Call for a Royal commission of Inquiry into the BMF Scandal

I rise to move:

“That this House

“NOTES the repeated public statements of the Prime Minister and other top Cabinet Ministers of the Government’s resolve to bring to book the ‘culprits’ in the Bumiputra Malaysia Finance loans scandal;

“NOTES the call by the Chairman of the BMF Inquiry Committee, Tan Sri Ahmad Nordin, that a Royal Commission of Inquiry is the only forms of inquiry to establish if anyone is criminally liable in the BMF loans scandal after he had spent nine months to prepare the interim report of the BMF loans scandal;

“RESOLVES that a Royal Commission of Inquiry should be established to investigate into all aspects of the BMF loans scandal and to expose the BMF culprits who have caused Malaysia to lose some $2.5 billion.”

I submitted this motion following the renewed call by the Auditor-General and the Chairman of the BMF Inquiry Committee, Tan Sri Ahmad Nordin, in an interview with the Bernama economic Service on 24th September 1984 for a Royal Commission of Inquiry as the only body with the necessary powers to establish if anyone is criminally liable in the BMF loans scandal. He said that such a commission, headed by a judge, could do more ‘more effective job’ as it could summon witnesses to testify under oath and added that it ‘was still not too late to set up a Royal commission of Inquiry’.

Tan Sri Ahmad Nordin’s renewed call for a Royal Commission of Inquiry after he and the three-man BMF Inquiry Committee had spent nine months to prepare the interim report is a very powerful argument for the establishment of a Royal Commission to get to the bottom of the BMF loans scandal, which is the biggest banking and financial scandal and crisis in Malaysia.

Tan Sri Nordin was referring to a statement made a week earlier by the Bank Bumiputra Executive Chairman, Dr. Nawawi Mat Awin, that action would be taken against anyone shown to have committed any wrongdoing in the BMF loans scandal. Dr, Nawawi said: “I know that the Committee (of Inquiry) will do its best to provide us with relevant information which might be useful in any such action.”


I am not surprised that Tan Sri Nordin had taken umbrade at Dr. Nawawi’s statement which puts the whole responsibility of exposing the ‘culprits’ in the BMF scandal on the Committee of Inquiry, when it had been denied the fullest powers and widest terms of reference.

Parliament and the whole nation must therefore take heed when Tan Sri Ahmad Nordin charged Bank Bumiputra with ‘dragging its feet’ in laying blame for the BMF loans fiasco, and for its slowness to call in question the officers who made out the loans following obvious ‘distress signals’ from the Hong Kong unit.

Tan Sri Nordin said: “I can’t understand why all the furore now. Why do they have to wait so long for the committee to be appointed?

“Bank Bumiputra has enough resources at its disposal to bring those responsible to book. They have all the time to do it; after all, the records are there.”

The Auditor-General said that his committee could not have been the first to detect guilt in the Bumiputra Malaysia Finance loans scandals, adding:

“It is on public record that Bank Negara started its own investigation into the BMF accounts as far back as 1982 and Bank Bumiputra also appointed its own internal auditors to examine the accounts

“You can quote me on this. Why make promises of taking action based on the work of other people, of an independent committee?”

The Auditor-General has asked very pertinent questions, as to why Bank Bumiputra had not taken any action based on previous investigations.

On March 15, 1983, in reply to my question in Parliament, the then Finance Minister, Tengku Razaleigh, said there was no need to call in the Auditor-General to look into the accounts of Bank Bumiputra Malaysia Bhd, and BMF as the Banking Act provided sufficient scope to Bank Negara to investigate into the accounts of any bank deviating from prudent norms, and he said that Bank Negara was already looking into the matter.

On 12th October, 1983, against at question time, Tengku Razaleigh replied to me that there was no need for a Royal Commission of Inquiry into the BMF as investigations by Bank Negara and others were sufficient for the purpose.

At the end of October, the Prime Minister conceded in form but not in substance to the public outcry for a public independent inquiry when he announced that the government would establish an inquiry committee, which was in early January with very restricted powers and terms of reference.

