N ATIONAL bank governor Thor Peng Leath will be dismissed from his post in coming
weeks, sources say.
The firing will take place after the official results
of an independent audit commission set up by the Prime Ministers to investigate
the Credit Bank of Cambodia (CBC) affair, and irregularities of the National
Bank governor and associates, according to several senior government
"The decision to fire him has already been made," said one
senior government official.
Caught in the fall-out for political reasons,
according to senior officials, will be MP Sam Rainsy's wife - the National Bank
deputy governor, Tioulong Saumura.
"Fire Thor Peng Leath to limit the
damage of the banking scandal and fire Saumura for larger political reasons,"
said one senior official. "It will be the recommendation of the
Saumura, in an interview with the Post, said any
investigation would show she had done nothing wrong, and that any such move
could be interpreted as political harassment. If the rumors were true, she said,
she would strongly demand that reasons be given.
At a meeting of the
Council of Ministers on 7 June, the two Prime Ministers ordered National Bank
governor Thor Peng Leath not to leave the country pending the outcome of the
investigation, according to senior government officials who attended the
But the audit commission was not formally approved as of 14
June and the CBC has re-seized control - with armed guards - of it's property
The National Bank governor, who remains in authority, has
refused to intervene telling government appointed auditors it is a "private
The CBC was officially closed and it's assets seized by the
National Bank on 6 May, citing a string of violations of Cambodian laws,
including failing to maintain minimum capitalization and refusal to provide the
government with basic reporting of bank activities.
The bank and it's
principal shareholders face a number of criminal and civil charges in Canada and
Cambodia ranging from laundering drug money to defrauding creditors.
scandal expanded when the National Bank governor and other officials were
accused of illegal and irregular practices by giving preferential treatment to
the CBC and allowing assets to be removed from the bank after it's official
But despite these embarrassing revelations in public in recent
weeks, the government appears to have further lost control of the situation in
On 7 June, when the independent auditors appointed as
liquidators showed up at the CBC, they were met by AK-47 wielding "private
security guards" who refused them access to bank premises - on the order of the
CBC chairman Sy Veng Chun. The guards, who remained in control of bank premises
at press time, were dressed in official police uniforms.
re-seizing of bank assets by the CBC appears to make a mockery of government
claims to have taken control of the CBC.
Says a senior official following
the scandal: "When armed guards hired by a private company are able to prevent
government appointed administrators from entering a seized bank, then it really
raises questions of whether the government is either sincere or in
Also on 7 June the government-approved accounting firm which
serves as liquidator of the closed bank received letter from Sy Veng Chun
ordering them "to postpone your activity at the Credit Bank of Cambodia from 29
May 1995 on... We will no longer allow you to go in and out of the credit bank,"
according to the Cambodia Daily newspaper.
Chantol Sun, secretary of
state for the Ministry of Finance who is expected to be chairman of the new
audit committee, told the Post on 10 June that shutting out the auditors was
unacceptable. "This is crazy. We will order the administrators to be allowed
He said that the CBC scandal "is the trigger that will begin the
cleanup of the banking system. We are very serious about this."
government is officially in control of bank assets, although they have been
barred from the premises by the CBC. On May 11 Thor Peng Leath announced that
"the decision to withdraw the license was taken... to protect the interests of
banking customers. We immediately placed a team of National Bank administrators
at the premises of the Credit Bank... "
"We are now in the process of
appointing an independent, professional administrator from among a group of
international auditors accredited to work with the National Bank," the governor
In reality, the auditor has received "virtually no cooperation"
from either the CBC or from Thor Peng Leath since being appointed last month,
according to the auditors and government officials.
When the auditor
protested being ejected at gun point to both the Ministry of Justice and the
National Bank governor last week, they were informed by the National Bank
governor that this was "a private matter" and the National Bank would not
intervene. As a result, one month after the CBC was seized, neither the National
Bank nor any independent auditor are on bank premises or in control of the
"This is an embarrassment," said a senior government official.
"Now they can change whatever accounting, whatever books they want."
latest embarrassment is one in a series that have prompted the two co-Prime
Minister's to intervene. On the night of June 7 at a meeting of the Council of
Ministers, they ordered the formation of a special audit committee controlled by
the Ministry of Finance to investigate alleged improprieties by the National
Bank and investigate the CBC affair.
In regards to the allegations of
National Bank malpractice, Sun Chantol said "we will get to the bottom of this.
