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Logo of Phnom Penh Post newspaper Phnom Penh Post - Secret deal secures $135m Swiss gold cache

Secret deal secures $135m Swiss gold cache

THE government has successfully claimed12.4 tonnes of 'old' Cambodian gold from

a Swiss bank in a secret deal, according to documents obtained by the Post.

The gold would have a current market value of more than $135 million.

But deposed First Prime Minister Prince Norodom Ranariddh and opposition politician

Sam Rainsy were, at Post press time, both discussing the possibility of challenging

the deal in court, on the basis that the present Cambodian government is illegal

and should not have been recognized as the gold's owner.

They also claim that, given the lack of public scrutiny surrounding the deal, the

gold could be cashed and squandered, misused - possibly for political purposes -

or stolen.

The gold is deposited in the Bank of International Settlements (BIS) in Basel, Switzerland.

The Cambodian account was opened in 1958 during King Norodom Sihanouk's Sangkum

Reastr Niyum regime, and it was last used in 1971 under Lon Nol.

It is not yet known when the gold was deposited. It still forms part of Cambodia's

foreign reserves.

During the Khmer Rouge period the National Bank of Cambodia (NBC) was destroyed and

with it the records relating to the gold.

However the government has now convinced the BIS that the gold is theirs and should

be handed back.

A letter dated March 6 from the then NBC governor Thor Peng Leath to Prime Ministers

Hun Sen and Ung Huot and Cabinet members outlines the moves to recover the cache.

The letter says that the first attempt at recovery was made in 1994 but suffered

delay because of a "lack of required technical abilities in some of the NBC's

staff, international interventions, and... the old NBC law."

The last point required a change of law that took place in January 1996.

The letter says there was "a stroke of misfortune" after last year's coup.Ranariddh

wrote letters to overseas financial institutions asking them to freeze Cambodia's

assets. Two of these letters were sent to the BIS.

At that point Thor Peng Leath writes that the NBC had two options: either a negotiated

settlement or legal action. "Fortunately, a resounding victory was obtained

by the first procedure," his letter says.

This "victory" was officially notified to the NBC on February 6 this year,

by BIS assistant director general Andre Icard.

He says in a letter, written in French, that there did not appear to be any problem

in handing over management of the gold deposits to the NBC.

It was then confirmed and a statement sent on March 4. In addition to the gold there

are also 3,759.06 Swiss Franc (about $2,500) in an account in the name of the NBC.

Within days of BIS's confirmation to the NBC, Peng Leath had been fired from governorship

of the bank. He could not be contacted to comment on the gold. People at his home

said he was out of the country.

Ranariddh and Rainsy say the government has no legitimacy since last year's coup

and the BIS should not have made any agreement with them.

Ranariddh is going to write to BIS and ask for clarification of the deal, the Post

has been told.

He is also going to warn them that if any of the gold went missing or was misused

by the current Cambodian government, he would take legal action against BIS to recover

the losses to the Cambodian people.

Former deputy bank governor and Rainsy's wife Tioulong Saumura said the whole issue

needed to be quickly clarified.

She said it was crucial to find out if the BIS will allow the money to be transferred

to the government - a process little different from an individual making a cash withdrawal

from a savings account.

Saumura said she was aware of the gold's existence when she worked for the bank,

where it was included in lists of foreign reserves.

She said she opposed the change in the NBC law because she thought it could lead

to circumstances where the government to get hold of the money and spend it. This

was exactly the present-day scenario, she said.

At the time she thought it better to keep the gold in Switzerland until Cambodia

was more stable.

Rainsy said he was angry that BIS had made a deal with a government which is not

recognized by either the UN or ASEAN.

If anything went wrong then BIS would be liable for any money that disappeared, he

said.

The government and the NBC are reluctant to discuss the gold issue. Finance Minister

Keat Chhon initially refused to answer questions, saying: "I can't tell you

about that because it is a secret."

However he did say he had no doubt about the government's right to the money, nor

that it would be returned. "That gold belongs to us. We must have it back. No-one

can stop us," he said.

Hun Sen's adviser in charge of finance, banks and trade, Chan Phin, said he did not

yet know anything about the gold.

National Bank of Cambodia deputy governor Pal Nay Im was also initially reluctant

to discuss the gold. When she was shown the Post documents, she demanded to

know how they had been obtained.

She said that the gold was now being managed by the NBC but whether it would be left

in Switzerland or cashed in and spent was a government decision.

She said that Peng Leath's comment that "the NBC has increased capital, making

it a financially healthy institution" because of the gold, was incorrect. She

said the gold was not an asset of the NBC but instead a foreign reserve.

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