Unless the Ahmad Nordin Inquiry Committee, which was established as a house-committee as it was appointed by Bank Bumiputra, made public its report and findings, it would be merely duplicating the ground that should have been covered by Bank Negara, the Bank Bumiputra’s internal and external auditors, which had conducted investigations into the BMF loans scandal.

There is completely no justification for Dr. Nawawi or for anybody to claim ignorance about the BMF loans scandal until they have received the interim and final reports of the Ahmad Nordin BMF Inquiry Committee, and to justify their inaction in prosecuting errant Bank Bumiputra and BMF officials responsible for the loans scandal by passing the buck to the Ahmad Nordin Committee of Inquiry.


I fully sympathise with the predicament of Tan Sri Ahmad Nordin, for as presently constituted, the Committee of Inquiry was legally incapable of further action which would be published as a matter of public record as it does not have the legal powers and immunity to protect against possible suits filed by people whom the committee considers criminally liable for the bad loans.

In retrospect, more and more Malaysians are of the view that Ahmad Nordin Committee of Inquiry was a ‘grand’ delaying tactic, which succeeded in pacifying the public outcry in Malaysia following the shocking revelation in the Hong Kong magistrate’s court on 4th October that Carrian group owed BMF at least $1.7 billion, and no one knows what has happened to almost half the money of about $769 million!

However, the establishment of the Ahmad Nordin Committee was not meant to have a ‘through, no-holds barred’ inquiry into the BMF loans scandal, nor was it meant to be an exercise to fulfil the government’s obligations of accountability to the public with regard to Bank Bumiputra and BMF stewardship of public funds.

Tan Sri Nordin, for instance, has publicly said he did not understand the delay over the release of the committee’s interim report, as a speedy release would put an end to misleading speculations and misconceptions.

It is understood that the Ahmad Nordin inquiry committee interim report was submitted to Bank Bumiputra on August 17, 1984, and the Malaysian public are mystified as to why the interim report had not been made public after two months.

As the Ahmad Nordin interim report could not have produced very many shocking revelations unknown either to Bank Bumiputra, Bank Negara or the Government in view of the fact that previous investigations into the BMF scandal had been conducted by the Bank Bumiputra’s internal and external auditors, Bank Negara and others, the delay in releasing the interim report to the public could only stem from the refusal of the government to honour its pledge there would be ‘no cover’, of the BMF loans scandal.


At the United Nations General Assembly recently, the Prime Minister, Datuk Seri Dr. Mahathir Mohamed, declared that Malaysia ‘says what it means, and means what it says’.

I call on the Prime Minister to honour this pledge at the world forum by proving that it ‘says what it means and means what it says’ in immediately releasing the Ahmad Nordin inquiry committee interim report to the public.

It would indeed be most ironic and even tragic if the Auditor-General, famous for his impeccable integrity, should be used as an instrument against his own free will in the latest ‘cover-up; of the BMF loans scandal.

All Malaysians want to know why the various government agencies should take such a long time to study the BMF loans inquiry committee interim report which the committee completed in seven months, especially as these various departments had already conducted their own separate investigations.

Is the Government going to take a longer time to study and make up its mind on the Ahmad Nordin inquiry committee report which was completed in seven months?

I get the distinct impression that the Government was forced by public pressure to form the Ahmad Nordin BMF inquiry committee, but it had never intended to take the inquiry committee or its findings seriously.

The spate of contradictory statements by Cabinet Ministers about the BMF inquiry committee interim report is a good case in point.

On 14th September 1984, when announcing the Petronas rescue of Bank Bumiputra with $2.5 billion of oil money, the Finance Minister, Daim Zainuddin, said he was studying the Ahmad Nordin committee interim report, and that he would decide what to do once he had finished studying it.

But the very next day, on 15th September 1984, the Prime Minister said that the government would make public the findings of the inquiry into the BMF affair once it has been studied by Bank Negara and that the interim report had been submitted to the Bank Negara.

This is unthinkable, the Prime Minister and the Finance Minister saying two different things about the BMF interim report. Either they are in their own separate ways trying to mislead the people of Malaysia, or it shows that they do not take the BMF interim report seriously and are merely interested in stone-walling government’s accountability to the public on the BMF affair. Who now is causing delay in the release of the interim report: Bank Bumiputra, Bank Negara or the Government itself?

