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Not all convinced by Cambodia's action on graft

by (c) Copyright Thomson Reuters 2010. Click For Restrictions. http://about.reuters.com/fulllegal.asp | Thomson Reuters Foundation
Monday, 13 December 2010 10:39 GMT

(c) Copyright Thomson Reuters 2010. Click For Restrictions. http://about.reuters.com/fulllegal.asp

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By Prak Chan Thul

PHNOM PENH, Dec 13 (Reuters) - Cambodia has begun to enforce an anti-graft law that came into effect this year but some businessmen and analysts already spot loopholes that could undermine the legislation in one of Asia&${esc.hash}39;s most corrupt states.

Corruption is endemic in Cambodia. Watchdog Transparency International&${esc.hash}39;s 2010 list of most corrupt countries ranks Cambodia 154th out of 178 nations. Fighting it is something of a novelty, and expectations are modest in the near term.

"If they can enforce the law 70 percent, I&${esc.hash}39;d be really happy," said Mong Reththy, chief executive of Mong Reththy Group of Companies, which has interests in agriculture and the ago-industrial sector.

A verdict in the first trial under the new law is due on Dec. 16. It involves a former Finance Ministry official who is charged with embezzling more than ${esc.dollar}600,000 by forging is pay cheques over a two-year period and squandering it all on gambling.

Kuy Dara, former acting bureau director of the Financial Industry Department, is the only person charged. He told the court he acted alone, but his attorney and a prosecutor among others doubt that was the case and believe he is protecting more senior officials.

The Anti-Corruption Institution held a seminar on Dec. 9 for hundreds of government members, state functionaries, police and army officials, explaining how civil servants would be obliged from Jan. 1 to declare their assets and debts.

Its head, Om Yentieng, assured the audience that civil servants&${esc.hash}39; wives and children were not obliged to make any declaration; their cash in banks did not have to be declared, he said, adding his view that corruption was not a big problem.

Those are big loopholes, said San Chey, a fellow of the Affiliated Network for Social Accountability in East Asia and the Pacific, a Manila-based advocacy group.

"When money in banks is not forced to be declared, big officials will just sell their assets and put their cash in banks," he said. "I am not confident in this body."

CHARGES OF TAX GRAFT

The Anti-Corruption Institution has said it had evidence to prove at least 40 Cambodian state tax officials had engaged in corrupt practices.

That investigation was opened after claims by 11 non-governmental organisations that officials were pocketing about ${esc.dollar}1 million a year in road tax payments.

But none of the officials seems likely to be prosecuted.

Instead, the Finance Ministry will be left to decide whether to fire, demote or simply issue a warning to offenders.

Despite its shortcomings, the law has been cautiously welcomed by international financial institutions like the International Monetary Fund and Asian Development Bank, and by foreign investors such as Richard Stanger, managing director of Liberty Mining International Pty Ltd.

"It will assist with improving the perception that foreign investors have of the country," Stanger said. "It will assist foreign investors to make more informed decisions."

Peter Brimble, the ADB&${esc.hash}39;s chief economist in Cambodia, was also looking on the bright side.

"Corruption remains a critical factor for the business environment in Cambodia. According to the World Bank, corruption was the most important constraint faced by the private sector in late 2009," he told Reuters.

"The new anti-corruption law can play a key role in reducing levels of corruption, and is an important signal of the government&${esc.hash}39;s intention to improve the overall business climate." (Editing by Alan Raybould and Jason Szep) prak.chanthul@thomsonreuters.com; +855 2 399 2102; Reuters Messaging: prak.chanthul.reuters.com@reuters.net))

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