Speech by Parliamentary Opposition Leader, DAP Secretary-General and Member of parliament for Petaling, Lim Kit Siang, in the Dewan Rakyat on Monday, 25th June 1979 on the second development supplementary estimates 1979
DAP calls for a full-scale public inquiry into all public enterprises and companies to expose and weet out Bank-Rakyat like scandals in their midst to protect hundreds of million of public funds from misuse and misappropriation by the Great Saboteurs of the NEP in these organizations themselves
Reading the Government White Paper on the Bank Rakyat, and the even more revealing Price Waterhouse Report on the Bank Rakyat, I am reminded of the judgement by Chief Justice, Tan Sri Justice Tan Sri Azman Shah, when convicting the former Selangor Mentri Besar, Datuk Harun Idris, of corruption in the Hongkong and Shanghai Banking Corporation case, in May 1976, that the hearing of the case suggested “a frightening decay in integrity of some of our leaders”. He added: “It has given horrible illustrations of Lord Acton’s aphorism ‘Power tends to corrupt and absolute power corrupts absolutely,’ and has focussed concern on the need of some avowed limitations upon political authority.
The Government White Paper, and even more so, the Price Waterhouse Report, tells a sordid tale of malpractices, mismanagement and misuse of public trust and funds, causing Bank Rakyat to pile up losses amounting to $65.233 million up to 31st December 1975, although there were attempts to cover up the losses by manipulating the accounts to alter its loss position to show profits, by for instance, including multi-million dollar management charges as income of the Bank for which there was no proper basis.
The betrayal of the Bank Rakyat, and in particular, the betrayal of the 27,314 members and the 1000 co-operative members, must be merci lessly exposed and condemned, for it constitutes one of the greatest betrayals, of the New Economic Policy, particularly bearing in mind that the members were mostly from the low-income group comprising farmers, fishermen, petty traders and lower rung government servants.
The Bank Rakyat is a good example of how those in control of the institution could create wealth and instant millions, not only for themselves, but also for their relatives and their close friends.
For instance, according to Section 2.12 of the Price Waterhouse Final Report, the Bank Rakyat advanced in 1973 $570,238 to Encik Abdul Aziz bin Haji Idris and Encik Mohamed Noor bin Mohamed for the purchase of three pieces of land in Kajang, which also cost $570,238. Subsequently, the Bank purchased from Encik Abdul Aziz bin Haji Idris and Encik Mohamed Noor bin Mohamed the three pieces of land concerned for $751,006- leaving Encik Abdul Aziz and Encik Mohamed Noor with a profit of $180,769, without having to spend a single cent, on a transaction financed wholly by the Bank.
Again, for a housing project at Kuala Muda, Sungai Petani, Kedah (as reported in Section13.10 of the Price Waterhouse Report), Rakyat Corporation Sdn. Bhd., a wholly-owned subsidiary of Bank Rakyat, acquired a piece of land at Sungai Patani for $435,149 on August 3, 1973, from the ‘registered proprietor’ Chin Tet Yen @ Cheng Tee Lian and Ow Siew Pun, who had themselves bought the land only six weeks ago on 28th June 1973 for $110,000. This means that in a matter of six weeks, the proprietors who bought the land only on June 28 made a profit of $325,148. What is even more intriguing is that on 27th June 1973 the Bank Rakyat Sungai Petani branch chairman manager, Muhsain bin Mohamed, wrote to the Bank Rakyat general manager in the purchase of the land. And it was after the Bank Rakyat Corporation Sdn. Bhd. Directors on 7th June July 1973, agreed in principle to purchase the land at the final sale price, that the land was registered into the names of the Chin Tet Yen @ Cheng Tee Lian and Ow Siew Pun on 18th July 1973.
The Price Waterhouse Report teems with so many examples of mismanagement, malpractices and downright dishonesty on so colossal a scale that it defies the imagination. Transactions of the Bank Rakyat were carried out to benefit individuals rather than the Bank and its members.
For instance, the Bank Rakyat or its subsidiaries would buy over companies which resulted in losses to the Bank Rakyat, though huge profits for individuals. As a result, out of its 10 subsidiaries, Bank Rakyat has run up losses amounting to $37,948 million.
