Ministry: Gov’t Was Victim of Indochine Scam

The Finance Ministry on Wed­nesday responded to renewed charges by former Indochine In­surance director Philip Lenain that the government improperly closed down his company in 2004.

Hang Chuon Naron, Finance Ministry secretary-general and negotiator on the Indochine case, alleged that Lenain, a French national, had scammed the government out of vast amounts of revenue and that a former director of the state-owned insurance company, Caminco, was fired in 2002 for his part in the embezzlement.

The demise of Indochine, which was the country’s largest insurer until it was shuttered by a government order, has become a diplo­ma­tic issue between Cambodia and France.

French President Jacques Chi­rac asked Prime Minster Hun Sen to solve the Indochine dispute during a visit to Paris in September.

Upping the ante on the two-year-old business dispute, Lenain’s lawyer threatened last week to sully Cambodia’s reputation internationally among investors unless the government compensates for Indochine’s closure. Lenain is seeking $4 million from Cambodia for the closure of his company.

A newly created Web site, www.indochinegate.com, was also launched, which claims that Hang Chuon Naron met in November with Lenain’s lawyers and proposed that Indochine agree to pay a disputed $3 million factory fire claim.

Hang Chuon Naron’s request was a branded a “blatant scam” on the Web site.

“I have kept quiet because I treasure the good relationships between Cambodia and France,” Hang Chuon Naron wrote in an e-mailed res­ponse on Wednesday.

“Mr Lenain was wrong to state that I was trying to have Indochine Insurance endorse a $3 million fire claim…. [The claim] pertains to a case of contract enforcement. I am not a judge. Therefore I have no mandate to force Indochine Insur­ance to endorse it,” he wrote.

Rather than perpetrate a scam against Lenain’s lawyers, Hang Chuon Naron said he had pointed out the “irregularities” in the way Indochine had conducted its insurance business in Cambodia.

Unable to issue its own insurance policies, Indochine was operating between 1994 and 2002 as a sales agent of the state insurer Caminco, Hang Chuon Naron wrote.

Agents normally act as an intermediary between principal insurer and policyholder, and collect a commission of five to 10 percent for their facilitation work. Their responsibility ends when the contract is signed between principal and client, he wrote.

“In reality, as former policyholders of Indochine Insurance could have witnessed, Indochine Insur­ance issued insurance policies in its own name, paid claims, carried out surveys and did everything on its own,” Hang Chuon Naron wrote.

“The most intriguing issue was that Caminco received only 5 to 10 percent of the premiums as a commission fee” and not the other way around, he wrote.

“The Ministry of Economics and Fi­­nance detected the irregula­ri­­ties in 2002. The Director Gen­eral, Mr Oun Taing In, who had worked for many years with Mr Le­nain, was removed in 2002 for cor­ruption and collusion leading to the loss of government revenue,” he added.

In the wake of the discovery and to “stop the monkey business,” the ministry required In­do­chine in 2002 to get an insurance com­pany li­cense. However, under “political pres­sure” the ministry is­sued In­do­chine a conditional li­cense in 2003.

Ultimately, Lenain was shut down when he could not come up with the $700,000 in capital that is re­quired of license holders, Hang Chuon Naron wrote.

Oun Taing In could not be reach­ed for comment.

In his e-mail, Hang Chuon Naron did not address one of Lenain’s central claims against the government: that the French insurance giant Macif had committed to providing Indochine with the required $700,000 capital, but the government had shut the company down regardless.

Lenain wrote by e-mail on Wed­nesday that he would respond to the new allegations today.

The French Embassy responded on Wednesday to claims by Lenain that French diplomats have failed to take Cambodia to task over Indo­chine, a case that he claims has broken an investment protection treaty between France and Cambodia.

“The embassy has intervened on several occasions to facilitate a settlement between Cambodian authorities and Mr Lenain,” French Em­bassy spokeswoman Claude Abily said. The spokeswoman declined further comment.

A former employee of Indochine Insurance said Wednesday that 30 ex-staffers were now jobless and waiting for compensation from the Finance Ministry. Former Indo­chine Administrative Chief Pen Serey said that the ministry paid them their salaries for October 2004, but had not yet compensated them for the loss of their jobs due to the company’s liquidation, as re­quired in the Labor Law.

Bankosal Ming, deputy director of the finance industry department at the Finance Ministry, said the former employees will be compensated once the $3 million factory fire claim is resolved in court.

Foreign reinsurance companies have already paid $2.4 million to the owners of the Grantex factory, and Caminco and Lenain are battling over who will pay the remaining $600,000.

 

 

 

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