BMF Scandal – Token Prosecution and Punishments

At a time of economic stringency, the government should have kept within its operating and development budgets, instead of coming to Parliament in asking for additional allocation of funds.

What is being asked is not a small sum of money either, as the total sum for the 1983 and 1984 supplementary operating and development votes come to $2.4 billion.

Before the government asks Parliaments for more supplementary allocations, it must be able to convince the House that it had expended the funds approved in the budgets proper judiciously and economically, and that it had steered the country’s economy and finances with the minimum of wastage, squandering, mismanagement or corruption.

It may be a coincidence that the total supplementary votes being asked is $2.4 billion, which is just short of the sum involved in the BMF loans scandals in Hong Kong.

Up to now, the Government has failed to give Parliament a satisfactory accounting of the BMF loans scandal, and I am minded to suggest that the House should not approve any supplementary vote unless there is a full public accounting of the BMF loans scandal.

I know I will not get the support of the Barisan Nasional Mps, who do not regard the BMF loans scandals as a major affair. In fact, I would expect Barisan Nasional Mps to criticize me in this debate for bringing up again the BMF loans scandal.

Let me tell these Barisan Nasional Mps, that as far as I am concerned, and I am sure I share the views of the overwhelming majority of Malaysians, the BMF loans scandal is the biggest banking and financial shame for Malaysia, and they have the right to insist at every available opportunity for a full public accounting. It is my intention to bring up the BMF loans scandal at every possible occasion in Parliament, until and unless the whole story of the BMF loans scandal is told to the Malaysian public and the culprits, regardless of their rank and political influence, are brought to book in the courts.

If there are Barisan Nasional Mps who do not like to listen to what I have to say about the BMF loans scandal, either now or later, they can leave the House. They may think I am wasting the House’s time, but in fact, they are the very one who are wasting the time of Parliament in not bringing up important issues like the BMF loans scandal in Parliament; they are interested only in trivial matters.

Since my last speech in Parliament on the BMF loans scandal during the BMF loans scandal during the debate on the Ministry of Finance’s 1985 budget during the committee stage on November 20, the Ahmad Nordin BMF Inquiry Committee has submitted its third report to the authorities. According to the Finance Minister a few days ago, the Cabinet had not even considered the Ahmad Nordin BMF Inquiry’s second report.

The Ahmad Nordin BMF Inquiry Committee must be commended on the speed with which it has produced its second and third reports – to the extent that the BMF Inquiry Committee is producing its reports faster than the Cabinet could consider them. This is a very poor reflection on the Cabinet, and I would call on the Cabinet to buck up, and not to sit on the BMF Inquiry reports but to act on them with dispatch and efficiency as expected by the Malaysian people.

Recently, the Prime Minister issued a directive that government servants must reply to Minister’s instructions and directives within five days. The people would expect the Cabinet to set an example first and decide on the Ahmad Nordin BMF Inquiry Committee’s reports within five days!


The Finance Minister has said several times that he would want to have the second report of the BMF Inquiry Committee released to the public. I want to ask the Finance Minister why he is unable to do this, as the BMF Inquiry Committee report comes directly under his Minister’s jurisdiction, and only the Prime Minister or the Deputy Prime Minister have a weightier voice than him on the subject in the Cabinet. Is he suggesting that either the Prime Minister or the Deputy Prime Minister or both of them want to suppress the second and subsequent reports of the Ahmad Nordin BMF Inquiry Committee.

Last week, a big fanfare was made out of two police reports lodged by the Bank Bumiputra in connection with the BMF loans scandal. Thinking Malaysians are not impressed by the two police reports, for they concern very small sums of money, actually less than 4 per cent of the total BMF loans scandal of $2.5 billion.

Malaysians do not want to see ‘token’ police reports about ‘token wrongs’ leading to ‘token prosecution’ of ‘token personnel’ in BMF and Bank Bumiputra and ‘token punishments’

As the BMF Inquiry Committee Chairman, Auditor-General Tan Sri Ahmad Nordin, had commented, the ‘consultancy fees’ issue, which was the subject matter of one of the two police reports, were ‘peanuts compared to the loans’

What is even more disturbing is the Attorney-general’s statement that clearly gave the impression that the BMF Inquiry Committee’s findings cannot be the basis for legal action and that only police investigations would be taken into account.

