by Parliament Opposition Leader, DAP Secretary-General, MP for Tanjung and Assemblyman for Kampong Kolam, Lim Kit Siang, in Petaling Jaya on Monday, 8th Dec. 1986:
Ghaffar Baba’s statement that none of the 588,000 depositors had come forward to state their views is most shocking and deplorable
The statement by the Deputy Prime Minister, Ghaffar Baba, that none of the 588,000 co-operatice depositors had come forward to state their views on the Government’s White Paper proposals on the 24 co-operatives, is most shocking and deplorable.
Since the appearance of the Government White Paper in early November, and in fact even before, co-operative depositors, either individually or through the formation of various depositors’ committees, had been stating their views on the solution to the $2.5 billion Co-operative Finance Calamity, whether in public meetings, through newspaper, or even in their meetings with Bank Negara, Government Ministers and officials.
How come Ghaffar Baba say now that “none of thedepositors had come forward to state their views”? Are the meetings of the co-operative depositors with MCA and Gerakan Ministers of completely no relevance to the Cabinet as far as Ghaffar Baba is concerned?
Then, what about thevarious meetings of the depositors and their representatives with Bank Negara officials?
Ghaffar Baba’s statement is doubly shocking, coming one day after the claim by the MCA President and Transport Minister, Datuk Dr. Ling Liong Sik, that “the problems faced by depositors of the 24 frozen co-operatives may soon be over”.
Datuk Dr. Ling said the MCA was “involved with the authorities concerned” in finding ways to resolve the co-operative crisis and had agreed on “several broad principles.”
One day after Datuk Dr. Ling held out the promise to 588,000 co-operative depositors that there is ‘hope’ for them, Ghaffar Baba dashed these hopes completely, by claiming that “none of the depositors had come forward to state their views.”
Ghaffar Baba’s reiteration of the 25:25:50 formula is another surprise, for this is not the government proposal in the Government White Paper, which want the 588,000 depositors to bear a loss of $600 million out of the total $1.5 billion depositors; secondly, propose the liquidation of KOSATU and SAKAPP; and thirdly, from the remaining $900 million of deposits, propose a scheme for banks and finance companies to take over the deposits and liabilities.
Paragraph 49 of the White Paper made this clear:
“The depositors will be entitled to such proportion of their deposits based on the net asset backing of the DTC concerned and the quality of such assets. A portion of up to 25% of such deposits can be withdrawn in cash. ………. The balance of the deposits will have be placed in 2-3 year fixed deposits with the bank finance company at an interest not exceeding 6% per annum.”
From my reading of the White Paper, the government’s proposed course of action includes the following elements:
1. the most the depositors could expect is up to 25 per cent withdrawal;
2. they must accept the losses arising from the write-off of the net asset value of their deposits, e.g. in the case of Fortiss valued at 39 cents per dollar, depositors must accept a loss of 61 cents per dollar of deposit;
3. the balance after 1 and 2 will be kept as deposits, which will now draw more than 6 per cent interest per annum, with no time period stated as to how long they could be withdrawn eventually.
It is most confusing to the 588,000 depositors that Ghaffar Baba should suddenly be reviving the 25:25:50 plan at this stage.
Co-operative depositors are entitled to ask who is really in charge of the Co-operative Crisis: Is it the Co-operative Development Department under Ghaffar Baba or the Bank Negara under the Finance Minister, Daim Zainuddin.
Ghaffar Baba’s history of the circumstances of the government rescue of Bank Rakyat in 1978, is also incorrect. In the Bank Rakyat case, the government was prepared to bail out the total losses faced by the co-operative bank, which is $150 million. In the case of the 24 co-operatives, it wants the 588,000 depositors to bear a $600 million loss, while offering a $400 million soft-loan to bank and finance companies to take over the deposits and liabilities.
If the government does not discriminate between Bank Rakyat and the 24 co-operatives, then it should advance $600 million to ensure that the 588,000 depositors do not face losses because of negligence of government and corruption or breach of trust of co-operative directors, over and above the $400 million soft loan to banks and finance companies to take over the assets and liabilities of the co-operatives
In the case of Bank Rakyat, the $150 million was not a soft-loan but a direct interest-free ‘loan.’