The loan policy of the Bank Rakyat was the height of irresponsibility, with cases of Bank officials having personal interest in the approval of loan applications and, in one case, the Bank’s Credit Controller, whose duty it was to appraise Loans for approval and to follow-up repayments, obtained a loan from the Bank by using the name of a relative. As pointed out by the White Paper, the Managing Director, Abu Mansor bin Basir; the Credit Controller, Khairuddin bin Haji Musa; and several officers of the Bank including Mazlan bin Datuk Harun and Jalaluddin bin Jalil directed the loan operation of Bank Rakyat virtually with blatant disregard for any established rules and procedures.
Price Waterhouse & Co. reported in Section 16.22 that it requested each loan debtor at the Alor Star, Bagan Serai, Kuala Lumpur, Melaka, Johore Bahru, Kuantan and Kota Bahru branchew and the larger loan debtors at the other branches to confirm direct to it the balances outstanding at 31 December 1975. The loans circularized amounted to $48,976,654 out of the total branch loans of $52,481,935 and represented 5,514 accounts. 2,406 loan debtors responded to Price Waterhouse inquiries but no replies were received from the remaining 3,108 loan debtors who owed a total of $30,916,913.
The List of loan defaulters of Bank Rakyat constitutes a UMNO roll call. Even the Malacca Chief Minister, Mohd. Adib bin Haj. Mahd. Adam, has an honoured place in the list of loan defaulters of the Kuala Lumpur branch of Bank Rakyat, whose debt balance stood at $357,839 on 31st Dec. 1975 and which increased to $414,826 in June 1977.
Although in the ‘remark’ column, it is stated that this loan had been restructured, I do not know what it means, although this is one of those rare cases in the Price Waterhouse report on ‘restructuring of loan’.
There are so many loans outstanding at 31st December 1975 which had higher balances outstanding at 31 December 1977, which showed that there had either been no repayments during this period, or that the repayments made were insufficient to repay the interests charged during the period.
As a result, the Bank Rakyat has now to write off the staggering sum of $19,391 million for doubtful loans and 1 bad loans.
While I commend the Prime Minister, Datuk Hussein Onn, and the Minister of , Datuk Shariff Ahmad, for tabling and making public the Price Waterhouse Report on Bank Rakyat, it is most fortuitous that there were any investigatiors into the Bank Rakyat mismanagements in the first place.
This is because if the UMNO leadership was not involved in a power struggle in 1974/1975, the Bank Rakyat scandal would definitely been hushed up. It is an open secret that the investigations on Datuk Harun and the Bank Rakyat was politically motivated- and although it led to an expose of a massive 1 scandal, and to corrective measures, which is welcomed by all right-thinking Malaysians, Malaysian citizens are entitled to know why expose of malpractices, misuse of public funds involving tens and hundreds of millions of dollars, must depend on one UMNO political leader falling out with the UMNO government leadership.
What must have disturbed many Malaysians is that the malpractices and misuse of public funds as highlighted by the audit inquiries are also prevalent in other public enterprises and companies which are entrusted with public funds, and that there are many other Bank Rakyat- like scandal in public enterprises and companies like MARA, PERNAS, tc. Bank Bumiputra, etc.
What the Bank Rakyat officials did, although wrong, was not unusual in that it was also being done in other government and semi-government bodies. For instance, five years ago, Bank Bumiputra gave a $2 million loan to a Deputy Minister just to buy shares.
There is an urgent need, not only to bring home the enormity of the crime and betrayal represented by the Bank Rakyat affair, but also to expose and weed out other Bank-Rakyat like scandals in other government enterprises and companies.
The DAP calls for a public inquiry, in the form of the Price Waterhouse inquiry, into all public enterprises and companies, to safeguard public funds and protect public interest, especially hundreds of millions of public funds have been entrusted to these bodies.
It is there top officials, who abuse their position to make themselves and their near ones rich at public expense, who are the Great Saboteurs of the New Economic Policy to abolish poverty and restructure society.
If the New Economic Policy objective of eliminating poverty and restructuring society, to benefit the masses and not a handful, is to succeed, then the Government must concentrate efforts on weeding out these Great Saboteurs of the NEP from public enterprises and companies.