Speech by parliamentary Opposition Leader, DAP Secretary-General and Member of Parliament for Petaling, Lim Kit Siang, in the Committee Stage of the Second Development Supplementary Estimates 1979 on Tuesday, June 26, 1979
Why UMNO and Barisan Members of Parliament have no sense of outrage at the hundred million dollar betrayal by Bank Rakyat? It is because the list of Bank Rakyat loan defaulters read like an UMNO roll call including State Chief Minister and Exco members?
Last September, the Prime Minister, Datuk Hussein Onn, scolded the UMNO General Assembly because no one had raised the question of Bank Rakyat’s bankruptcy and betrayal of its members who are mostly poor fishermen, farmers, and low-rung government servants.
Yesterday, in the policy debate on the Finance Minister, Tengku Razaleigh’s request for another $55 million to bail out the Bank Rakyat, I was shocked at the speeches of UMNO and Barisan Members of Parliament. There was no sense of outrage, anger or even concern at the catalogue of crimes, malpractices, mismanagement, misuse of public trust and funds fully documented in the Price Waterhouse Report on the Bank Rakyat.
Is this because the Bank Rakyat loan defaulters read like a UMNO roll call, including the Chief Minister of Malacca, Mohd. Adib bin Haji Mohd. Adam, who on 31st Dec. 1975 owed Bank Rakyat $357,839, which sum increased to $414,826 in June 1977? And which include the Kedah Executive Councillor, Zainal Abidin bin Johari, who took a $800,000 loan from Bank Rakyat in March 1975 to be repaid in 18 months, but until June 1977, there had not only been no loan repayments, but no payments of interest since the loan was disbursed. As at 30th June 1977, the balance outstanding from YB Zainal Abidin had increased to $1,084,672. It also included former UMNO Kedah Assemblyman, Haji Sapirol bin Haji Hashim, who took a loan of $170,000 for a period of one year, but which on 30.6.1977, was still outstanding at $128,820?
UMNO and Barisan backbenchers, who usually have a lot of things to say, for instance taking three days on the Sports Council, had very little to say on the colossal Bank Rakyat scandal which necessitated expenditure of $155 million of public funds to rescue it. Is this because they do not want to damage their chances to secure loans, not only from Bank Rakyat, but from other government or semi-government institutions like MARA, Bank Bumiputra, Pernas, etc. Where a million-dollar loan can be taken without having to repay or even to pay interest, as in the case of Y.B. Zainal Abidin bin Johari?
I want to ask UMNO and Barisan backbenchers where is their sense of responsibility, morality and integrity that they could feel no sense of outrage, anger or even concern at the colossal betrayal of the New Economic Policy in the Bank Rakyat scandal, where loans are given out to close friends and relatives with no security or even no requirement to repay, resulting in the Bank Rakyat having to write off $19.391 million for bad and doubtful loans; where Bank Rakyat undertake transactions to benefit individuals rather than the Bank. Is this because they are conscious of the adage that they who live in glass houses should not throw stones?
In fact, the Bank Rakyat scandal can be aptly described as the Greatest Swindle of the Rakyat, but listening to UMNO and Barisan MPs, they seem not only to be quite smug and complacent, and unconcerned, but even trying to play down the enormity of the crime and betrayal of the NEP and the masses of farmers and fishermen.
The Member for Pasir Puteh for instance said that if the DAP is in power, we will also do the same thing as happened in Bank Rakyat, wanting to create the impression that the Great Bank Rakyat Betrayal is in fact a common-day occurrence. And the Member for Pasir Puteh is probably right, because as I said yesterday, the corruption, malpractices, misuse of public funds and trust, and mismanagements exposed in the Price Waterhouse report in Bank Rakyat also equally afflict other government corporations and public enterprises and companies.
For instance, yesterday I said that five years ago Bank Bumiputra gave a $2 million loan to a Deputy Minister just to buy shares and make millions, which is a great betrayal of the NEP. Nobody is interested or brave enough to challenge me on the veracity of what I said, because they all know it is true.
I say shame to UMNO and Barisan Members of Parliament, who have not needed the Prime Minister’s fury expressed at last September’s UMNO General Assembly for trying to ignore or cover up the Bank Rakyat scandal. And it is the great misfortune of the House and the country to hear such a sycophantic and sniveling speech by the Gerakan Member of Parliament for Kepong, Dr. Tan Tiong Hong, who could be so bereft of indignation and anger at the betrayal of the farmers and fishermen as to criticize the Opposition. He may be better advised to emulate his MCA colleagues in the Dewan, who are behaving like the traditional three monkeys, who see not, who hear not and who know not what is happening in the House or in the country by keeping completely silent.
