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Insurance outrage

Insurance outrage

I have just been informed of a recent Prakas passed by the Ministry of Economy and

Finance (MoEF) on April 1, 2005. From that date onwards, an insurance company can

legally operate in Cambodia with a minimum capital of $1.5 million, when this figure

used to be $7 million. This drastic change lowers the capital threshold by nearly

80 percent. This is what one could call a considerable dose of flexibility in the

application of the law. Or could we?

Some of your readers may remember that five months before this courageous "April

1st Prakas", my company, Indochine Insurance, was brutally liquidated by the

MoEF under the pretext that Indochine hadn't yet paid up the minimum capital of $7

million.

Although, I had announced previously that a large French insurance firm (Macif) and

the French Development Agency had confirmed their intent to invest $6 million in

Indochine.

Nonetheless the MoEF had frozen all bank accounts and our head office was under siege

for two months, surrounded by a large platoon of armed policemen and military police.

The French Embassy sent a letter on September 26 - copied to the Minister of Finance,

Keat Chhon - asking that "given the profound interest shown by Macif (and AFD)

in this investment in Cambodia, it would be appreciated that Indochine be given some

flexibility in its day to day operation until the end of March 2005."

But the Minister, a former Khmer Rouge himself as everyone should remember, showed

no flexibility at all, probably because he felt the urgent need to implement the

law. Dura lex, sed lex. As a consequence, Indochine Insurance was liquidated, all

its assets and money were confiscated, all its clients and creditors were dispossessed

(with a 50 percent market share, who was compensated?), and my family and myself

barely escaped a manhunt by finding refuge in the French Embassy. Do these methods

remind you of anything in the contemporary history of Cambodia?

When the French Ambassador politely asked that Indochine be given until March 31

to complete a confirmed transaction, he was answered with contempt: Impossible! But

on April 1 (the day after!), the law was changed. By 80 percent!

Unless one is blind, deaf or utterly in bad faith, this story demonstrates:

* That the methods of the Cambodian government nowadays have not changed very much

since 1975. This should be remembered by all those who will soon follow the farcical

KR trial where two rank-and-files will be soon judged.

* That freedom of entrepreneurship and business in Cambodia is only a mask. If you

are visibly successful, you'd better keep your assets out of the country. I had to

maintain everything I had in Cambodia (to meet Indochine's capital needs) and I lost

everything.

* That the international treaties protecting foreign investors are, as far as I know,

mere pieces of paper. France signed with Cambodia in 2002 an "Agreement for

Reciprocal Investments' Protection," but it protects nobody as long as the French

are not serious about forcing Cambodians to face their responsibilities. As usual,

France loves to teach lessons to the international community, but in this instance,

it would be well-inspired to simply implement the treaty it signed with Cambodia.

As a conclusion, I would like to add that this ridiculous Prakas of April 1, 2005,

proves how arbitrarily power is exerted in Phnom Penh. They respect only force, they

change rules when it suits their needs and they consider themselves above the laws

(international or domestic).

I am ready to fight as long as necessary to obtain compensation for my clients and

for myself against the damages we've suffered. We'll see who is ready to fight alongside

with me.

To all Post readers, among whom I still have many friends, I wish good luck.

Philippe Lenain Former managing director, Indochine Insurance Company

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