BMF Scandal: The Seremban Declaration

I am moving a motion to cut the salary of the Finance Minister by $10 to protest in the strongest possible manner against the Government’s handling of the $2,500 million Bumiputra Malaysia Finance (BMF) loans scandal in Hong Kong up to today. As the Prime Minister, Dr. Mahathir Mohamed, has said that the Finance Ministry was and is at all material times responsible for Bank Bumiputra, and the BMF, and not the Prime Minister’s Department, I am moving this $10 cut against the Finance Minister’s salary and not the Prime Minister’s salary.

The Government’s handling of the BMF scandal has completely discredited the present administration’s two most popular slogans: ‘Clean, Efficient and Trustworthy’ Government and ‘Leadership by Example’.

Up till today, the Government has refused to report to Parliament on the BMF scandal showing that it is merely paying lip-service to the principle of parliamentary democracy.

Even more serious, the Government has refused to establish a Royal Commission of Inquiry to conduct a wide-ranging public inquiry into the BMF scandal. Dr. Mahathir Mohamed was reported to have said on October 22 that the government was considering setting up a Royal Commission of Inquiry but a week later, when in Labuan he backtracked and denied having said so and announced that the government had no intention of setting up a Royal commission. He said that the Government would conduct its own inquiry into the BMF scandal.

The UMNO Youth, which had always pride itself in the forefront against all forms of betrayals and deviations from public trust, had been particularly timid on the BMF scandal. It organized an UMNO Youth Rally on the Constitutional crisis but did not think it important enough to organize a rally on the BMF scandal.

All that the UMNO Youth had asked for so far is a White Paper, which is completely unacceptable for it could so easily become a ‘White-Was Paper’.

For the same reason, another government inquiry into the BMF scandal as intimated by the Prime Minister in Labuan statement is completely unacceptable.


This is because firstly, since the BMF scandal came to the government’s knowledge some two years ago, it must have conducted one inquiry after another into the BMF scandal either through Bank Negara or the Finance Ministry or the Prime Minister’s Department, and another government inquiry would be redundant and a mere duplication.

Secondly, what is urgently required at present is a full-scale public inquiry into the BMF scandal, to get to the root of the scandal, to ascertain the real extent of BMF loans in Hong Kong; the amount the BMF, and therefore Bank Bumiputra, Permodalan Nasional Bhd. and the Amanah Saham Nasional shareholders, stand to lose, the persons responsible for the loans; the degree of irresponsibility and negligence of the officials of BMF, Bank Bumiputra, Bank Negara, the Ministry of Finance and the Prime Minister’s Department, and in fact the entire Cabinet, in the sordid BMF saga.

This is why there must be a Royal Commission of Inquiry with full and unfettered powers to investigate into all aspects of the scandal, including the power to summon political leaders and Cabinet Ministers, even the Prime Minister himself, to appear and testify and be examined on the BMF scandal.

This is particularly important in view of the rife speculation that top political leaders, up to Cabinet or former Cabinet rank, are involved in the BMF scandal. There is also the equally rife rumour that the UMNO Building Fund had been a great beneficiary from the BMF-Carrian-George Tan link!

There are various aspects of the BMF-Carrian-George Tan link which raise very disturbing questions involving the integrity and character of political leaders in Malaysia.

The Foreign Minister, Tan Sri Ghazalie Shafie, has admitted that he had in July given ‘friendly advice’ to the British Government not to use BMF documents, procured for an investigation into the murder of Jalil Ibrahim, Assistant BMF General Manager, for investigations into the Carrian affair.

I find Tan Sri Ghazalie Shafie’s ‘friendly advice’ most ill-advised, for it would appear that the Malaysian Government had great fear and foreboding that a thorough inquiry into the Carrian affair, and in particular its master-mind, George Tan, would adversely affect Malaysia’s reputation.

This could only strengthen suspicion that there is a most unusual relationship between Carrian boss, George Tan, not only with BMF and Bank Bumiputra Directors, but also with top political personalities in the country.


Malaysia must prove whether nationally or internationally that she has nothing to hide whether in the full revelations about the Carrian affair or the BMF scandal. Tan Sri Gazalie Shafie should therefore officially contact the British Government to withdraw his ‘friendly advice’ of July, and inform them that Malaysia has no objections whatsoever to the use of any BMF documents in their possession which could throw light on the Carrian affair for which the BMF had committed some $2,000 million of loans.

