Mao Chanthurith, Kampot Provincial Police Chief, said on Thursday that 1,105 people in the province have filed lawsuits against tycoon Hy Kimhong, CEO of Piphub Deimeas, for a total loss of $21,078,960.

Chanthurith added that Kimhong is currently under investigation by the Phnom Penh Municipal Court. He also said that most of the people who filed lawsuits against him borrowed money from microfinance institutions and banks to invest in Piphub Deimeas Investment.

"Most of them want their own capital back from the company," Chanthurith told Kiripost. "We cannot solve this problem and involve the banking sector."

Chanturith said the victims invested in land at Kompongcheu and more than 1,000 people live in Kompot.

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Economist Nget Chou said that only investments that promise profits within the interest rates offered by the banking system and microfinance are legitimate.

“Any investment that promises a profit in excess of the interest rate that the banking system can provide is just a high-interest loan with no collateral and very high risk,” Chou said.

He added that, in particular, investing in real estate that the company promises to be more profitable than the interest rates offered by the banking system is not impossible, and it is not guaranteed.

“The company has no legitimacy to raise capital and promise profits like banking and microfinance,” he added.

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He emphasized that “both thousands of investors and business owners, who invest in real estate to make a profit and promise to turn a profit, are all the same victims”.

He added that the business owner is a victim because he does not understand the business model and that it is high-risk due to the promise of high profits that is not stable.

Poor management of finances and capital accumulated and misappropriated use of anything other than real estate investment purposes, he added.

“Lack of financial management ability, lack of understanding of the sustainability of the business model and promising high profits, it's a risk that this happens is also the greed of business owners,” he said.

He said that to avoid future borrowing problems, one must trust the official financial system, have money to put in the bank to take an interest, buy insurance, and work legally. He added, “avoid investing in companies that do not have a legal business.”

Soeung Sen Karuna, a spokesman at rights group Adhoc, said there are two ways related to investors and companies. The company usually thinks about providing profit first, and the investors should think about what is a stable profit from the company.

“Who acts contrary to the contract of the law and must be properly enforced to avoid the same problem again, we see more cases from tycoons that are not responsible,” Karuna said

The investors, the authorities and the company must obey the law so that there will be no problems and they can receive income or compensation, he added.

He noted that in doing business, according to the contract, if the company makes a profit, it is a joint profit, but if it is a loss, it is a joint loss.

“Investors should think about whether the profits are balanced or not. When there is a problem, only the legal system can find justice to share the losses,” he said.

Representatives of Kimhong were not available for comment on Thursday however, during a police interview on Wednesday, the tycoon denied defrauding investors, claiming he has problems with cash flow and the profits on investment are slow.

Tycoon Denies Defraud to Police

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