by Parliamentary Opposition Leader, DAP Secretary-General and MP for Tanjung, Lim Kit Siang, in Petaling Jaya on Thursday, 28th July 1994:
DAP welcomes Bank Negara Governor’s warning of ruthless action against bank frauds but why has Bank Negara taken no action against anyone on the Rakyat Merchant Bankers Bhd. scandal of 110 fictitious accounts involving fraud of RM330 million?
DAP welcomes the stern warning by the Bank Negara Governor, Ahmad Mohd Don that the Bank Negara is prepared to be ruthless to those involved in bank frauds, as banking fraud in Malaysia had risen sharply from 87 cases involving RM6.6 million in 1986 to 240 cases involving RM235 million ringgit last year.
Ahmad said: “As millions of dollars can be transmitted electronically, it is much easier to rob a bank account than the bank itself.”
While DAP welcomes the Bank Negara Governor’s stern warning, Ahmad should explain why bank Negara has not taken action against any one on the Rakyat Merchant Bankers Bhd. scaldal of 110 fictitious accounts involving RM330 million?
The Bank Negara has revealed that Rakyat Merchant Bankers Bhd. had approved loans totaling RM150 million to 50 ‘fictitious’ individuals and another RM180 million to 60 companies.
There was an avoidance of a single customer limit of RM3 million by creating 50 individual loan applicants.
Bank Negara found that there were only two beneficiaries to the RM150 million loans.
The foreign press have reported that Rakyat Merchant Bankers lost more than RM500 million, largely through improper loans given to several prominent people during the height of last year’s bull run.
A top community leader had been linked to the loans. At least seven commercial banks were said to have provided the money to Rakyat Merchant Bankers for the loans.
Bank Negara had tracked the destination of the loans but a large part of the money could not be recovered as share prices had since fallen sharply, resulting in the community leader defaulting on his repayments.
Barisan Nasional politicians have also been linked to the loans.
Unless the Bank Negara Governor can give a satisfactory explanation as to why Bank Negara is ‘dragging its feet’ on the Rakyat merchant Bankers, his speech yesterday that Bank Negara would be ‘ruthless’ with bank frauds would not have the expected impact or effect.
It is for Bank Negara to prove that it is not a ‘paper tiger’ when it warns about ‘ruthless action’ against bank frauds.