And then on 25th September 1984, came the startling statement by the Acting Finance Minister, Datuk Sanusi Junid, who said there was ‘no reason why we should now be excited’ over the BMF affair as the money involved has gone, and his later statement about the difference between ‘thief with loot in his hand’ and the ‘thief whose loot is gone’.


The clue to the government leadership’s attitude towards the Ahmad Nordin BMF Inquiry Committee is to be found in the Finance Minister’s press conference statement on 14th September when he announced the Petronas take-over of Bank Bumiputra. Daim Zainuddin said that with the Petronas take-over of Bank Bumiputra, the Ahmad Nordin inquiry had been ‘overtaken by events’ and it should now concern itself with the criminal and not technical aspects of the bank’s problems

I find Daim Zainuddin’s statement most disturbing, for is he unilaterally now restricting the terms of reference of the Ahmad Nordin Inquiry Committee for the purpose of its final report?

When the Prime Minister announced the formation of the three-man BMF Inquiry Committee headed by Tan Sri Ahmad Nordin, the committee’s term of reference were given as “to determine and enquire into and report” on the BMF affairs with reference to:

• The management and control of its operations;

• Whether there has been any misuse, misapplication or misappropriation of any of its funds;

• The extent and nature of loans or credit facilities granted by BMF to the Carrian group of companies and the companies associated with its chairman, George Tan, and Eda Investments Ltd;

• Whether such loans and credit facilities were approved in compliance with the law and/or lending procedures of the company and were disbursed in accordance with the terms and conditions stipulated by the approving authority, and whether, in all the circumstances, they were made bona fide in the interest of BMF and consistent with normal prudent banking and commercial practices;

• The person or persons involved in processing and approving such loans or credit facilities;

• Whether such person or persons and/or any director, officer or person, directly or indirectly involved with the administration of BMF, has by himself or by a member of his family or agent received or agreed to received any benefit either in money or money’s worth or by whatever called from:

a) BMF in addition to his ordinary remuneration or
b) The borrowers or any of them, and if he has, his identity and the identity or identities of the borrower or borrowers as the case may be;

• Any irregularities, frauds or breaches of trust or action in disregard of honest commercial practice of contravention of any law in respect of the administration and operations of BMF; and

• The measures which in the opinion of the committee are necessary in order to ensure due and proper administration of BMF in the future.

If the Ahmad Nordin Committee of Inquiry confines itself merely to the criminal aspects of the BMF loans scandal, it would mean the removal of about 80 per cent of the committee’s original terms of reference. This also provoked an explanation by Tan Sri Ahmad Nordin that his committee has no powers of criminal investigation and cannot by itself determine whether anyone involved with lending activities of BMF of Hong Kong has committed any criminal offence or not.

The Finance Minister’s statement is also a clear violation of the pledge given by the Prime Minister when he announced the BMF inquiry committee that there would be no ‘restriction’ on its probe as ‘the government is interested in getting to the bottom of the matter’.


On the first day of the present Parliamentary meeting, the Deputy Finance Minister, Datuk Sabarudin Cik, had during question time asked me a question which I propose to answer in this debate. Referring to my persistent questions on the BMF loans scandal and the Ahmad Nordin inquiry interim report, Datuk Sabaruddin said he did not understand why I wanted to delve further into the BMF loans scandal and the Ahmad Nordin interim report at this juncture. He asked: “Does he not believe us?”

Let me declare here that it is not only I myself, but the Malaysian people at large, who do not believe the government as far as the BMF loans scandal is concerned.

This is because the government’s handling of the BMF loans scandal and its accounting to the public have been characterised by a series of cover-ups, deceptions and downright lies.

This is why the people want a Royal Commission of Inquiry with unfettered powers to inquire into all aspects of the BMF loans scandal, and why although they have the highest regard for Tan Sri Ahmad Nordin, they have the greatest scepticism about the Committee of Inquiry because of the nature of its constitution and powers. These scepticisms have been proved right as event the Auditor-General had himself become so frustrated as to come out with a number of strong statements in public.