The second aspect of the BMF-Carrian-George Tan link is the BMF and Bank Bumiputra’s role in helping to raise funds to provide the $15 million bail to get George Tan out of custody in Hong Kong.

The third aspect of this link was pointed out by the Institute for Social Analysis, why when Bentley Ho, executive director of the Carrian group, was arrested on the same day as George Tan on October 2 in Hong Kong by the police, he was trying to board a flight to Malaysia at the Kai Tak airport. Why was Ho trying to come to Malaysia while he was being sought by Hong Kong police?

The fourth aspect of this link is the allegation by the latest Far Eastern Economic Review issue that Bank Bumiputra and BMF had entered into ‘underhand’ arrangements with Carrian with regard to Carrian;s secret assets hidden outside Hong Kong to limit its losses, which may lead to Bank Bumiputra to be ‘ostracized’ by other international banks for such irregular, unethical and even unlawful banking practices.

This brings to mind the attempt by Malaysian businessman, Datuk Mohamed Hussain Mohamed Yusof’s firm of Fleuret to buy Carrian’s Hong Kong assets in one of its strongest subsidiaries, China Underwriters Life and General Insurance Company.

This attempt by the Channel Island-based nominee company is unlikely to succeed as the Hong Kong authorities had taken full control of the firm and a provisional liquidator appointed before the deal could go through.

It is now reported that Fleuret would lose some $6 million in this aborted take-over bid. And if the general suspicion is correct that the Fleuret was acting as proxy for Bank Bumiputra and BMF, then this is again another instance of Bank Bumiputra throwing more bad money after bad money.

Since my budget speech on October 24 on the BMF scandal, there had been more and more revelations about the BMF which cry out for official explanation.

For instance, the Asian Wall Street Journal of 1st November 1983 reported that BMF continues to lend money to Hong Kong property developer Kevin Hsu long after he told creditors he could not repay his debts. Kevin Hsu had been the first Hong Kong property trader to go public in late 1982 with his debt problems, but BMF still lent him HK$3 million on March 30 this year.


The Asian Wall Street Journal also reported that it is believed that the BMF had provided a bank guarantee to bail out Mr. Hsu after the Hong Kong Supreme Court bailiffs had seized his jeweler factory and jewelry store inventory for non-payment of a HK$6 million loan.

BMF is the largest creditor of Kevin Hsu whose total debts were at one time computed to be in the region of HK$1.2 to $1.3 billion.

I call on the Government to heed the demands of the people of Malaysia for a thorough public inquiry by a Royal Commission of Inquiry, as expressed in the great majority won by the DAP national Chairman, Dr. Chen man Hin, in the Seremban by-election on Saturday on November 19.

During the by-election campaign, we presented for adoption by people of Seremban a Statement on the BMF, which the people endorsed decisively on Polling Day. I would urge the Government and Parliament to heed the voice of the people of Malaysia as expressed by the voters of Seremban.

This is the Statement by the People of Seremban on the BMF Scandal on the occasion of the Seremban by-election:

We, the people of Seremban, gathered at the Negri Sembilan Chinese Recreation Club Hall on Friday, 11th November 1983 at the BMF protest rally to resolve to make the following statement for endorsement and adoption by the voters of Seremban on polling day, November 19, 1983:

We, the people of Seremban:

1. Condemn and protest in the strongest possible terms against the $2,500 million Bumiputra Malaysia Finance Loans Scandal in Hong Kong which the Prime Minister Dr. Mahathir Mohamed had described as a ‘betralyal of trus’ and ‘a heinous crime’;

2. Express deep shock that despite the $150 million Bank Rakyat Scandal in the late 1970s, a bitter lesson had not been learned by government institutions and agencies including companies and subsidiaries set up by the government like Bank Bumiputra and Bumiputra Malaysia Finance to the extent that we have now a BMF Scandal which is twenty times more serious than the Bank Rakyat Scandal;

