THE CAMBODIAN Farmers Bank is in financial crisis, unable to pay up on a $400,000

deposit of donations - including $50,000 from the Pope - to the Cambodian Red Cross

(CRC).

First brought to light by the July coup, the saga of the missing money has seen Hun

Sen's wife Bun Rany negotiating with bank director Princess Norodom Arunrasmey, the

King's daughter, in a bid to recoup the CRC's losses.

The bank has so far been able to give the CRC $45,000 in four installments, and asked

for more time to try to collect the remainder owed.

Princess Arunrasmey said Dec 2 that some money had "disappeared" - but

would not say how much - and pointed the finger at the bank's previous director.

It is unclear whether any criminal prosecution could be taken over the case. But

Arunrasmey said that a banking regulation specifying that banks must keep cash reserves

equaling at least 5% of their deposits and borrowings had been breached.

A total of $408,345 - comprising $332,261 raised from the CRC's annual gala and charity

bazaars, a $52,952 donation from Pope John-Paul II, $7,517 from the Angkor Wat International

Half Marathon and about $15,600 in other donations or income - was deposited over

several years into an account, opened in August 1994, at the bank.

The cash, in the CRC's "fund-raising" account, represented money deposited

by CRC but not yet used for specific programs financed by donors, according to a

June CRC financial report.

Princess Arunrasmey was the treasurer of the CRC - whose honorary head was Princess

Marie, wife of then First Prime Minister Prince Norodom Ranariddh - at the time the

account was opened.

The Cambodian Farmers Bank - which is not related to the Thai Farmers Bank - was

started by Princess Arunrasmey and a Thai investor in 1992. She said its previous

director, whom she would not name, ran the bank's operations for three years before

he was fired in 1995. She took over as director.

The previous director was "a very bad one", Arunrasmey said. "There

was mismanagement and the bank had a big loss, a big gap. Money disappeared."

She also said that the money had been expected to be withdrawn only "little

by little" by the CRC, "so, as a banker, we used this money for other operations

with our clients". She would not say what the money had been used for.

Arunrasmey said that when the bank's liquidity problem became clear, her Thai business

partner - whom she also declined to identify - "was supposed to fill in the

gaps" of funds, but had been unable to do so.

The situation came to a head after Ranariddh and his wife Princess Marie, the honorary

president of the CRC, fled into self-exile in July, and Bun Rany, the deputy president

of the CRC, asked for the withdrawal of the money.

"After July, Bun Rany... decided to move the funds to the Foreign Trade Bank,"

explained Arunrasmey. "Right away at that time we had a problem because there

were a lot of unexpected withdrawals. We came to the point when it was more than

expected.

"CRC is one of the biggest customers. I will pay them back but I need some time

to gather the funds," she said. "I am expecting money to come from my partner

in Thailand. But because of the economic problems there, it is coming [only] little

by little."

According to Arunrasmey and CRC officials, an agreement was struck between Bun Rany

and the Princess.

"There is a verbal agreement between Bun Rany and Princess Arunrasmey. We received

the promise from the bank that we will receive the money," said a Red Cross

official.

He added that the Foreign Trade Bank was in charge of pursuing payment of the debt.

"As soon as the Cambodia Farmers Bank receives a bit of cash, the Foreign Trade

Bank chases it for us." He didn't know when the CRC might expect to recover

all the money.

Arunrasmey, who formerly worked for a bank in the United States, implied that she

had always depended on her Thai partner to finance the bank. "When we got the

license in 1992, I only had my knowledge and I came with empty hands. I explained

that I could only open with foreign [investment]."

She denied that there had been anything untoward in the CRC's initial decision to

open the account at her bank. "We organized the fund raising together with Princess

Marie. Without any bad intention or to misuse the money, we decided to place the

money here."

She said she had also resigned as treasurer of the CRC in late 1994 soon after the

organization opened the account at her bank.

According to a CRC official, the initial choice of the Cambodia Farmers Bank was

made because it offered better interest rates than the Foreign Trade Bank at the

time.

Arunrasmey promised "we will do our best to pay the CRC". She said that

reimbursing the CRC was her first priority when money arrived from her Thai partner,

but noted that she traveled a lot and sometimes her orders were not respected when

she was away.

She added that she was always happy when she was able to contact her Thai colleague

on the telephone because it eased her fears that he would "disappear".