T HE insurance business is in turmoil after Caminco, the state-owned company allied to the Finance Ministry, declared that the two Western firms in the country are operating outside the law.

Caminco asked the Finance Ministry to shut down CIL Insurance Services and Indochine Insurance Union.

Tan Saro, inspector general of Finance at the Ministry, has refused to close the companies and ordered the two sides to negotiate a compromise.

Caminco, in an apparently independent action, then tried to issue a levy on the companies which some people view as "near to corruption".

"These companies are operating unlawfully," said Ung Tang Im, in July 25's Reasmey Kampuchea.

Im is the director of Caminco, the state owned insurance company formed under the SOC regime and controlled by the CPP. Caminco is a department of the Ministry of Finance. Caminco then entered negotiations with the two companies in early August, only allowing them to continue to operate if they paid a percentage of their revenues to Caminco.

Under a proposed agreement with Indochine Insurance Union, the private company would pay Caminco a 10 percent levy on the commissions earned from the making of insurance contracts.

However CIL Insurance Services has taken a different view of the proposed deal.

Manager Paul Cable said: "This is near to corruption. I disagree with such a levy. There is no framework to ensure this money won't go directly into the pocket of some officials."

Caminco further seems to have tried to put the levy on the companies independently of the Finance Ministry, according to sources who add that the exact relationship between Caminco and the Finance Ministry remains unclear.

Im said Caminco was currently negotiating with the Finance Ministry over who would be entitled to the revenues Caminco collected and how high the percentage should be.

Rath Sarath, Caminco's re-insurance manager tried to clarify their behavior. He said the two western companies were acting outside the law because there was as yet no law governing insurance in the country.

"In such a situation the levy we proposed to these companies is just a temporary agreement before the law comes out. We are trying to refine and pass an insurance law within the next two or three months."

The director of Indochine Insurance Union Philippe Lenain also thinks there is nothing inappropriate with the Caminco levy.

He said: "We [Western companies] arrived before any law was created. This is a unique situation in the world.

"The levying Caminco is intending to set up is just a working arrangement. I consider it as a kind of imposition.

"We use the Cambodian infrastructures, such as roads and trains, and do not pay anything for it.

"Thus it seems to me quite normal to pay to Caminco the amount of 10 percent of our commissions, an amount we freely discussed and agreed with them."