Right from the beginning of 2M Government which boasts of a motto of ‘clean, efficient and trustworthy’ administration had been dishonest with the people of Malaysia in the BMF loans scandal.

In February 1982, for instance, the then Finance Minister, Tengku Razaleigh, said that there was ‘nothing amiss’ in the BMF dealing and the loan situation was ‘nothing more than a normal business problem.’


In fact, Government Ministers had deliberately misled the House about the BMF loans scandal, which is a breach of priviledge. In reply to my question on 15th March 1983, The Finance Minister, Tengku Razaleigh, said that it was still unclear at that stage whether BMF and Bank Bumiputra would actually suffer losses because Bank Bumiputra’s accounts for the year ended December 31, 1982 were still being audited.

In retrospect, Tengku Razaleigh had clearly lies or misled the House for it is inconceivable that in March 1983, the Finance Minister was not aware that as sure as the sun rises, the BMF and BankBumiputra were going to suffer colossal losses. The Finance Minister may have good reason in not wanting to disclose this knowledge, but it is no justification for him to breach his parliamentary privilege by deliberately misleading the House in claiming that it was still unclear whether BMF and Bank Bumiputra would actually suffer losses.

It is now public knowledge that Carrian Investiments’ fateful announcement on October 26, 1982 of its “temporary liquidity difficulties” which require its debts to be reschedules, opened up the can of worms not only in Carrian, but also in BMF and Bank Bumiputra.

In November 1982, Wardley Limited, the merchant banking subsidiary of Hong Kong and Shanghai Bank, prepared its first report for Carrian creditors, including BMF, which said that Carrian has debts of some HK$2.5 billion, and, after write-offs, net assets also of some HK$2.5 billion. The problem was with cash flow, as Carrian would not be able to meet payments falling due on HK$700 million of debts in 1982, and HK$1 billion in 1983.


To restore some immediate liquidity, Carrian planned a HK$500 million share issue jointly financed by the Hong Kong Bank and the Carrian’s ultimate owners subject to agreement by its creditors for rescheduling of its debts.

Other Carrian creditors may have excuse for being lulled by the Wardley report, but not BMF, for as it was revealed in the Hong Kong magistrate’s court in October 1983, Carrian had all along owed BMF an undisclosed sum of HK$4.6 billion.

According to the Hong Kong Senior Assistant Crown Prosecutor, Warwick Reid, on October 4 in the Hong Kong magistrate’s court, there was “evidence of a systematic scheme of deception and fraud” in relation to the plan to bail out Carrian and that creditor banks were induced to join the rescue plan because Carrian had understated its debts. In the documentation for the bailout plan, the Carrian group said Carrian Holdings owed Bumiputra Malaysia Finance US$35 million, and that Carrian Investment owed BMF nothing, but on the books of BMF, the Carrian group owes HK$4.6 billion which had been confirmed by BMF.

It is therefore very clear that the BMF, and through it Bank Bumiputra and the Malaysian Government, was best-placed than any other banking or financial institution or government to know the real state of the Carrian finances, as the BMF’s HK$4.6 billion debts had not been publicly disclosed.

How can the Finance Minister come to the House in March and claim that it is still unclear whether BMF and Bank Bumiputra would actually suffer losses, when there should be no doubt whatsoever on the question?

From the Wardley memorandum of November 1982, the new asset backing of Carrian Investments seemed to still represent HK$2.50 for every share. But in another report sent to bankers on January 6, 1983, Wardley valued the net asset backing of Carrian Investment shares at just under 15 cents apiece. Wardley’s analysis of Carrian spelt out a simple equation: if HK4.3 billion of debts cannot be rescheduled, the group will be liquidated. Carrian Investments owes HK$2.9 billion, while Carrian Holdings owes HK$1.4 billion.

Again, it must be borne in mind that Wardley never knew until October 1983 that there was the undisclosed $4.6 billion Carrian debt to BMF.

