BMF Scandal – Malaysia’s Watergate?

A year ago, on 22.11.1983, I moved a $10—cut motion on the Finance Minister’s salary to protest in the strongest possible manner against the Government’s handling of the $2.5 billion Bumiputra Malaysia Finance (BMF) loans scandal in Hong Kong, as it had completely discredited the 2M administration’s two most popular slogans of ‘Clean, Efficient and Trustworthy’ Government and ‘Leadership by Example’.

Today, I am moving a second $10-cut motion again to protest against the new Finance Minister’s unprecedented ‘evasiveness’ and broken pledges of the Government to give a full accounting to the public about the BMF scandal, the government’s refusal to hold a Royal Commission of Inquiry into the scandal, and the government’s refused to take Parliament into its confidence about the BMF scandal.

It is most significant that in today’s newspapers, the Auditor-General, Tan Sri Ahmad Nordin Zakaria, who is also the Chairman of the three-man Bank Bumiputra in-house inquiry into the BMF loans scandal, had cautioned the public not to expect too much from his committee of inquiry as it had to work within the terms of reference specified by Bank Bumiputra.

‘As a result, what can be done by the committee depends on the information that is obtained from the bank and BMF officials’, he said.

Tan Sri Ahmad Nordin said that his committee had no powers to compel anyone to give information to the committee, as such power are vested with government bodies like the Attorney-General’s Office, the police, the ACA, and the magistrates.


Tan Sri Ahmad Nordin remarks today have again thrown into limelight the most unsatisfactory nature of the government’s handling of the BMF loans scandal, which seemed to be guided by the principle of maximum damage control rather than to have the fullest expose of the root cause of the BMF scandal.

In fact, one is reminded of the Watergate scandal which shook the Nixon Presidency in the early stages, where there was a blanket denial of wrongdoing by any top leaders. But when the incriminating evidence begin to pile up, the Nixon Administration was engaged in a series of damage control operations, where at any one stage, top officials who could not be protected were made to take the rap in the hope of salvaging the political reputation and position of those higher-ups who were similarly implicated.

Is the BMF scandal the Malaysian Watergate scandal, and is it for this reason, that the Government is not prepared to have a full-fledged inquiry in the form of a Royal Commission of Inquiry for fear that it would trace the ‘smoking gun’ to higher and higher levels of political responsibility, well beyond administrative and managerial ranks whether in BMF or Bank Bumiputra?

The Finance Minister, Daim Zainuddin, reiterated yesterday that there would not be a Royal Commission of Inquiry into the BMF, claiming that Parliament had rejected such a Royal Commission being set up.

This is the lamest excuse Daim Zainuddin could have given, for Parliament had rejected my motion for the establishment of a Royal Commission of Inquiry on October 18 because of the mindless obedience and subservience of Barisan Nasional Mps to the government whip.

Although a few Barisan Nasional Mps realized that the national interest demands a Royal Commission of Inquiry into the BMF Scandal, none of them dared to vote for a Royal Commission of Inquiry for fear of breach of party discipline. To these Ministers and Mps, party discipline is more important than national interest and the people’s right to public integrity and trust in the management of public funds by public officials.

I have no doubt that if today, the government has come round to the view that there should be a Royal Commission of Inquiry, everyone of the BN MPs who voted against it would vote for it even without batting an eyelid!

I am glad that the UMNO Youth Leader and Agriculture Minister, Anwar Ibrahim, has now taken the position that there should be a Royal Commission of Inquiry, and that he is as disappointed as ordinary Malaysians by the interim report of the Ahmad Nordin Committee of Inquiry.

I am surprised however that according to the Finance Minister, UMNO Youth had not made a formal presentation to the Government for a Royal Commission of Inquiry, for this is contrary to the usual style of operation of UMNO Youth to press its views on the Government with representations, memorandum, request for meeting, etc.

Why is the UMNO Youth and its leader so docile this time in their demand for a Royal Commission of Inquiry? I hope Anwar Ibrahim is not making his statement about the Royal Commission of Inquiry only for the record, to show that his previous ABIM record of opposing corruption and abuse of trust remain consistent to his present thinking, but without pressing or pursuing the demand to ensure that it is accepted by the government.

The Ahmad Nordin BMF committee interim report, which was made public by the Minister of Finance on 2nd November 1984, more than two and a half months after it was completed and submitted, was a great ‘let-down’ as it had not taken the sordid financial scandal any much further and the public are not any more wiser about the whos, the whys and the hows of the scandal.

The interim report on the ‘extend and nature of the loans or credit facilities granted by BMF’ to Carrian Group and Eda Investments Ltd. Was a great let-down because if the committee had the fullest co-operation from the Bank Bumiputra and BMF, it should have been able to get those information and data in a matter of days and would not have to require seven months.


