Canadia Bank Official Nabs $1.5 Million

A Canadia Bank official has con­fessed to misappropriating over $1.5 million of interest he personally earned on his clients’ ac­counts and was sent to PJ Pri­son on Wednesday night, municipal court officials said Thurs­day. The man’s alleged partner in crime has not confessed but has al­­so been sent to prison pending an investigation of the matter.

Kim Sophea, 40, manager of Ca­nadia’s letters of credit department with responsibility for transferring clients’ deposits to their accounts, has been charged under Untac law Article 46 “Breach of Trust,” said Hout Heang, clerk to Chief Pro­se­cu­tor Uk Savuth. His alleged partner, Phing Sam Reth, 50, has been charged with abetting an illegal act.

“We will begin a four-to-six-month investigation period,” Hout Heang said, adding that during that time the suspects will remain in prison.

The two were arrested on Sat­urday, Canadia Bank Vice Pre­si­dent Phuong Khinh Hoa said, when Kim Sophea was caught transferring money from Canadia to garment factory manager Phing Sam Reth’s account at the Foreign Trade Bank.

“They played back and forth with our client’s money,” Phuong Khinh Hoa said. “We want the money back, it was money that our clients were supposed to de­posit in our bank.”

According to the vice president, Kim Sophea since 1999 had taken clients’ largely cash de­posits and placed them in his partner’s private account to earn in­terest on the money. When a client would seek a withdrawal, he would sometimes quickly transfer the money back to Ca­na­dia.

“He confessed that he did transfer money back and forth to earn interest, because his family in Ca­nada owed some amount of money, so he needed to fix the prob­­­lem,” Hout Heang said Thurs­­­day.

Phuong Khinh Hoa said the former department head has pro­mised to repay half of the $1.5 mil­lion he earned from the clients’ deposits. “After we get back the money, we will ask po­lice to take action against him on trust violation,” he said.

Noting that Kim Sophea had logged 8 years of service at the bank, he said “we over-trusted him…this staff member has broken our trust.”

On Thursday, National Bank of Cam­bodia Director of Bank Su­pervision Phan Ho said he had not heard of the case and could not comment.

Cambodia’s banking system has long been plagued by low pub­lic confidence in the security of its deposits. The failure of 11 of 31 commercial banks in 2000 deepened public distrust of the banking system.

In December, international in­vestment ratings service Moody’s re­ported that for banks, “the operating environment remains highly challenging and public confidence in the financial system is still lacking.”

As of December, according to Sok Hach of the Economic In­sti­tute of Cambodia, only 21 percent of the country’s gross domestic product was recorded through the banking system, and many sus­pect that three times as much foreign currency circulates among the public as is held in the county’s banks.

 

 

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