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Takeo families accuse unregistered MFI of swindle

People hold placards during a protest in Takeo province earlier this month after an unregistered microfinance institution was unable to repay deposits. Photo supplied
People hold placards during a protest in Takeo province earlier this month after an unregistered microfinance institution was unable to repay deposits. Photo supplied

Takeo families accuse unregistered MFI of swindle

Fifty families in Takeo province are pressing charges against an unregistered rural lender they say has cheated them out of $150,000 worth of deposits.

According to representative Hoeung Sam Oun, the families from Lompong commune placed their money with the Prosperous Farmer Savings Association (PFSA), an unfunded microfinance institution (MFI), at a promised interest rate of 2.2-2.5 per cent over three years.

“They all believed they would receive money to build a house,” she said. When the PFSA suddenly stopped paying its interest to them in 2015, they attempted to withdraw their money. In response, the association’s director, El Sopheap, informed them that his five-year-old association did not have the funds.

“We offered loans to borrowers, who then fled to Thailand without paying them back,” Sopheap said yesterday. “Therefore, we cannot pay the interest [to these families] and this case broke out. But I will offer them land titles, and money to some people. I have about $100,000 left. We are solving the case,” he said, admitting that PFSA was unregistered.

Before filing a complaint demanding their money back with the Takeo Provincial Court on Tuesday, the families had initially requested intervention by the Ministry of Interior in October. In response, Pol Lem, a ministry secretary of state, informed the Takeo provincial governor on December 17 that Sopheap’s group was unregistered. He then urged the disputants to work through the courts.

Poa Choen, 62, a member of the aggrieved party, believes that Sopheap has defrauded them. “We filed the complaint to demand only our capital back, but he urged us to file the complaint, then used the money to buy a car and motorbikes and to build a house. He hasn’t paid us back, and we’re poor now,” he said.

In Manet, director of the Takeo Provincial Court, said that they had no plans to arrest Sopheap. “We have no plan [to do that]. We need to question him first,” he said.

Chea Serey, director-general of the National Bank of Cambodia, which registers and monitors MFIs, said that she had never heard of PFSA, but added that “many operators claim to be an MFI in order to mislead and cheat the public”.

In June, the deputy chief of a microfinance NGO was arrested amid allegations that he and his brother, the NGO’s director, had scammed Svay Rieng province villagers out of nearly $40,000.

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