This makes the statement by Tan Sri Ahmad Nordin today that the committee’s progress depended on the information that is obtainable from the bank and BMF officials is highly significant, for clearly, if the Bank or BMF officials are uncooperative or hostile, there is nothing very much the Committee could do.

When releasing the interim report of the Ahmad Nordin BMF inquiry committee, the Finance Minister suppressed an appendix on the ground that their revelation would be a breach of the Banking Act.

This is completely unacceptable, for how could the Banking Act be used to protect the actions of Carrian Group and Eda Investments Ltd. which are responsible for some $2 billion loss of public funds. Secondly, the Banking Act is not applicable to the BMF, as the BMF is registered in Hong Kong. Thirdly, even more important, Daim Zainuddin had broken a solemn pledge by the Prime Minister, Datuk Seri Dr. Mahathir Mohamed, two days earlier that the first interim report of the BMF loans scandal would be released in full and that ‘nothing will be concealed’. The Prime Minister said this was a Cabinet decision.

The Finance Minister should explain to Parliament and the people why he had reneged on the Prime Minister’s pledge, and the Cabinet’s decision on a full, unconcealed publication of the Ahmad Nordin Committee interim report?

It had been reported that the Ahmad Nordin Committee had submitted a second report, said to be at least two inches thick with its index, which contained recommendations that action be taken against at least four former BMF and Bank Bumiputra Executives for the loans scandal.

The Finance Minister, Daim Zainuddin, said that he would ‘strongly’ advise the Cabinet to make the second report public.

I want to ask the Finance Minister why it is necessary for the Cabinet to vet every report submitted by the Ahmad Nordin Committee of Inquiryt and to decide individually whether, and to why extent, such report should be made public. Is it because the Cabinet and the political leadership are afraid that in some of the reports, the political leadership may be implicated? A nd is this the reason why the Royal Commission of Inquiry was rejected to keep the inquiry strictly at the BMF and Bank Bumiputra level, when nobody believes that authority would have been given for the approval of loans amounting to $2.5 billion without green-light by top political leaders?

I call on the Finance Minister to release the second report of the Ahmad Nordin Committee without any more delay, and to get the Cabinet to take a policy decision that henceforth the subsequent reports of the Ahmad Nordin Committee would be released to the public as a matter of course without having to get prior Cabinet vetting and approval.


Although the Finance Minister had repeatedly said that there would be no ‘cover up’, it is most tragic that he is unaware that his actions since he become Finance Minister in July this year with regard to the BMF loans scandal had been one of ‘cover ups’ especially his Budget speech remark that the ‘BMF scandal is a thing of the past’!

In this connection, I must deplore in the strongest terms possible the statement by the Prime Minister last month accusing those who demand an open inquiry into the BMF scandal as motivated by the desire to destroy the Malay political leadership.

This is most unworthy of the Prime Minister, for it would forfeit his claim to be the leader of all Malaysians regardless of race, if he is to take such perverse and racial attitude towards the BMF loans scandal.

If there is anyone who are trying to destroy the Malay political leadership, then it is those who are responsible for the ‘heinous crime’ of the $2.5 billion BMF loans scandal. Unfortunately, the government seems to have lost its moral sense of right and wrong, regarding the critics of the BMF loans scandal as greater enemies of the state than the perpetrators of the BMF loans scandal!

I hope that the Prime Minister’s unworthy statement is a momentary lapse and would not be repeated in future, whether by him or by his other colleagues in UMNO.

Ever since the eruption of the BMF loans scandal, Parliament has been treated shabbily, denied necessary information about the greatest banking and financial scandal in Malaysia history. The Government had never volunteered information on the BMF loans scandal in Parliament, and whatever meager said about the BMF had to be forced out from the Government Ministers by DAP’s persistent questioning and speeches on the subject.

Parliament should be treated with greater respect, and should be given a periodic report about the BMF loans scandal, instead of learning bits and pieces from some enterprising newspaper reports. The Finance Minister should not use Parliament whenever it suits him, as in rejecting a Royal Commission of Inquiry, while at other times, treating Parliament with utter contempt and disrespect. Finally, I call on the Finance Minister to be guided by the national interest and get the Cabinet to agree to the establishment of a Royal Commission of Inquiry into the BMF loans scandal, as there is no other more satisfactory way of dealing with the ‘heinous crime’ of the BMF loans.

(Speech by Parliament Opposition Leader, DAP Secretary-General and MP for Kota Melaka, Lim Kit Siang in Dewan Rakyat when moving a $10 cut on the Finance Minister’s salary on November 20, 1984)