By Parliamentary Opposition Leader, DAP Secretary-General and MP for Kota Melaka, Lim Kit Siang, in Petaling Jaya on Thursday, 5.7.1984:
DAP calls on the BMF Committee of Inquiry headed by the Auditor-General to widen its scope of investigations to include the BMF Auditors’ heavy qualifications on its 1983 Accounts
Bumiputra Malaysia Finance has taken very swift action to change its auditors from Touche Ross and Company of Hong Kong to Hughes and Company, because of the auditors’ heavy qualifications on the BMF’s 1983 accounts.
Touche Ross and Company had said that they were unable to form an opinion as to whether or not the BMF’s 1983 annual accounts did give a true and fair view of the states of affairs of BMF. It said that that if further additional informations are obtained, it could be expected to make revisions to its audit report accordingly.
Among the auditors’ qualifications are:
Evidence available which shows that certain transactions (by the former board) were not reflected in the company’s books and records, casting doubts on representations made by the former management;
The inability of the auditors to obtain independent confirmation of the accuracy of the accounting records required for auditing;
BMF’s breach of the Hong Kong colony’s Deposit Taking Companies Ordinance (DTC Ordinance) for at least four days in December, this relating to liquidity requirements of BMF;
Late adjustments to BMF’s accounts which had the effect of reducing reported net assets by HK$510 million; and
The inability of auditors to obtain evidence of financial support coming from parent company (Bank Bumiputra Malaysia Bhd.) or that the parent company has the financial capacity to do so in the future.
These are very serious qualifications, which reflect not only on the managerial competence of the BMF management, but also on their integrity as well. The Malaysian public cannot be satisfied with the BMF’s action in terminating auditors’ services, for this does not answer the queries raised by the qualifications.
Bank Bumiputra statement that the BMF’s present net worth would enable the company to continue without outside assistance (implying even without Bank Bumiputra parent company assistance) is part of a propaganda offensive by BMF to show that it is the auditors who are unreasonable, and not the BMF which is in the wrong.
This is clear contradiction to the statement by the auditors, Touche Ross, that “the scale and nature of the company’s (BMF) operations were such that financial support from its Malaysian parent company was likely to be required to enable it to remain in compliance of the Hong Kong DTC Ordinance and to continue as a going concern for the forseeable future.”
The BMF’s 1983 balance sheet shows negative working capital of HK$470.8 million as at end-1983 – a sharp contrast from the positive figure of HK$3,703.9 million only a year eqrlier.
The BMF accounts for 1983 shows a loss of HK$7.68 million, including a bad debt provision of HK$327.12 million. The net current position at the end of 1983 was a deficit of HK$470.77 million, compared with a surplus of HK$1.4 billion at the end of 1982.
Bank Bumiputra must disclose how much money it has pumped into BMF, and what amount of this is repayable and what portion would have to be written off as bad debts.
The Malaysian public are entitled to an independent investigation into the BMF Auditors’ heavy qualifications, and for this reason, I call on the Committee of Inquiry headed by the Auditor-General, Tan Sri Ahmad Nordin, into the BMF loans scandal to widen its scope of investigations to include the BMF Auditors, Touche Ross heavy qualifications on the 1983 BMF accounts, leading to its termination as the auditors of the firm.
The Committee of Inquiry should submit a special chapter on the BMF Auditors’ qualifications with regard to the 1983 report, as to whether the termination of the Touche Ross as the auditors following the adverse audit report was in the best interest of BMF, Bank Bumiputra and the Malaysian public whose funds enabled the Bank Bumiputra to be established, or merely in the best interest of those who want to cover-up the BMF loans scandal, so that it would remain a ‘heinous crime’ without criminals.
Bank Bumuputra and BMF should fully authorise Touche Ross, as the former auditors, to fully co-operate with the Committee of Inquiry, and to enable the Committee of Inquiry to have access to all documents and information available to the auditors.