Let me tell the Member for Pasir Puteh that the DAP will not be like UMNO and Barisan MPs, in that we would not countenance corruption, malpractices, misuse of public funds and trust, and mismanagement in government corporations, public inquiry to expose and weed out Bank Rakyat-like scandals in MARA, Pernas, UDA, SEDCS, Petronas, Bank Bumiputra, and other public enterprises and companies to bring to book the Great Saboteurs of the NEP in the top echeleons of these organizations. But the Member for Pasir Puteh is opposed to such a public inquiry, to weed out the Great Saboteurs of the NEP. I do not know why he wants to defend the Great Saboteurs of the NEP, but it shows clearly his political and personal inclinations.
With the present allocation of $55 million, the Government would have given $155 million loan to Bank Rakyat to save it from bankruptcy. I want to know for how long this Salvation period is to take, and when the $155 million loan would be repaid to the Government. I also want to know whether even more public funds would be needed for the future to salvage Bank Rakyat.
In moving the Bank Kerjasama Rakyat Malaysia Berhad Special Provisions Bill in the Dewan Rakyat on Dec. 19, 1977, which provides for the Government take-over of the Bank, the Prime Minister said that during the Government take-over of Bank Rakyat, he and the Finance Minister are entitled to a quarterly report from the Bank. I am disappointed that in his speech yesterday, the Finance Minister has not given the House and country a report on the latest banking operation and position of Bank Rakyat, of which the House is entitled to know, considering that the House is approving $155 million to Bank Rakyat.
In my view, during the period of Government take-over of the Bank Rakyat, the Bank Rakyat should come under the purview and jurisdiction of the Public Accounts Committee of the Dewan Rakyat, to ensure that public funds are properly accounted for and used, and I hope that the Minister of Agriculture would take up this matter with the Prime Minister and the Cabinet, and make the necessary legislative changes.
The House is also entitled to know what the Bank Rakyat is doing about the long list of loan defaulters, and wants an assurance that regardless of position, status, or party affiliation, legal action would be taken against such defaulters, because public money is involved. What action has been taken against the Bank Rakyat auditors, Kassim, Chan & Co. whose negligence have contributed to Bank Rakyat losses.
What action has been taken against Bank Rakyat’s auditors, Kassim Chan & Co. whose negligence have contributed to Bank Rakyat losses?
One of the sorriest episodes in the Great Bank Rakyat Betrayal is the role played by the Bank’s auditors, Kassim, Chan & Co. As stated in the White Paper on Bank Rakyat:
“The malpractices in the Bank were largely attributable to the Managing Director and certain officers of the Bank. However, if the Chairman, the Board of Directors, the Registrar General of Co-operative Societies and the external auditor had properly discharged the functions and responsibilities imposed on them, they could have prevented the management from perpetuating the malpractices and thereby could have reduced the losses to be borne by members of the Bank.” – Para 45.
The auditors, Kassim, Chan & Co. failed to comment on a number of important issues in the 1973 and 1974 accounts. Price Waterhouse investigations also revealed that the auditors did not sufficiently comment on;
- the maintenance of proper accounting records;
- the provision of doubtful loans;
- the valuation of investments in stocks and shares when the market price was substantially below cost.
There is also a Clear conflict of interest, in that Mohd. Kassim bin Sulong of Kassim, Chan & Co. took a $100,000 loan from Kuala Lumpur branch of Bank Rakyat on 31.1.1974 and although the loan is to be repaid in three years, there was not a single repayment in 1975. As on 30.6.1977, the balance outstanding on this loan is $146,485, which means that one of the auditors of the Bank belong to the long category of loanees who not only do not repay, but also do not pay interest.
In other countries, such negligence and conflict of interest would have resulted in professional action being taken against the firm of auditors, and I want to know what action has the Government taken against Kassim, Chan & Co. for its professional negligence and conflict of interest, leading to such colossal losses.
Such conflict of interest, and inability to differentiate public responsibility from personal interest, to know right from wrong, pervade the entire Bank Rakyat scandal, giving poignancy to the comment by the Chief Justice, Tan Sri Azlan Shah, in the conviction of Datuk Harun Idris in the HongKong and Shanghai Banking Corporation case of “ a frightening decay in integrity of some of our leaders.”
