Acleda Defends Itself Against Prime Minister’s Accusations

Acleda bank executives met with the National Bank Wednes­day to defend themselves against accusations made by Prime Minister Hun Sen that the bank had jailed borrowers in the prov­inces for failure to pay back loans.

Hun Sen claims to have a letter accusing Acleda—the country’s largest micro-finance institution—of jailing nearly 100 borrowers in the provinces.

Acleda director In Channy denied the charges Wednesday, calling them a “big misunderstanding.” Interviews with officials of the provinces with the three highest numbers of alleged prisoners indicated nobody had been jailed.

The premier ordered an investigation of Acleda earlier this week, and repeated the accusations in an address telecast Tues­day on TVK. The telecast reach­ed many of the provinces, creating concern for banking analysts, who said it could erode the al­ready shaky confidence the rural population has in the banking system.

Hun Sen called on National Bank Governor Chea Chanto to investigate Acleda, and to consider taking away its license.

“I will pay Acleda instead of those villagers,” he said in an emphatic speech. “Maybe I’ll just sell my car.”

He called on provincial governors to investigate the charges. Citing a document sent to his office, Hun Sen said he had the following figures for jailed borrowers: 61 in Kompong Speu province, 34 in Kompong Cham, 24 in Takeo, 19 in Prey Veng, 15 in Battambang, 6 in Pursat and 5 in Kompong Chhnang.

“There’s no one in jail,” said Kang Heang, third deputy governor for Kompong Speu. “The report is not true.”

In Kompong Cham, the court has issued just one warrant to reclaim the property of a bad borrower, but there is no one in jail, Governor Cheang Am said.

There was also no one jailed in Takeo, said Pall San, first deputy governor of the province.

In Channy met with National Bank Governor Chea Chanto to present documentation refuting the prime minister’s charges.

Chea Chanto could not be reached for comment Wednesday, and Phan Ho, director of bank supervision for the National Bank,  declined comment.

Acleda is calling a meeting in Phnom Penh of all the provincial branch managers, In Channy said, adding that he feared frequent broadcasts of Hun Sen’s accusations could hurt Acleda and the micro-finance sector in general.

“Now we are not so much affected. People still come to use our services,” he said. “I’m concerned that if the tape keeps broadcasting, the public might get confused.”

Analysts say micro-financing institutions are a critical component to economic development of the country. They make loans that would ordinarily be too small for larger banks to consider.

Pall San did say that even though there is no one in jail in Takeo province, people had sold their land to repay the loans, or had run away when they couldn’t pay.

People in Kompong Speu also had difficulty with their loans because they did not have enough knowledge of good business practices, Kang Heang said.

Loans in the provinces are usually taken to start or expand  small enterprises. But much of the capital available in the provinces remains in cash, keeping it from circulating through the bank system. Only 20 percent of the available capital in the provinces is in the banks, according to one banking expert who asked not to be identified.

The expert said Acleda has a much higher rate of success for lending than other banks. Only about 7 percent of Acleda’s loans are considered bad, compared to 20 percent sector-wide.

 

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