Philippe Lenain, the former director of Indochine Insurance, has demanded $4 million compensation from the Ministry of Finance over the government’s closing of his business, according to documents obtained Wednesday and Thursday.
The complaint, received by the Finance Ministry on April 7, accuses the government of violating an agreement between Cambodia and France on the protection of investment.
According to a copy of the letter sent to Finance Minister Keat Chhon, Lenain, who fled to France after his company was shut down last year, claimed that a pattern of behavior by the ministry—including ignoring commitments by French insurance giant Macif and the French Development Agency to finance the $7 million Indochine needed as a capitalization requirement—violated the joint government agreement.
Indochine has not “collapsed into insolvency,” Lenain wrote in an e-mail Wednesday. “It was brutally shut down by the Ministry of Finance which froze all bank accounts, put 60 employees out of employment and drove me as a refugee into the French Embassy after confiscating my passport.”
Lenain’s demand comes during this month’s plan to privatize the state-run Caminco insurance company.
Vong Sandap, general director of Caminco, would not comment on Indochine on Wednesday.
A high-ranking source in the Finance Ministry said he also could not comment on Indochine “because it could affect relations between countries, it is a sensitive case.”
Lenain said that the Ministry of Finance will have trouble finding investors to buy into the 49 percent stake in Caminco that is on offer, because of ongoing litigation between Indochine and Caminco over a $3.5 million insurance claim of a garment factory that burned down in May 2003.
Court documents provided by Lenain show that Phnom Penh Municipal Court decided in January 2004 that because Indochine sold the Grandtex garment company its fire insurance when Indochine operated as an agent of Caminco, Caminco owed 20 percent of the $3.5 million fire insurance claim.
However, an August, 2004 Municipal Court judgment, which upheld the validity of the Caminco-Indochine-Grantex insurance contract, nullified the order for Caminco to pay 20 percent.
Tim Smyth, director of Indochina Research, agreed this week that finding a partner for Caminco may be difficult. “It is usually best before trying to raise equity for a company to establish a reputable brand,” he said.
Smyth said that the loss of Indochine, which held over 50 percent of the market, initially decreased competition and availability of service but now the company’s former competitors are able to provide for local needs. Large investments, however, still have trouble securing insurance, he said.