Unfortunately, this frightening decay in integrity not only afflicts political leaders, but also political parties. I refer to the unauthorized kick-back received by Selangor UMNO from the Bank Rakyat amounting to $82,500, which is one of the items adding to the $65,233 million losses suffered by Bank Rakyat.
On 3rd September 1974, Bank Rakyat paid $82,500 to UMNO Selangor as a kickback in the form of an additional interest at the rate of ½% on fixed deposit of $26.5 million lodged with the Kuala Lumpur branch of Bank Rakyat by the Selangor State Government. This ½% interest was in addition to the rate of interest stated on the fixed deposit receipts, and the Price Waterhouse investigators were informed by a Bank Rakyat official, Mohd. Ghazally Shahabudin, that this was agreed verbally between Datuk Harun and Abu Mansor Basir. Mohd. Ghazally Shahabudin also said that he received verbal instructions from Abu Mansor Basir, the Managing Director, to pay the interest to UMNO Selangor.
Section 20.8 of the Price Waterhouse Final Report stated:
“In November 1976, the General Manager of the Bank instructed the Bank’s solicitors to write to UMNO, Selangor for a refund of the $82,500. In his reply to the solicitors, Tuan Haji Ahmad Razali bin Haji Mohd. Ali, the Liaison Secretary of UMNO Selangor and Federal Territory (Setiausaha Perhubungan UMNO Selangor dan Wilayah Persekutuan), confirmed that UMNO Selangor had received the $82,500 as a donation by the Bank to the UMNO Selangor Liaison Fund (Tabung Perhubungan UMNO Selangor). He said that UMNO Selangor was not aware how the funds were obtained by the Bank and that UMNO Selangor was of the opinion that the sum of $82,500 was received in good faith as a donation and would not, therefore, refund the money to the Bank or any other person.”
I am shocked by the stand taken by UMNO Selangor, and in particular, by its Liaison Secretary, Tuan Haji Ahmad Razali bin Haji Mohd. Ali, who is in effect the Deputy Mentri Besar of Selangor, for it shows a complete inability to understand or posses political and moral integrity, that makes him completely unfit to be a State Government leader, let alone Deputy Mentri Besar.
How could Tuan Haji Ahmad Razali have the cheek to claim that “the UMNO Selangor was not aware how the funds were obtained by the Bank”, when during the operative period, the Chairman of UMNO Selangor was none other than Datuk Harun Idris, who was also Selangor Mentri Besar and Chairman of Bank Rakyat.
In the Hongkong and Shanghai case, Tan Sri Raja Azlan Shah said it was ‘incomprehensible’ how a man of Datuk Harun’s position ‘could not recognize corruption for what it is’. It is now clear that this is not an isolated lapse, but this is inability to recognize ‘corruption for what it is’ afflicts the Deputy Mentri Besar of Selangor, Tuan Haji Ahmad Razali bin Haji Mohd. Ali, all the Selangor UMNO leaders, and even Members of Parliament from the Barisan Nasional in this house, unless they are prepared publicly to admit that this $82,500 is tainted money, a kickback which is derived by corruption.
How could there be an effective war against corruption in Malaysia, how could NBI have effectiveness, when top political leaders in the nation and in the states could not recognise ‘corruption for what it is.’, and even MPs like the MP for Tanah Merah, Hussein Mahmud could stand up in this August chamber and defend corruption.
This $82,500 belongs legally, morally, to Bank Rakyat and Selangor UMNO must refund this money to Bank Rakyat if it is not to be guilty of aiding and abetting corrupt practices, and of robbing poor farmers, fishermen of their money and become a Saboteur of NEP.
As the Government is asking for another $55 million to Help Bank Rakyat meet its losses, which include the $82,500 unauthorised kickback to Selangor UMNO. This is unacceptable, and this is why I will move an amendment to reduce the $55 million by $82,500, which must be coughed out by Selangor UMNO.I call on every Selangor UMNO Member of Parliament, including the Deputy Finance Minister, Datin Rafidah, to declare their stand, on whether they support the MP for Sepang and UMNO Youth Leader, Haji Suhaimi, and condone such corrupt practice, or whether they oppose.
I will be calling for a division on the vote on my amendment, because fundamental question of political integrity of political parties, especially the ruling party, is involved, and I hope that this division call and my amendment will get the support of MPs, whether from UMNO, Barisan or PAS, who treasure the principle of political integrity as a higher principle than even party affiliation.