Hun Sen Orders Investigation of Acleda Bank

Prime Minister Hun Sen has ordered an investigation into Acleda Bank after receiving a complaint that nearly 100 poor farmers, some unable to pay back loans as small as $20, had been thrown into jail.

But Phan Ho, director of supervision for the National Bank of Cambodia, disputed the charges against the bank.

“Putting people in jail is an action of the court, not of the bank. The complaint is just an exaggeration of a different case,” he said.

According to Phan Ho, a credit officer from Acleda Bank ap­proached a Pursat province customer in November and asked for repayment on a loan. Instead of repaying the loan, one of the customer’s friends began fighting with the credit officer, who later requested the friend be detained, Phan Ho said.

Acleda Bank Director In Cha­my also said the complaints were overblown. “Acleda has only been involved in four court cases since 1993, and all of those dealt with people who owed more than $2,800,” he said.

Acleda Bank does not pursue litigation against debtors lacking ability to repay small loans, In Chamy added.

“Microfinance in Cambodia is very difficult because in traditional Cambodian culture, money that is borrowed is not always paid back. [But] we would never apprehend people for not paying back $20. I think that the complaint was written with political motives,” he said, saying the complaint was sent to Hun Sen, not the National Bank of Cambodia.

Hay Vanna, a poor farmer from Chong Thnal Village, Kompong Cham province, has a different complaint with Acleda. In his village alone, around 10 families lost property because the bank underestimated property prices, Hay Vanna said.

When Acleda Bank staff identified a customer’s land as desirable for their own personal purchase, the bank would refuse to renew the customer’s loan, then tell the customer the bank could sell the property or have it seized, he said.

They usually provide a price estimate that is only 30 percent of the actual value of the property,  Hay Vanna said.

“I almost fell into the trap be­cause everybody there is poor, in debt, and unable to lend me money or buy my property at its actual value,” he said.

Urooj Malik, country representative for Asian Development Bank, said he would not be surprised if such difficulties emerged within a microfinance organizations. Given the weaknesses of Cambodia’s justice system, the tendency exists for people to “take the law into their own hands,” he said.

Malik said he was concerned about Hun Sen’s investigation, which was announced Friday outside the Council of Ministers. Most microfinance operations had little problems with people paying back loans, Malik said.

“We provide credit to the Rural Development Bank, so this will relate to our operations as well,” he said.

Acleda Bank began as an NGO in 1993 with a mandate to “create sustainable development through the birth of microfinance in Cambodia,” In Chamy said. The bank holds a majority share of the small-scale credit market in Cambodia.


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