3. Register anger that the BMF Scandal should involve such a vast sum of public monies as amounting to $2,500 million which would gravely undermine the socio-economic development of Malaysians of all races, as the $2,500 million is equivalent or could be used for the following;

a. It would cover Negri Sembilan’s development expenditure for the whole state for more than 12 years;

b. It could be used to start off 100 universities based on the $27 million starting grant to the Islamic International University for 1983;

c. It could be used to build 125,000 low-cost housing units at $20,000 per unit, or two low-cost units for each of the 60,000 voters of Seremban.

d. It could be used to double the police force in the country give them all a 50 per cent pay increase, and still be left with some $1,500 million;

e. It could be used to develop another 150,000 hectares of land to settle at least 30,000 settlers; or

f. It could be used to develop and even rebuild Seremban many times over;

4. Declared the right to know of Malaysians to the whole story of the BMF Scandal and reject any attempt to cover up the greatest Financial and Banking Scandal in Malaysia History;

5. Call for the establishment of a Royal commission of Inquiry to conduct a thorough public inquiry into the BMF Scandal and empower it to investigate into the irresponsibility and negligence as well as malpractices of not only Bank Bumiputra and BMF officials but also Bank Negara, Ministry of Finance and the Prime Minister’s Department as well as the Cabinet;

6. Urge the Prime Minister to live up to his 1982 general election pledge of a ‘clean, efficient and trustworthy’ administration and his earlier pledge to ‘put the fear of God’ in those people who are corrupt by immediately establishing such a BMF Royal commission of Inquiry which should comprise Malayisans of impeccable integrity and character and who could command instant public confidence like the Auditor-General, Tan Sri Ahmad Nordin, the Industrial Court President, Justice Harun Hashim, Aliran President, Dr. Chandra Muzaffar, Consumer Association of Penang President, S.M. Mohd. Idris, Dap National Chairman, Dr. Chen Man Hin, former Opposition Member of Parliament, Tan Sri Dr. Tan Chee Khoon, Selangor Graduates’ Society President, Gurmit singh, and Scholar-Academician, Professor Syed Hussein Alatas;

7. Propose that the BMF Royal Commission of Inquiry should in particular study the relationship between Carrian mastermind George Tan and Malaysian political leaders, whether of cabinet or former cabinet rank, as no Malaysian would believe that a few BMF Directors and Officials could commit $2,500 million of loans in Hong Kong to three companies without the highest political approval, as this sum was five times the total capital and reserves of the parent company, Bank Bumiputra.

8. Propose that the BMF Royal Commission of Inquiry should study as to how the $2,500 million Scandal would adversely affect the Amanah Saham National shares of 1.3 million Bumiputra ASN shareholders as its parent company, Permodalan Nasional Bhd. Holds 80 per cent of Bank Bumiputra shareholdings;

9. Propose that the BMF Royal commission of Inquiry should inquire whether Malaysia faces several more problems similar to those created by the collapse of the Carrian group, as asserted by former Bank Bumiputra Executive Chairman, Tan Sri Kamarul Ariffin, who said that ‘three to four Carrian-like problems are looming within Malaysia in the 1980s’; and

10. Demand the prosecution and punishment of all those persons, regardless of their status or influence, responsible for the $2,500 million scandal for we cannot accept that this is a ‘heinous crime’ without criminals.

The Government should therefore accept the verdict of the people of Seremban in the by-election and heed their call for a wide-ranging Royal commission of Inquiry into the BMF scandal.

In his second-year-as-Prime Minister interview on July 16, 1983, Dr. Mahathir Mohamed said the government would take action against anyone found to be involved in any malpractice in the BMF Scandal. He also said he was confident that BMF could recover most of the loans it gave out in Hong Kong. It is clear that even up to July 1983, Dr. Mahathir Mohamed had not been given the true picture of the BMF scandal, for in less than three months, the Carrian Empire had collapsed bringing down with it the BMF, Bank Bumiputra, unless the Government step in to save it from being bankrupt with the people’s monies. In less than three months, Dr. Mahathir was talking about recovering 25 to 30 per cent of the BMF loans.

Dr. Mahathir should not hesitate anymore to set up such a Royal Commission of Inquiry unless the political leadership has many skeletons it wants to hide from the Malaysia public.

(Speech by Parliament Opposition Leader, DAP Secretary-General and MP for Kota Melaka, Lim Kit Siang in Dewan Rakyat when moving a $10 cut from the salary of the Minister of Finance on November 22, 1983)