AMBODIA'S often-maligned banking sector has produced another controversy as the
National Bank of Cambodia (NBC) tries to dictate who should be given jobs at a new
The fledgling Thaneakear Khmer (the Khmer Bank) has been told that at least 60 percent
of its staff must be people proposed by the NBC or else it will not be granted a
Thaneakear Khmer founder Heng Kim-Y fears he will lose a Japanese loan of $40 million
for his bank to run a rural credit scheme if the dispute is not settled soon.
"They [the Japanese lenders] want to freeze the funds because they are fed up
with the slow process of the NBC... Cambodia's poor will be the ones who lose out
if this happens," Him-Y said.
Kim-Y, himself a former NBC senior official who is now locking horns with current
NBC governor Thor Peng Leath, says he should have the right to hire qualified people
of his own choice.
Thaneakear Khmer was inaugurated Sept 27 but has yet to receive a license from the
NBC, the state bank which regulates Cambodia's banking industry.
Kim-Y's bank is being denied a license - and fined 5 million riel (US$1,852) a day
for operating without one - until he meets what NBC officials term a "fundamental
The condition is that all new banks must hire people from the NBC's payroll, to help
the central bank reduce its own staff numbers.
Kim-Y has been given a list of 108 people - from one Phnom Penh bank and six provincial
ones, all state-owned institutions controlled by the NBC - to select at least 60
percent of his staff from.
The NBC list did not state the people's home addresses, only the banks they worked
at, nor their education and qualifications.
Kim-Y said he didn't necessarily object to hiring the people, but had to interview
"I don't know who these people are, where they live, what kind of education
they have. Some of them may have only primary education, how can I give a job as
a director to someone who has just primary education?" he complained.
Kim-Y said he has fulfilled all other requirements to get a license, including making
a 10,000 million riel (US$3.7 million) deposit with the NBC.
Thor Peng Leath would not comment directly to the Post, referring inquiries to Kaing
Tong Heang, NBC deputy director of banking supervision.
Tong Heang said the employment requirement put on Than-eakear Khmer was part of the
central bank's efforts to reduce its surplus staff numbers.
There were 23 state-owned banks around Cambodia, most of them not actually operating,
whose employees drew salaries from the NBC.
"These are left-over personnel... Where can we find money to spend on them?
Any new bank must accept [some of them]...no one can escape this measure."
Tong Heang said the NBC's responsibility ended once it provided the names of 108
prospective employees, and it was up to Kim-Y to call them in for a job interview.
"Because of complicated system of home addresses, we decided to provide him
with names and bank addresses that are not difficult to contact.
"If Kim-Y intends to comply with our condition, he could have just written letters
and sent them out...people there are waiting for them."
The NBC has given Kim-Y until October 31 to pay his due fines, or declare his application
for a license void, Tong Heang said.
The NBC also demanded - as a pre-condition to a license - that Kim-Y withdraw a complaint
against Thor Peng Leath which he had sent to Second Prime Minister Hun Sen and to
the National Assembly.
Kim-Y, whose relations with Peng Leath appear strained, to say the least, replied:
"Hah, hah! I'll never do that, because I've done nothing wrong."
A former French-educated chartered accountant, Kim-Y held various managerial positions
at the NBC in the late 1960s and early 1970s, eventually becoming Director-General
He left Cambodia in 1972 to join the International Monetary Fund, working extensively
in South-East Asia and Africa, according to his prepared biography.
Returning to Cambodia several years ago, he said he came back "with the main
objective of raising money from abroad to distribute it to poor people in order to
help boost Cambodia's economy."
He said he decided to establish Thaneakear Khmer after discussing with Hun Sen the
idea of setting up a bank to offer rural credit to farmers and support other agricultural
Thaneakear Khmer aims to be "the only credible private commercial bank"
in Cambodia, according to a prospectus prepared by Kim-Y.
Working with the government and NGOs, it proposes to run a rural credit scheme offering
materials and money to individual farmers and to help finance factories.
Kim-Y said he secured a pledge of a low-interest loan of $40 million for the credit
scheme from the Japan Economic Cooperation for Rural Development (JECRD).
"This is historical and very exceptional that a [foreign] government institution
gives credit to a private bank run by a Cambodian," he said.
Among 30 private banks in the Kingdom, only two - his and Cambodian Mekong Bank of
Theng Boon Ma - were run by Cambodians, he said.
His former positions at the International Monetary Fund and his experience in Cambodia
had helped convince the JECRD to give the loan.
"They know that through my project their money will not be lost on intermediaries
but will reach farmers. They know me well," he said.
But the JECRD was now reconsidering the loan because of the NBC delays.
"They are waiting to see [what will happen] and say that if a license is not
issued to me, they will shift the credit to Laos and the Philippines," he said.
Kim-Y alleged that Thor Peng Leath's handling of his bank license application was
going directly against the instructions of Hun Sen.
Thaneakear Khmer had initially intended to lease office space at the Phnom Penh Municipal
Bank building but, after a deal with the NBC to do this fell through, Hun Sen wrote
to Peng Leath requesting that he allow Kim-Y to find alternative premises and "recruit
his own staff."
In a Cabinet memorandum dated Feb 14, Hun Sen instructed the NBC to "issue a
license for Thaneakear Khmer of Heng Kim-Y in a timely manner."
In a Sep 20 letter to Hun Sen, Kim-Y complained that Peng Leath "endlessly abuses
his power...and at whim disrespects order from a leader of the Royal Government".
He sent a similar letter to the National Assembly.
Kim-Y labeled Peng Leath "clumsy" and accused him of lobbying some businessmen
not to become shareholders in Thaneakear Khmer .
"Thor Peng Leath is very jealous and is afraid of me taking his position as
[NBC's] governor," Kim-Y told the Post.
While Peng Leath would not comment, other NBC officials said Kim-Y's problems with
prospective shareholders related to his demand that he hold 51 percent of Thaneakear
Khmer 's shares.
Niev Chanthana, a banking supervision advisor, said the NBC has accorded Kim-Y a
lot of help, and blamed him for prolonging the dispute.