DAP Parliamentary Group to meet Bank Negara Governor, Datuk Jaffar Hussein, on the latest co-operative development at Bank Negara tomorrow

Speech by Parliamentary Opposition Leader, DAP Secretary-General, MP for Tanjong and Assemblyman for Kampong Kolam, Lim Kit Siang, at the meeting of DAP National Co-operatives Finance Scandal Committee held at DAP PJ Hqrs on Wednesday, January 7.1.1987 at 5 p.m.

DAP Parliamentary Group to meet Bank Negara Governor, Datuk Jaffar Hussein, on the latest co-operative development at Bank Negara tomorrow

A high-level DAP parliamentary delegation will meet Bank Negara Governor, Datuk Jaffar Hussein, in Bank Negara tomorrow at 4 p.m. to discuss the latest co-operative finance crisis developments.

The $ 1.5 billion co-operative finance calamity, directly affecting 588,000 depositors, and indirectly over three million people (or at least 60 per cent of the Malaysian Chinese population) is the greatest economic setback to the Malaysian Chinese in Malaysian history.

There is no doubt that if there is no fair and just solution to the $ 1.5 billion co-operative finance calamity in the next week or so, then the majority of the Malaysian Chinese will have no cause or ‘heart’ to celebrate the Chinese New Year of the Rabbit starting on January 29. In fact, there would be entire new villages and townships which would be gloomy and bleak, for their savings had been completely locked away in the various co-operative finance branches.

This is why it is of the utmost importance and urgency that the Government, and in particular Bank Negara, should make the first refund of the monies of the 588,000 depositors well in time for the Chinese New Year, as the depositors are in desperate need of funds, not only for the Chinese New Year but also for the new school year which has started.

MCA President and Transport Minister, Datuk Dr. Ling Liong Sik, said yesterday that depositors of the 24 co-operatives can expect refund of monies before Chinese New Year ranging from 10 to 20 per cent. KOSATU, he said, would refund 10 per cent.

Deputy Prime Minister and National and Rural Development Minister, Ghaffar Baba, had been advocating the 25:25:50 formula, and in view of this, the DAP calls on the Government and Bank Negara to ensure that the first refund of the 588,000 depositors would not be less than 25 per cent, when this is paid out before Chinese New Year.

I understand that there are co-operatives which are prepared to refund more than 25 per cent before Chinese New Year, and Bank Negara should not obstruct these co-operatives from such refunds.

The 588,000 depositors are entitled to come to the end of their patience, for the Bank Negara and Government have taken five long months although they originally promised a solution after investigations which would not taken more than a month.

There had been suggestions Ly government leaders that the depositors have themselves to blame for their greediness for higher interest in putting their monies in the co-operative finance branches, when in actual fact, it was because of the depositors confidence in the assurances given by government Ministers and leaders. For instance, the co-operative depositors heeded the advice of MCA President and Transport Minister, Datuk Dr.Ling Liong Sik, and Deputy Prime Minister, Ghaffer Baba. In July last year to “remain” and not to withdraw their deposits from the co-operatives – and the result is a financial calamity for the depositors!

DAP calls for the refund of at least 25 per cent of depositors’ monies before Chinese New Year, which should be unconditional
The 588,000 depositors are in desperate need of monies for their essential needs. The DAP wants the Government and Bank Negara to given an assurance that they would not exploit this desperate need of the depositors, to coerce them to agree to unfavorable terms as a condition for the refund of ten to twenty per cent of their depositors before Chinese New Year.

The DAP calls for the refund of at least 25 per cent of depositors’ monies before Chinese New Year, which should be unconditional, with no strings attached. The depositors are entitled to their own deposits and monies, and it would be the height of irresponsibility if anyone makes use of the depositors’ desperate need for money to coerce them to agree to unfavorable terms with regard to the solution of the co-operative finance crisis.

Bank Negara should pay out the refunds without the appointment of receivers

Bank Negara has justified its action to have receivers appointed for the 23 co-operatives on the ground that this enable the depositors to refund some money to depositors before Chinese New Year.

As Bank Negara has invoked Essential (Protection of Depositors) Regulations 1986, especially Regulation 9 (1) (b) to “assume control of and carry on the business” of the co-operatives as it “deems fit, or appoint any person to do so on the Central Bank’s behalf”, it has the powers to direct the refund of the monies to the depositors before Chinese New Year without appointing receivers.

This appears to be one instance where Bank Negara is exploiting the need of the co-operatives and depositors for refund before Chinese New Year to get them to agree to unfavourable arrangements.

I will give one example why the appointment of receivers to assume all powers and duties of directors and other principal office-bearers of the co-operatives would be detrimental to the interest of the co-operative members and depositors.

The White Paper on the 24 co-operatives estimated the net asset value of one co-operative as more than one dollar, but the bank appointed to take over this co-operative estimated its asset value at around 50 cents, or half the White Paper estimate. As a result, talks broke down between this co-operative and bank. But if receivers are appointed for this co-operative, then the receivers would be fully empowered to accept the bank’s estimate of the asset value of the co-operative at around 50 cents, although the White Paper estimated it at over $ 1.

I note that yesterday, the Boards of four co-operatives , KOSJASA, KBB, KOMEWAH and KOTENA have publicly expressed their objection to Bank Negara’s move to appoint receivers for them.

On Monday, Bank Negara Governor, Datuk Jaffar Hussein, announced that nine DTCs have reached agreement with their appointed financial institutions on arrangements to pay their depositors, and that High Court approval would be sought for these mutually-agrees arrangements.

As Datuk Jaffar Hussein is talking about ‘mutual agreements’, he has not explained why there has been no ‘mutual agreement’ for the appointment of the receivers for the co-operatives – as the co-operatives were never consulted before-hand on the receivership question.

Role of DAP National Co-operative Finance Scandal Committee

The DAP has been accused of trying to ‘politicise’ the co-operative scandal, and exploit the sufferings of the 588,000 depositors.

The DAP cannot ‘politicise’ an issue, which is the result of the political irresponsibility of the Barisan Nasional component parties and the government. The MCA, and the Gerakan to a lesser extent, had ‘politicised’ the co-operative finance issue right from the beginning, painting it as the ‘last line of Chinese capital’! The MCA and the Gerakan fully made use of their political branches, network and influence to get 588,000 depositors to put in $ 1.5 billion hand-earning savings in the co-operative finance system. It is now these very same people who are saying that the co-operative crisis should not be ‘politicised’!

The DAP’s role is to come to the defense of the 588,000 depositors because they have become victims of the political irresponsibility of the Barisan Nasional Government which did not protect the safety of the deposits from corruption and criminal breach of trust by crooked co-operative directors and officials.

In the past five months, when the 588,000 depositors were in black despair, the DAP was the only voice throughout to demand justice and fair play, as demanding that the Government is morally, politically and legally obliged to bail out the depositors in the same manner it bailed out Bank Rakyat and Bank Bumiputera; the publication of the Bank Negara investigations into the 24 co-operatives; and in immediate refunds of monies before Chinese New Year.

The DAP National Co-operative Scandal Committee must continue to champion the right of the 588,000 depositors to fair and just treatment, using all available avenues to get the Government and Bank Negara, as well as the political leadership in the Barisan Nasional, to realise their responsibility to the depositors – who are the small-timers in the population.