I cannot believe that Tenku Razaleigh, as Finance Minister, did not know about the BMF’s precarious financial situation arising from its as yet undisclosed $HK4.6 billion loans to Carrian, many of which are unsecured, for he would then had been grossly negligent and incompetent.

He might not have been a free agent when he misled the House on 15th March 1983 in stating that it was still unclear whether BMF and Bank Bumiputra would actually suffer losses, but this is a gross breach of privilege which should not be allowed. I officially propose that Tengku Razaleigh should be referred to the Committee of Privileges for his statement in the House of March 15, 1983 which deliberately misled the House on a matter of principle. I am not asking for any ‘pound of flesh’, but Ministers however senior must not be allowed to get away scotfree when they committed breach of privilege.

Even the Prime Minister, Datuk Seri Dr. Mahathir Mohamed, had not been truthful and honest on the BMF scandal.

Thus in his two-yearas-Prime Minister interview which came out in the press on 16th July 1983, Dr Mahathir, when asked about the BMF loans, said:

“I dont’s know about BMF but Bank Bumiputra, the parent company, is in a position to supervise the BMF especially after the Government came out with the statement in support of the bank.”

He also said:

“We are confident that we can recover most of what had been committed by BMF.”

But less than three months later, at the press conference on 11 October on the BMF after the Hong Kong court revelations about the at least $1.7 billion BMF loans to Carrian, the Prime Minister said that he was kept fully informed about the BMF loans by the Bank Bumiputra Executive Chairman, Dr. Nawawi Mat Awin, including the ‘moment the Hong Kong property market collapsed’. He estimated that only some 25-30 per cent of the BMF loans could be recovered.


There was again the unseemly dispute as to who was in charge of Bank Bumiputra, whether it was the Prime Minister (as claimed by Tengku Razaleigh in February 1983) or the Finance Minister (as claim by the Prime Minister in reply to my parliamentary question in October 1983)!

Bank Bumiputra had also its host of lies and deceptions.

I said during last year’s budget debate on 24th October 1983 that the Bank Bumiputra’s Executive Chairman, Dr. Nawawi Mat Alwi and the Bank Directors should be prosecuted for non-compliance with the Companies Act requirements in Section 169 for their misleading 1982 Directors’ Report and Accounts.

In view of the BMF loans to Carrian, and the Wardley reports of November 1982 and January 1983, how could the Bank Bumiputra Board of Directors certify in June 1983 that no circumstances had arisen which would render one Bank’s existing method of valuation of its assets and liabilities ‘misleading and inappropriate’, and that there was no ‘item of abnormal character’?

I commend Umno Youth Exco Member, Tamrin Ghafar, for his courageous stand in early November in supporting my contention that the Bank Bumiputra’s non-disclosure as to the possible losses to the bank from Carrian group collapse in its 1982 accounts was a ‘serious breach of several laws’.


Another instance that comes to mind is the attempt by Dr. Nawawi to deny or mislead the public about Jalil Ibrahim’s functions in BMF in Hong Kong after he was murdered on July 18, 1983.

In his first public response to Jalil’s murder, Dr. Nawawi denied press reports that Jalil was auditing the BMF’s accounts in Hong Kong. Dr. Nawawi said Jalil was sent to Hong Kong to ‘strengthen’ BMF’s administration, and denied that he was sent to Hong Kong in connection with the BMF loans.

This is a slur on the good name of a person who had died in the course of duty, as during Jalil Ibrahim murder trial, it was brought out that Jalil Ibrahim was auditing the BMF loans to Carrian, and that he had tried to block a US$4 million loans from BMF to Carrian which was the key to a plan to save the tottering Carrian empire.

The murder trial heard evidence that on the day that Jalil Ibrahim was murdered, Carrian had to secure approval of the US$4 million BMF loan if the Carrian rescue plan was to proceed, or the whole plan would have been aborted.