We want to know why bank assets were allowed out after the CBC was seized. We
want to know why a loan was given by the National Bank to the CBC" to create the
minimum capitalization that resulted in the issuing of an operating license last
The CBC scandal began unfolding in March, when the CBC principal
shareholders lost 1.5 million dollars in Chicago futures trading. This prompted
a Canadian securities firm Marlieu Lemire to seize the assets of the traders -
including the CBC bank. It soon unfolded that the CBC bank had few assets and
had misrepresented it's financials to Cambodian authorities and to the Canadian
The National Bank - particularly governor Thor Peng
Leath - are accused of irregularities in the licensing, supervising, and later
closing of the CBC.
At issue is a highly unusual 1994 loan from the
Cambodian National Bank and approved by the bank governor to CBC bank chairman
Sy Veng Chun and his wife Leng Ky Lech. The $3 million loan of government funds
was to establish minimum capital requirements which then allowed the National
Bank to issue a private bank operating license to the CBC. According to
Cambodian law, the National Bank is not allowed to make private loans and should
not be accepting a loan - from it's own reserves - in lieu of capital deposits
to establish a private bank.
Further, it emerged in April that principal
CBC shareholder Leng Ky Lech is under indictment for 8 counts of laundering drug
money in Montreal.
But further disturbing to Cambodian authorities and
to the CBC bank creditors, the National Bank governor authorized the removal of
funds to personal associates after the bank's assets were frozen on 6
Bank documents obtained by the Post show that former commerce
minister and newly appointed Ambassador to Washington Var Huot deposited
$145,000 in 100 dollar bills in his personal account at the CBC on 4 May. The
move was viewed as highly unusual given that it was well known that the CBC
assets were about to be frozen on 6 May.
It was also illegal as the funds
were government money. In a telephone interview from Washington, Huot
acknowledged that the funds were government money intended for use at the
Washington embassy. He said that he deposited the money in order to transfer it
to Washington, but refused comment when asked why the money was only deposited
and no request for transfer was made. He also refused comment when asked why he
withdrew the money from the government account - which could have been directly
transferred to Washington - and deposited it in the CBC, which has no
relationships with a foreign bank to allow for direct transfer.
appears to be one of the most egregious and unusual moves was the withdrawal of
Var Huot's money, with the written permission of Thor Peng Leath, on May 8, two
days after all the banks assets were officially seized.
Chantol Sun said
that the new audit commission will investigate both the CBC and the National
Bank handling of the affair. "The government is taking the right action to
oversee the audit. We want to bring to the surface any irregularities of the
CBC, to see whether they met their minimum requirements. We want to look into
the reports in your newspaper that funds have been transferred after the closure
of the bank. We want to know why action was not been taken by the proper
authorities. We want to know who authorized the transfer of money from the CBC
after the bank was closed. And we want to know why the National Bank governor
gave a loan of government money without permission."
He said "we will
take action to ensure that all discrepancies have been brought to the surface so
that the banking system is reformed and that it is fundamentally sound. That is
the objective. And we will complete it in a matter of days." Chantol Sun said
that he expected the audit committee to begin investigating by 16 June and it's
conclusions and recommendations made "in a week at the most."
Leath has denied all charges of improprieties. "These allegations are false," he
told the Cambodia Daily on 6 June. "Somebody would like to de-stabilize the
government through the National Bank of Cambodia."
Thor Peng Leath has
accused deputy governor Saumura of being part of a "political plot", according
to diplomats and other government officials. No one has accused the deputy
governor of any involvement in the banking scandal or other
Says Saumura: "I wonder who would be able to topple the
government through de-stabilization if the National Bank hasn't done anything
wrong? If the leadership of the National Bank is faultless, then the governor
should not be worried. If the leadership of the National Bank has done something
wrong it is normal that the scandal is made public. These are not political
questions. They are technical questions, period. Either there has been irregular
or illegal conduct by officials of the National Bank or not."
government officials say that the two Prime Ministers will use this opportunity
to also fire Saumura. "The decision to fire Thor Peng Leath and Saumura has been
made," said one source.
Saumura told the Post on 13 June that "this a
simple corruption case. No government in the world is immune to scandal. I don't
see why any scandal should de-stabilize the government if the government takes
proper action and takes the right sanctions. This is a very democratic process.
Instead, after taking the right steps such as forming the audit committee, the
government will be more stable than before and the image of the banking system
will be stronger. It shows the government is serious about a strong, sound
She vowed to fight any move to oust her. "Only people
who have done something wrong should be sanctioned. Any investigation will show
I have done nothing wrong. I have done what is within my power to limit the
damage, to avoid a blow to the image of our country. At the moment they are
trying to silence my husband, one kind of harassment is to take action against