Speech by Parliamentary Opposition Leader, DAP Secretary-General, MP for Tanjung and Assemblyman for Kampong Kolam, Lim Kit Siang, at the ‘Protect the 588,000 Depositors of 24 Co-operatives Public November 14, 1986 at 8 p.m.
The Government must produce $600 million to bail out the 588,000 co-perative depositors as the Government is the biggest single cause for the Co-operative Finance Calamity BECAUSE of its negligence and failure to monitor the co-operatives and protect the depositors in the past five years
In the Government White Paper on the 24 deposit-taking co-operatives, the government said that it should not “ as a matter of principle underwrite each and every loss in institutions, be they companies, co-operatives or even statutory bodies.” The White Paper said the Government could not guarantee the deposits of the 24 co-operatives.
The arguments of the Government in the White Paper are completely unsound and invalid, not only because it had spent $150 million ten years ago to bail out one co-operatives, Bank Rakyat, and $2.5 billion to bail out Bank Bumiputra and BMF scandal, but even more important, the Government must bear responsibility to rescue the 588,000 depositors because it is the biggest single cause for the Co-operative Finance Calamity.
If the Government , either through the Co-operative Department or Bank Negara, had been responsible and discharged its responsibility to monitor the 24 co-operatives and protect the interests of the 588,000 depositors, half a million households in the Chinese community would not be faced with the prospest of their entire life-savings reduced to nought.
In the past five years, the Government had received numerous complaints about the irregularities and illegalities committed by the deposit- taking co-operatives, but the Government failed to perform its basic government duty tostamp out such malpractices, despite full government knowledge.
DAP calls for the establishment of an Independent Commission of Inquiry to investigate how the negligence and irresponsibility of the Government had been the single biggest cause of the $1.5 billion Co-operative Finance Scandal.
On looking back, it is clear that there was a conspiracy involving the Co-operative Department and the co-operatives, especially those where fraud, breach of trust and abuse of power were committed on a grand scale, to allow such co-operatives malpractices to continue.
The DAP calls for the establishment of an Independent Commission of Inquiry to investigate into how the negligence and irresponsibility of the Government had been the single biggest cause of the $1.5 billion Co-operative Finance Scandal.
In fact, the Government White Paper mentioned top leaders of Barisan Nasional component parties in the various questionable co-operative deals. There was Tan Koon Swan, Tee Ann Chuan ,Kee Yong Wee, Wang Choon Wing, Alex Lee, among others.
Bank Negara has publicly pretended that it came into the co-operative scene only on July 23, 1986, when it froze the assets of KOSATU and its key management under the Essential (Protection of Depsitors) Regulations, 1986, and that until then, it knew absolutely nothing about the mess in the co-operative finance branches.
This is not the case. In early January this year, I personally spoke to the Bank Negara Governor, Datuk Jaffar Hussein and senior Bank Negara officials about the potential scandal in the co-operative finance branches.
In late January, 1986, the Malaysian Business quoted the Co-operative Development Department Director-General Haji Abdul Aziz bin Haji Abdul Wahab as saying that officials from Bank Negara had been seconded to the Department to monitor and supervise the credit operations of deposit-taking co-operatives.
How can Bank Negara now pretend that it knew nothing of this problem until July 23, 1986? In any event, Bank Negara as a part of the Government cannot claim governmental ignorance, but must bear full government responsibility for the collapse of the 24 co-operatives.
I have no doubt whatsoever that an Independent Commission of Inquiry would be able to establish beyond any doubt that the Government, either through the Co-operative Department or Bank Negara, had been given sufficient warning and information to act to protect the interests of the depositors, but for reasons which should be exposed, failed to do so.
What is worse, the Co-operative Department and the Government allowed the co-operatives to continue to expand until the 24 co-operatives had 588,000 members, 630 branches, total deposits of about $1.5 billion with 3,000 employees.
The $1.5 billion Co-operative Finance Scandal is a government scandal, and the Government must not be allowed to put the blame just on the criminal and crooked co-operative directors and officials.
For this reason, the Government must assume its moral, political and legal responsibility to ball out the 588,000 depositors with a $600 million rescue plan.