were issued

- he took it upon himself to authorize a $3 million transfer of funds from the

National Bank to help them come up with enough capital for a license.

"It

was not a loan. It was an entry," he said.

He defended the transfer of

funds, saying the government earned $24,000 interest on the "entry." He said it

would have been a shame if the Credit Bank couldn't open because they had

already prepared their building.

Leath said that he also authorized the

$145,000 withdrawal from CBC a few days after the bank had been shut down. He

said Var Huot, the ambassador to the United States, had been waiting for months

to get the money from the Ministry of Finance and when he finally got it he

decided to deposit it in Credit Bank, rather than keep it at home.

"He

had a choice because we have 29 banks," said the governor. A couple of days

after the shutdown, the governor said, he personally intervened so that Var Huot

- who evidently needed the money for repairs to the embassy - could get the

money out.

Leath said that if the funds had been tied up or perhaps lost

in a liquidation proceeding "all Cambodians would be afraid. Cambodian people

don't trust the banking system."

"We are transforming from a socialist to

a liberal regime," he said, explaining that he had authority to make such

decisions.

National Bank Deputy Governor Tioulong Saumura called both

transactions highly irregular but said how they would be judged "all depends on

the degree of tolerance of the government because everything is not perfect in

Cambodia by international standards."

Leath said that he has been asked

by the prime ministers not to leave the country.

He said it was because

"somebody" at the bank was going to be fired. "I have responsibility for the

institution. I have to remove them."

He said someone in the bank is

"trying to politicize and poison the atmosphere for Cambodia."

It has

been more than two weeks since the two Prime Minister asked Chanthol Sun,

secretary general of the Council for the Development of Cambodia (CDC) and a

former audit manager for General Electric, to audit the mess.

So far

little has happened, other than a committee having been appointed to

investigate. Chanthol Sun initially said the investigation would only take a few

days.

"We are going to look at every record to see if there are

discrepancies," he said.

Leath has objected to allowing the Ministry of

Finance to look at National Bank files. He said he regarded that as

inappropriate because the Ministry of Finance and the National Bank needed to be

separate.

"I have expressed my opinion to the prime ministers that it

should be another person from the Council of Ministers, not be from the Ministry

of Finance," he said.

Leath said that he didn't think that the bank

scandal was hurting Cambodia's image with foreign investors because he is

perceived as being very "strict" with the banks he regulates on such matters as

filing their reports on time.

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