The trial also heard evidence by the former BMF Assistant General Manager, Henry Chin, who testified that Jalil Ibrahim had queried whether the Bank Bumiputra’s supervisory committee for BMF had authorised the US$4 million loan to Carrian in a telephone call from Regent Hotel in Hong Kong before his murder. When Jalil Ibrahim did not return to the office after his departure from the BMF office at about noon on July 18 to meet prominent Malaysian businessman, Tan Sri Ibrahim, Henry Chin was pressured by the BMF Chairman, Henry Chin said he learn subsequently that the US$4 million loan to Carrian was approved later by the Bank Bumiputra supervisory committee.

The question that leapt to public mind is that as the natural conclusion of any person is to link Jalil’s murder with the BMF loans scandal, why is it that Dr. Nawawi went out of his way to try to rebut that possibility?

Although Bank Bumiputra later introduced a statement in the Jalil Ibrahim murder trial asserting that the Bank Bumiputra supervisory committee had not ‘authorised, approved or ratified’ the US$4 million loan to Carrian of July 18, 1983, the many questions raised by this episode had not been answered. Does this mean that even until July 1983, despite the establishment of the supervisory committee and the dynamic chairmanship of Dr. Nawawi, the BMF was still uncontrollable and could release and approve loans at its whim and fancy without reference to the parent company?

Dr. Nawawi had said that Bank Bumiputra will present a special award to Jalil Ibrahim, and the Prime Minister has also announced at the UMNO General Assembly in May 1984 that the government would give Jalil Ibrahim a posthumous award as he ‘defended the dignity of the race’. The Malacca State government has given Jalil a posthumous award and the Minister for Land and Regional development, Adib Adam, had described Jalil as a ‘pejuang ekonomi negara’.

I feel that if we in Malaysia want to really to honour Jalil Ibrahim’s dedication in protecting the public interest and funds in the BMF and Bank Bumiputra, then we should honour him not by giving posthumous awards only but in continuing his work to expose the BMF scandal.

I think there is no better way to honour Jalil Ibrahim than to have a Royal Commission of Inquiry into the BMF scandal to finish what he started which will really be honouring him, then giving him posthumous awards but to engaging in a major ‘cover up’ of the BMF scandal.

To only give Jalil Ibrahim posthumous awards but ‘covering up’ the BMF scandal would in fact be dishonouring Jalil Ibrahim’s name and sacrifice!


Last week, the Bank Bumiputra Executive Chairman, Dr. Nawawi claimed that he was innocent and had not approved or authorised any loan to Carrian or to any Hong Kong group, Malaysians are no more interested in hearing any plea from the BMF and Bank Bumiputra characters, but only in the facts adduced in an independent public inquiry.

Dr. Nawawi’s predecessor, Kamarun Arrifin, had like him, also publicly claimed innocence. Where then is the guilt?

According to a Star report of 3rd October 1984, the BMF inquiry interim report revealed that Bank Bumiputra lend about $1 billion through BMF to Carrian and George Tan related companies after the collapse of the property market in Hong Kong in 1982. Only about 20 per cent of the BMF’s $2 billion loans to Carrian were given out in the first two years (1980 and 1981), another 20 per cent in 1982. About 30 per cent more was lent out after the collapse of the Carrian group in 1982 and the remaining 30 per cent given out last year.

Dr. Nawawi become Chairman of Bank Bumiputra in April 1982, and I do not see how he could disclaim responsibility, unless he is another Kamarul Ariffin who claims that he does not know what is happening in his Bank and Group!

Dr. Nawawi should realise that his continues tenure as Bank Bumiputra Chairman can do no good for Bank Bumiputa. After the 1983 Bank Bumiputra report which declared a loss of $967 million, and being responsible for the $2.5 billion BMF bad debts, he could still declare that Bank Bumiputra is ‘sound and strong’. By his twisted logic, Bank Bumiputra is probably stronger if it could pile up such losses two or three-fold!


The Prime Minister, The Finance Minister and Bank Bumiputra officials have to stuck to their claim that the BMF loans troubles are caused by the collapse of the Hong Kong property market, and implied that it was the result of imprudent and overexposed loans.

Is this really the case?

