When the new director general of the country’s largest demining agency takes the reins at an official handover ceremony slated for today, he will face the daunting task of wading through and reforming a confusing entrenched finance system fraught with irregularities and possible corruption.
Lieutenant General Khem Sophoan will do so with outraged, anxious donors looking over his shoulders—last week Denmark joined the US and Australia in announcing it has frozen funds to the agency. About $3.5 million will stay in the bank for now, according to news reports there.
Meanwhile, the specter looms that a second audit of donor funds due out in late August or early September could reveal even more damning allegations. While the first audit completed last month examined government funds, the second one will examine spending of donor funds.
Donors have been pushing hard to enact reforms prior to possible revelations that they themselves have been defrauded.
But the high-ranking general will bring with him advantages that have led some donors to express cautious optimism for the future of the agency—which receives more international aid than any government-run agency.
In a world where many war-ravaged nations compete for scarce demining funds, many here are hoping Khem Sophoan will help CMAC fully recover before resources are diverted elsewhere.
Outgoing Canadian Ambassador Gordon Longmuir, a longtime CMAC supporter, recently implied a failure to reform could mean the end of most donor funding. Of the change in leadership, Longmuir said Thursday during his last public appearance: “I am happy to see there are steps taken to get it under control. I think the worst is over….The recent evidence of mismanagement in CMAC, and the actions of some individuals associated with it, has been a great disappointment to me.’’
Lieutenant General Khem Sophoan, whose military career began in 1970, is regarded as a “man of integrity.’’ As RCAF’s top training officer, he has worked closely with diplomats from Western nations that provide military training. He trained in the US for six months in 1993.
“He is certainly known as a man of high integrity,’’ said one Australian diplomat. “In the dealings we have had with him, he more than impressed us with his military skills and ability to handle a staff.’’
Said one Asian diplomat: “He is a good man. He takes his mission with a lot of responsibility and is respected by his men.’’
Whether those qualities will be enough remains to be seen.
A KPMG audit of government funds, obtained by The Cambodia Daily earlier this month, reveals the depths of the problems. It marks 16 “finance’’ problem areas “high priority.’’
In addition to misappropriating $494,899 in fraudulent salaries, the agency cannot account for $102,177, according to the audit.
Government funds were dispersed to CMAC in riel. The money was then converted to US currency through a money changer not authorized under law, according to the audit. The money changer’s exchange rates were lower than the National Bank of Cambodia, resulting in the loss for CMAC of an unspecified amount of money—and raising the suspicion of at least one donor that CMAC employees may have agreed to trade millions of dollars worth of riel at inflated rates in exchange for a percentage of the difference.
More than $42,077 in disbursements made by CMAC over a three-year period were not supported by adequate documentation, the audit states.
The audit implies vehicles were taken for personal use. Top CMAC officials deny it, but a Ministry of Finance investigator repeated the charges last week.
They also sought reimbursement for items already paid for by other entities—a prospect that highlighted a worst-case scenario for donors: That CMAC billed the government for items already paid for by donors—or vice versa.
The possibility donors could have been defrauded is a daunting one, and could prove devastating to efforts to regain donor confidence if wide scale reforms are not in place, some donors say.
Khem Sophoan will replace only one person, outgoing director general Sam Sotha. Many of the former staff remain in place, including Chairman Ieng Mouly.
Although Ieng Mouly has not had a hand in the day-to-day operations of the agency, he has been taken to task for misuse of CMAC vehicles, and has been implicated in at least some of the irregularities by CMAC staffers. The audit also accuses him of hiring relatives for important positions in the agency. Ieng Mouly has denied all the allegations.
But Khem Sophoan has advantages Sam Sotha did not, donors say. In addition to his good reputation, his position in the military will make it easier for him to deal with lower-level RCAF personnel grabbing demined land.
Even so, one former resistance fighter who fought with Khem Sophoan in the Khmer People’s National Liberation Front, questioned his ability to enact reforms. “Integrity and technical skills he has, but courage to reform, the strength to reform, I would not count on him,’’ the man said. “In Khmer there is an expression: They say Khem Sophoan is like the tops of pine trees. He moves whichever way the wind blows.’’