Logo of Phnom Penh Post newspaper Phnom Penh Post - KDIC steps up recovery efforts on failed Cambodian deals




KDIC steps up recovery efforts on failed Cambodian deals

Content image - Phnom Penh Post
Gwak Bumgook, president and CEO of the Korean Deposit Insurance Corporation, reveals how the agency is trying to recover hundreds of millions of dollars in failed and hidden deals by Korean investors in Cambodia. Heng Chivoan

KDIC steps up recovery efforts on failed Cambodian deals

The Korean Deposit Insurance Corporation (KDIC), a state-run body that is tasked with collecting assets on failed property and financial services investments, opened its first overseas branch in Phnom Penh earlier this month. The agency is tasked with recovering 78.5 percent of all overseas assets that stem from a string of bankruptcies dating back to 2011. Post Supplement sat down with Gwak Bumgook, president and CEO of the agency, to discuss how it will conduct operations.

What are the insolvent financial institutions the KDIC is trying to recover funds for?
They are nine mutual savings banks (MSB) including five Busan-affiliated MSBs, two Tomato-affiliated MSBs and Prime MSB that we are trying to recover funds from. The MSBs invested in assets in Cambodia’s property sector before going bankrupt in 2011. The KDIC, as the receiver, is administering the assets and recovering funds from them. There are a total of 10 projects and businesses under the KDIC in Cambodia, valued at approximately $420 million.

Last year, the KDIC was trying to sell 100 percent of Camko Specialized Bank. Has that deal been finalized?
Following the February investor seminar for Camko, we signed a stock sale contract with a buyer from Japan and obtained a preliminary approval from the National Bank of Cambodia for the sale contract in October of last year. However, after signing the contract, the buyer has not carried out the contract citing a lawsuit filed by a third party. However, the lawsuit does not correspond to a cause for non-compliance according to the contract. So we have been urging the buyer to fulfil the contract, and Apro Financial Group has not given us any indication that they don’t want the deal.

Have KDIC’s recovery efforts been hindered by the Cambodian government?
No, they have not. The KDIC’s recovery efforts and business normalization have not been challenged by lack of cooperation or administrative delays on the part of the Cambodian government agencies.

Our major recovery challenges have been that of joint business partners who were not cooperative in the recovery of loans, lawsuit processes that are challenged by operating in a different legal environment and the difficulty in finding the right investors.

Now that the Phnom Penh office has been established, we will reinforce cooperation with the Cambodian government, local legal representatives and other stakeholders to achieve business deals.

Why did the KDIC decide to open the branch in Phnom Penh?
It has been over five years since these banks went bankrupt and it was about time that we try to get the money back. However, due to the challenges we faced and long distance and inadequate infrastructure for recovery, we needed a dedicated branch. This office will actively resolve issues of each project.

Content image - Phnom Penh Post
KDIC is working to sell 100 percent of Camko Specialized Bank. Hong Menea

How much has the KDIC recovered so far in Cambodia?
Since 2011, we have sold four parcels of real estate, recovering about $15.75 million.

To make recovery easier, what actions do you think Cambodia should take for better transparency?
I have to note that recently Cambodia has improved its legal framework. However, the Cambodian real estate registration system limits access from creditors and the general public. So, it is difficult to look up and check ownership and related registration. Cambodia should make it easier to facilitate clarification on the ownership of assets invested by investors from overseas.

If the KDIC sells assets, will the recovered funds be reinvested in Cambodia?
We have a plan to sell most of the assets to Cambodian or overseas investors. Therefore, the additional injection of funds by investors and subsequent business normalization are likely to contribute to the economic development of Cambodia.

Will the office investigate hidden assets in Cambodia by Korean investors?
The KDIC is also investigating such hidden properties in Cambodia. When properties are identified, the KDIC takes active legal actions to recover funds from them, such as direct collection, claims preservation and lawsuits.

Those that hold these types of hidden assets tend to be current or former officers or employees of insolvent financial institutions that are responsible for the failure of a bank.

How much has the KDIC recovered and identified for hidden assets?
The KDIC has registered six cases of hidden properties worth $28 million in Cambodia since 2011. So far, the KDIC has recovered funds from the three of them valued at $11 million. For the remaining three valued at $14 million, they are in the recovery process with lawsuits underway.

MOST VIEWED

  • Seven positive for Covid-19, Hun Sen confirms local transmission

    Prime Minister Hun Sen announced that there has been local community transmission of Covid-19. However, he urged the people not to panic even though the Ministry of Health announced the discovery of seven new cases on Sunday. Among the victims are Chhem Savuth, the director-general

  • Cambodia at ‘most critical moment’, Hun Sen warns

    Prime Minister Hun Sen said the first community transmission of Covid-19 in Cambodia has led the country to the “most critical moment” that warranted urgent, large-scale operations to contain the pandemic. Hun Sen, who confirmed the first local transmission on November 28, said the source of

  • PM confirms community transmission, calls for unity

    Prime Minister Hun Sen has called on the public to stay calm, unite and follow the Ministry of Health guidelines after the wife of a senior official tested positive for Covid-19 in the Kingdom’s first case of community transmission. The case has drawn criticism

  • Over 110 garment factories close

    A government official said on November 22 that at least 110 garment factories had closed in the first nine months of the year and left more than 55,000 workers without jobs – but union leaders worry those numbers could be much higher. Ministry of Labour and Vocational Training undersecretary

  • Singapore group seeks $14M in damages from PPSP over ‘breach of contract’

    Singapore-based Asiatic Group (Holdings) Ltd is seeking a minimum of $14.4 million relief from Cambodia Securities Exchange (CSX)-listed Phnom Penh Special Economic Zone Plc (PPSP) for allegedly breaching a power plant joint venture (JV) agreement. Asiatic Group’s wholly-owned Colben System Pte Ltd and 95 per

  • PM vows to protect Hun family

    Prime Minister Hun Sen has vowed to continue his fight against opposition politicians who he said intend to smash the Hun family. Without naming the politicians but apparently referring to former leaders of the Supreme Court-dissolved Cambodia National Rescue Party (CNRP), Hun Sen said there