From published information and figures it is now clear that the Carrian empire was not just the victim of a collapsed Hong Kong property market because of the ‘ham-fisted handling of China relations on the 1997 question’ by the British as Dr. Mahathir alleged, but that Carrian was in fact one of the biggest corporate frauds in recent times. Even the 1980 deal on which Carrian made its reputation – the purchase of the 390-storey Gammon House, now called Bank of America Tower, for the sum of M$449 million and its resale nine months later for M$752 was never completed. The Carrian empire was a maze of fictitious property deals between a multitude of its shell-companies.

What Malaysians should be concerned is that the BMF seems to have a special relationship well beyond the normal client-relationship. Former Bank Bumiputra Executive Director and one of the two BMF Directors at the time of the BMF troubles, Hashin Shamsuddin, had admitted to foreign journals that BMF financed Carrian in the purchase of the Gammon House which started the Carrian rise and fall


Apparently, right from the beginning of the Carrian story, the BMF was intimately involved, as seen in the undisclosed HK$4.6 billion BMF loans to Carrian and the BMF’s involvement in raising the $15 million bail for George Tan when he was arrested and charged in court.

One of the tasks of a Royal Commission of Inquiry when it is established is to ascertain whether the Carrian-BMF relationship was so close that in fact the Carrian was BMF, and the BMF was Carrian!

The latest episode of the BMF loans scandal is the Petronas rescue of Bank Bumiputra and the take-over of the $2.5 billion BMF bad debts. It is a most shocking example of irresponsible juggling around with public funds to avoid public accountability and parliamentary scrutiny of the BMF loans scandal.

It would set a dangerous precedent whereby the Government could avoid public and Parliamentary accountability for breach of trust, mismanagement and gross negligence in Off-Budget Agencies by hiding and absorbing such losses by getting Petronas to use its oil money to buy over such agencies.

The Petronas-Bank Bumiputra deal is a great blow to the efforts by Malaysians to get the government to be accountable on the BMF scandal, as well as to get Off Budget Agencies to be brought under greater control and accountability.

I do not want here to deal with my other contention that the Petronas was acting ultra vires its statutory objectives under the Petroleum Development Act in straying from its upstream, downstream and other petroleum-related activities to buy over ailing banks and absorb BMF bad debts, which I will reserve for another occasion.

What the Government should do in the Bank Bumiputra case is to come to Parliament, as in the Bank Rakyat case, to ask for a $2.5 billion vote to bail out Bank Bumiputra, and submit to parliamentary accountability and approval.


If there is any national consensus on one subject, it is on the need for a Royal Commission of Inquiry into the BMF scandal to ensure that all those criminally, morally, politically and administratively responsible are made to realise the enormity of their ‘heinous crimes’ so that there could be no repetition in Malaysia.

The Prime Minister, the Deputy Prime Minister, the Finance Minister, and even the Bank Bumiputra Chairman, had repeatedly said that action would be taken against those who have been shown to have committed offences in the BMF scandal.

Malaysians have been hearing this promise for close to two years, and are no more interested in hearing them again. What they want is action, for those who are responsible for the country’s loss of some $2.5 billion to be brought to book.

If the Cabinet cannot bring to book the culprits of the BMF loans scandal, then the Cabinets integrity and capability comes under question, for clearly the question will arise as to whether the Cabinet must assume full responsibility for the BMF loans scandal as it could not even find the culprits concerned, or to bring them to book.

In other countries where there is a more developed sense of political morality, scandals like the BMF loans scandal would have brought down the government of the day. But in Malaysia, where we boast of a motto of ‘clean, efficient and trustworthy’ government, the Government is not only morally unshaken, it is cock enough to upbraid Malaysians for being ‘excited’ about the BMF loans scandal, and drag its feet in a long-drawn-out strategy of cover-ups.

If the government is not prepared to set up a Royal Commission of Inquiry, then I would challenge it to hold a referendum to ascertain whether the people support such a Royal commission of Inquiry or not.

The BMF loans scandal is the biggest financial and banking scandal in Malaysia. It is also an acid test as to whether Malaysians are going to tolerate dishonesty, Immorality and corruption in political and public life, or whether they are going to demand increasingly high standards of political and public integrity, morality and honesty.

