In an effort to recoup millions of dollars owed by telephone companies for unpaid overseas call fees, the Finance Ministry has ordered local banks to stop the companies from sending funds abroad until the debts are paid.
At least one company has had its account released since the edict came down six weeks ago, and several others are working out payment schedules with the Finance Ministry, senior government officials said.
One legal analyst said the government action violates investment law and warned such a move could discourage future investors. But senior government officials defended the action, calling it a last-ditch attempt to get back money that has been owed to the government for years.
“Why can’t we do this?” Minister of Posts and Telecommunications So Khun said Monday. “They owed us money. They have a contract. They are obligated to pay us.”
The debt, which stems mostly from unpaid fees for overseas calls that the mobile phone companies have been unable to collect from customers, stretches as far back as 1992. Government officials have estimated the debt could be as much as $10 million.
[JUMP HEAD: Phone Assets]
With the government looking for ways to increase revenues, Finance Minister Keat Chhon issued an order to the National Bank of Cambodia, which in turn ordered commercial banks where the operators have accounts to stop overseas remittances.
“It’s because they owe so much money,” explained Koy Kimsea, an undersecretary of state for Posts and Telecommunications, on Tuesday. “As you know, the government is in great need of money.”
The order, which was approved by the Council of Ministers, never involved a court and no official notification was ever sent to the five companies in question. “I found out a letter was sent by the Ministry of Finance to the National Bank of Cambodia,” said CamTel General Manager Anil Chandra Adhikari. “But officially, I have not been told.”
Two of the five companies, MobiTel and Samart, have since paid their debts, which totaled $2 million in total, according to Keo Vuthin, deputy director of finance for Posts and Telecommunications. At least $4 million is still outstanding, he added.
Tricelcam and Shinawatra met with Keat Chhon two weeks ago to work out a payment schedule, Keo Vuthin said. Shinawatra has agreed to pay within the next 18 months, and Tricelcam by Dec 23. Failure to pay could result in a charge of 3 percent interest or the cutoff of international service, he said.
National Bank Director General Tal Nay Im said Tuesday that she only knew of MobiTel’s bank account being released. The status of Shinawatra, Samart and Tricelcam accounts could not be confirmed, and company managers either were unavailable or declined to comment this week. CamTel’s Adhikari said that his firm’s account is still frozen.
MobiTel General Manager Iain Williams said Monday that he understood that the government needs to collect cash, but said that using the same tactics on companies that were only a few months behind in their payments as on the operators who have been in debt for years is “heavy-handed.”
The move may also be illegal. One local lawyer said the order violated both the investment law and its subdecree that both guarantee a company the right to remit cash abroad.
“This could be very harmful to the investment environment,” the lawyer said. “These companies have financial obligations overseas, debts they have to pay. It’s also really a disincentive to potential investors.”
But government officials insisted the move was neither excessive nor illegal. They said this week they are just trying to get back the money that the companies owe.
“This is only case by case when a company doesn’t fulfill its obligations,” said Council of Ministers economic adviser Te Doung Tara when asked whether the order violated the investment law. He added that the law “does not spell out clearly” the procedure in this kind of matter.
Council of Ministers Undersecretary of State Soy Sokha also said the order was within the government’s right. “If companies always send money abroad and do not pay the government, the government loses a lot of money,” he said Monday. “If the companies are not happy with this, they can complain to the court.”
The operators have no plans to go to court over the issue. But MobiTel’s Williams said he hopes Posts and Telecommunications will assume a partnership in collecting overseas fees from customers. As of now, collecting the fees as well as shouldering the cost of unpaid charges, is the sole responsibility of the private operators and one of the main reasons for the large debt to the ministry.
Koy Kimsea said his ministry is working on a draft agreement that would allow the operators to keep a portion of the fee for international calls that they collect.
Posts and Telecommunications Undersecretary of State Lar Narath said the ministry wants to work out an agreement that is fair for the operators as well as the government. But he added that the ministry has to be strict. “They knew [the system] from the beginning of their investment,” he said. “They agreed. They accepted to do business here.”
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