I can understand the demoralization of the BMF Inquiry Committee about the Attorney-General, Tan Sri Abu Talib Othman’s statement, for it means that the BMF Inquiry Committee’s investigations do not matter one iota in the eyes of the Police and the Public Prosecutor.

In these circumstances, Tan Sri Ahmad Nordin has rightly asked whether it wouldn’t have been better for the Attorney-General to recommend to the Finance Minister that the Inquiry Committee should not concern itself with the criminal aspects.

But it was the Finance Minister who, after the submission of the first report, told the Ahmad Nordin Committee to concentrate on the criminal aspects of the BMF loans scandal!

I call on the Cabinet to direct the Attorney-General to use the Ahmad Nordin Inquiry Committee’s reports on the BMF loans scandal as a basis for police action instead of initiating police action on the BMF loans scandal which would duplicate and cover the same ground, wasting a lot of time and public money.

In this connection, could the Finance Minister explain why the two reports to the police were not lodged very much earlier, last year or even sooner, as the Bank Bumiputra must have known about them already?

The Government’s handling of the BMF loans scandal to date has been most unsatisfactory, giving the public the impression that intense public pressure must be maintained if the government is to be forced to account to the people about the loans scandal. Parliament must not abdicate its responsibility to get to the bottom of the scandal, as the representatives of the people, and for this reason, I propose that we should establish a Parliamentary Committee on the BMF loans scandal to study the Ahmad Nordin committee’s report and other aspects of the loans scandal. The Standing Orders of the Dewan Rakyat provides for such a Parliamentary Committee to have as vast powers as a Royal Commission of Inquiry. The question is whether Barisan Mps dare to rise to the challenge of safeguarding the country’s finances.


Before I leave the BMF subject, I want to know when the Cabinet proposes to discuss and decide on the second and third reports of the BMF Inquiry Committee, and when both reports would be released to the public.

When the government agencies had failed to follow up on tax dodges, involving tens of millions of dollars, then the government has failed to minimize the need to ask for supplementary votes from Parliament.

On January 7, 1980, the New Straits Times carried on its front page a lead story of the Custom Department uncovering a well-planned tax dodge racket involving the export of crude palm oil which involved more than $20 million over the past three years.

The modus operandi of the tax evasion was to export crude palm oil at that time under the names of non-dutiable by-products, one of which is neutralized palm oil (NPO) – with the exporters evading Custom duties between $200 to $400 for every ton.

But since that report, nothing more has been heard, as if the investigations never took place.

One of the informants who had co-operated with the Customs to uncover this tax dodge racket has informed me that he had furnished the Customs Department with documents whereby two sets of documentation were made – one set to the Customs and the local authorities where the shipments were classified as non-dutiable by-products while another set of documents were presented to the banks and end-importers in foreign countries where the shipment was rightly classified as ‘Crude Palm Oil’. There are even two sets of Bills of Lading for the same consignment!

For such a racket to operate for over three years, a lot of people must have been involved. In fact, I understand that very highly placed influential people are involved in this racket. Is this the reason why the entire investigations were suddenly hushed up?

I have with me some sets of these double-documents to evade Customs duty, and I am really shocked that with such documentary evidence, the Customs Preventive Branch has abandoned the entire investigation and could have saved for the country over $20 million in evaded duty, and hefty fines for the multitude of people who are involved.

I call on the Finance Minister to give a full and satisfactory explanation on why the Customs investigations into this $20 million tax dodge was abandoned, although it had adequate evidence for prosecution. The Anti-corruption Agency should be called in to investigate into this $20 million Customs scandal.


The BMF loans scandal and the $20 million Customs duty scandal are disturbing signs that high integrity in public life is sorely lacking. Recently, the market was full of rumors that the last batch Finance Companies licenses before the freeze are up for bid to the highest bidder, at the rate of about $50 million to $70 million each.

What is the use of the Government blaming the ordinary bumiputras of Ali-Baba enterprises, when highly-placed Bumiputras who get finance company licenses eventually sell-out their licenses for $50 million apiece? In this connection, I call on the Finance Minister to disclose how many finance companies’ licenses were issued since 1980, to whom, and what provision had been made that they are not used merely for sale to the highest bidder in the market.

(Speech by Parliament Opposition Leader, DAP Secretary-General and MP for Kota Melaka, Lim Kit Siang in Dewan Rakyat on the 1984 Supplementary Operating and Development Estimates on December 3, 1984)