DAP calls for Royal Commission of Inquiry into the management of Bank Pertanian to inquire

by Parliamentary Opposition Leader, DAP Secretary-General and MP for Tanjung, Lim Kit Siang, in Petaling Jaya on Tuesday, January 7, 1992:

DAP calls for Royal Commission of Inquiry into the management of Bank Pertanian to inquire:

(i) into its $305 million losses in 1988 and 1989;

(ii) whether the Board of Directors had on 24th July 1991 approved an untrue Statement of Account for the first six months which is the basis for the Ministerial claim that Bank Pertanian had turned around and is making profits this year.

According to the 1998 and 1989 Bank Pertanian annual reports which were presented to Parliament only last month, Bank Pertanian suffered $46.4 million losses in 1988 another $258.96 million losses in 1989-making a total of $305 million losses for these two years.

Up to now, however, both the Ministry of Finance and the Ministry of Agriculture had failed to account to the people the cause for the $305 million Bank Pertanian Scandal, or to respond the many caustic comments and criticisms made by the Auditor-General, Tan Sri Ishak bin Tadin, on the 1988 and 1989 Bank Pertanian accounts.

In his comment on the 1989 Report dated 29th April 1991, Tan Sri Ishak bin Tadin said:

“Pada 31 Disember 1989, kedudukan Bank ini menunjukkan kekurangan modal sebanyak $149,224,623. Pihak Bank sedang berunding dengan pihak Kementerian Pertanian, Kementerian Kewangan dan Bank Negara Malaysia untuk mendapatkan tambahan sokongan kewangan.

“Sekiranya rundingan tersebut gagal untuk mendapatkan sokongan kewangan yang berterusan dan yang cukup untuk memenuhi komitment semasa Bank, ianya akan menghadapi masalah besar bagi meneruskan operasinya.”

On 22nd March 1991, the Bank Pertanian Malaysia (BPM) General Manager, Encik Ibrahim Hashim, was reported in the Business Times as saying that Bank Negara has agreed in principle to provide $400 million in soft loans to BPM on condition that BPM be placed under the central bank’s indirect supervision.

Ibrahim Hashim said:”BPM’s funds are drying up and if new funds are not injected fast enough, BPM is sure to collapse in the near future.”

However, up to July 23, 1991m the Parliamentary Secretary to the Ministry of Agriculture, Haji Mohd.Shariff, was still telling Parliament that the BPM had applied to Bank Negara for the $400 million loan.

As far as is known, Bank Negara and the Finance Ministry had not approved and granted the $400 million loan applied for by BPM. What is the reason? Is it because Bank Pertanian Malaysoa, which comes under the direct responsibility of the Minister of Agriculture, Datuk Sanusi Junid, refused to come under the supervision of Bank Negara anmd the Finance Ministry which is under Datuk Anwar Ibrahim?

Regardless of who is in charge of BPM, Malaysians are entitled to know the root causes for the $305 million losses suffered by BPM in 1988 and 1989.

For instance, the Auditor-General commented on the 1989 Report and accounts:
“Satu kajian secara rambang keatas fail pinjaman telah dijalankan untuk menetukan sama ada dasar dan aturcara pinjaman telah dipatuhi atau tidak. Hasil kajian itu menunjukkan ada lapan kes pinjaman berjumlah $30,658,627 dimana dasar dan aturcara terhadap pengurusan kredit telah tidah dipatuhi.”
Bank Pertanian Malaysia should also explain why it allowed its KPN Holdings Sdn.Bhd. to be sold to Agoes Salim Holding Sdn.Bhd. for $8 million in 1982, when apart from the downpayment of $500,000, not a single cent of the balance of $7.5 million had been paid!

This is one reason why the DAP calls for the establishment of a Royal Commission of Inquiry into the $305 million Bank Pertanian Malaysia scandal.

How did Bank Pertanian Malaysia turnaround making profits in July when two months earlier it was on the verge of collapse

There is a second reason why there should be a Royal Commission of Inquiry into Bank Pertanian Malaysia.

This is to inquire as to how Bank Pertanian Malaysia, which according to its general manager in March last year was on the verge of collapse unless it gets an injection of $400 million from Bank Negara ‘fast enough’, suddenly turned around with the Agriculture Minister, Datuk Sanusi Junid and other BPM officials announcing from July onwards that Bank Pertanian was making profits.

It would appear that after failing to get the $400 million loan from Bank Negara to avert its collapse, Bank Pertanian Malaysia suddenly found that it could not only survive, but make profits!
The whole scenario smacks of something very wrong and hanky-panky.

In this connection, the Royal Commission of Inquiry should inquire into three aspects:

Firstly, isn’t it true that from the Bank Pertanian Malaysia’s own Statement of Accounts in the first six months of 1991, Bank Pertanian Malaysia made a loss of $11,335,860 as at 30.6.1191.

Secondly, is it true that the Board of Directors of Bank Pertanian Malaysia, at its meeting of July 24, 1991, was made to approve an untrue Statement of Accounts of the bank for the first six months which showed that the Bank made a profit of $11,787,237.

A $23.1 million difference for the first two Statement of Accounts for the first six months of 1991
Form these two Statement, from a loss position of $11.3 million on 30.6.1191 to a profit position of $11.8 million on the same date, this would mean a miraculous difference of $23.1 million-just by alteration of the Statement of Accounts!

Thirdly, when the untrue Statement of Accouints presented and officially adopted by the Board of Directors was drawn to the attention of the authorities, a third Statement of Accounts for the first six months of Bank Pertanian Malaysia appeared, which is different from the first two Statements.

If this scenario is true, it reveals a most shocking and irresponsible manner of managing a financial institution handling hundreds of millions of ringgit of the people’s money.