In 1979, the then Prime Minister, Tun Hussein Onn, made an issue of the $150 million Bank Rakyat mismanagement scandal, and sent the then UMNO aspirant for the Prime Ministership and Selengor Menteri Besar, Harun Idris, to jail.


Malaysians hoped that an exemplary precedent had been set whereby high standards of political integrity and incorruptibility would be expected of all Malaysians in public life, but this exemplary standard had been destroyed b the foot-dragging of the 2M Government, which seemed prepared to tolerate mismanagement of funds 20 times the scale of the Bank Rakyat scandal.

Even now, the government is not prepared to release the Ahmad Nordin Inquiry Committee’s interim report two months after its submission to the authorities.

If the Government is not prepared to come out clean and publicly on the entire BMF loans scandal, and the punishment of all those responsible for it, then the 2M Government can abandon its motto of ‘clean, efficient and trustworthy’ – for it would be a standing joke rather than an elevating motto.

As a result of the foot-dragging of the government over the $2.5 billion BMF loans scandal, I detect a serious deterioration in public integrity and attitudes of government leaders.

Previously, mismanagement or abuses of public funds involving $100,000 or $250,000 would be regarded a very major scandal, but now, with the $2,500 million BMF loans scandal, an attitude is seeping into government circles that mismanagement or abuses of public funds even in the scale of tens of millions of dollars of public funds are not very serious deviations, bearing in mind the magnitude of the BMF loans involved.

Parliament must provide the leadership to check the slide down the slippery slope of corruption, whether legal or moral, for once we become a nation which is used, or tolerate, or cannot get ‘excited’ about corruption, abuse of power and gross mismanagement of public funds and trust, then we are on our way towards a doomed people and nation.


A Royal Commission of Inquiry into the BMF scandal, with full powers to investigate into all aspects of the affair, to expose the persons and events and the forces at work resulting in the BMF scandal, is necessary to save Malaysia’s soul from the pervading corruption in public life.

Such a Royal Commission of Inquiry would serve also as a national notice to all public officers that the country would not tolerate breaches of public trust and dishonesty, which will raise the tone of public service of political and government officers. It will vindicate the cause for which Jalil Ibrahim gave his life – which is to be a guardian of public funds and trust – so that Jalil Ibrahim would not have died in vain.

Such a Royal commission of Inquiry should also inquire into the role of the various government regulatory agencies, like Bank Negara, the Companies Registry, the Ministry of Finances, the Prime Minister’s Department, for the BMF loans scandal would not have occurred if all these government regulatory agencies had fully discharged their duties to the country.

The reasons that have been given by the Prime Minister and the Deputy Prime Minister that a Royal Commission of Inquiry is inappropriate do not hold water. They had said that a Royal Commission has no powers of jurisdiction in Hong Kong, but this disability is also faced by the Ahmad Nordin Committee of Inquiry. A Royal Commission will have powers which the Ahmad Nordin Committee lacks, which is the legal power to subpoena persons, papers and records, with the power to punish for contempt those who obstruct its proceedings. The other reason with regard to banking secrecies can also be taken into account by the Royal Commission of Inquiry, weighing the respective public interest claims of banking secrecies and expose of crimes.

I do not think that anywhere in the world, banking secrecies should stand in the way against the expose and punishment of crimes against the nation and people as in the BMF loans scandal.

A Royal commission of Inquiry, headed by a High Court judge, with the Auditor-General, Tan Sri Ahmad Nordin, as a Commission member, who can bring into the Commission all the work done by the Committee of Inquiry, would be the only answer to the BMF scandal.

Anything less would be to demonstrate lack of seriousness to deal with a scandal of the magnitude of the BMF affair, which will bode ill for the development of a clean, honest, incorrupt and trustworthy national climate for all political and public officials. The 2M government must decide whether it wants to be remembered by its motto of a ‘clean, efficient and trustworthy‘ government or by the BMF scandal.

(Speech by Parliament Opposition Leader, DAP Secretary-General and MP for Kota Melaka, Lim Kit Siang in Dewan Rakyat on the motion to establish a Royal Commission of Inquiry into the $2.5 billion Bumiputra Malaysia Finance loans scandal on October 18, 1984)