Speech by Parlimentary Opposition Leader, DAP Secretary-General and MP for Kota Melaka, Lim Kit Siang, in the Dewan Rakyat on Monday, 14.3.1983 on the Audit Amendment Bill 1983
DAP calls on the Cabinet to order an audit by the Auditor-General into the Bank Bumiputra, and in particular the hundreds of millions of dollars loans to the now-bankrupt Eda Investments Limited and tottering Carrian company groups in Hong Kong by the Bumiputra Malaysia Finance (BMF) , a subsidiary of Bank Bumiputra.
The DAP supports the Audit Amendment Bill to improve on the control of expenditure of public funds, whether by Federal or State Governments, public corporations or bodies and companies where there is substantial public funds invested, whether as loan, grant or in terms of equity.
However, the DAP feels that the Audit Amendment Bill does not go far enough to ensure strict public accountability of public funds, particularly in bodies or companies registered under the Companies Act1965 in receipt of grant, loan or equity participation from public funds.
Up till now, mammoth companies established by public funds, in particular Petronas and Pernas, are completely outside the ambit of control or even review, either by the Auditor-General or Parliament, although it was Parliament which approved the public funds for these government companies to be established in the first place.
The present amendment bill does not improve substantially on controls over expenditures by these government companies. Thus, the new section 5(d) of the Audit Act provides that the Auditor-General may examine “ the accounts of any other body, including a company registered under the Companies Act 1965, in receipt of a grant or loan from the Federation or a State, and including also a company where more than half its paid-up share capital is held by the Federation, a State or a public authority, or is so held in the aggregate by the two or more of them: Provided that the Yang di-Pertuan Agong so specifies by order under Article 106(2) of the Federal Constitution and notwithstanding any law relating to the audit of the accounts of any such body.”
This is an improvement on the 1978 Audit Amendment Act which provides that only companies with “not less than 51%” paid up-share capital from public funds are brought within the Auditor-General’s ambit. This means that there is a now an improvement by one per cent, i.e. from over 50% public paid-up share capital from public funds, compare to the present provision of not less than 51%.
What must be noted however is that in both cases, the Auditor-General has no independent power to conduct an audit of such companies. The Auditor-General can only audit such companies if the Yang di-Pertuan Agong, i.e. the Cabinet, invokes Article 106(2) to order him to do so.
As far as I know, ever since the enactment of this power in 1978, Article 106(2) had never been invoked, and for all practical purposes Section 5(d) might as well not exist. If the Government wants to order an audit of the Petronas or Pernas accounts, it has adequate powers under the present Act, for these companies have definitely ‘not less than 51% paid-up share capital’ from public funds, or are in receipt or grant.
‘WINFALL’ PROFIT
The very fact that Article 106(2) of the Constitution had never been invoked even once to cause an audit to be conducted on even a single one of the teeming government companies, although it is open public knowledge that many of these companies are wasting or mismanaging public funds, leading even to bankruptcies, shows that the Cabinet will be most reluctant and unwilling to allow the Auditor-General to examine the accounts of the public companies.
This is due primarily to political considerations, to avoid unpleasant political publicity for the ruling coalition, thus subordinating public interest to party or sectional political interest. This appears to become a very common phenomenon, as shown by my expose in January this year about the scandalous case where two UMNO Malacca State leaders with a paid-up capital of only $2 were allotted 250 acres of scarce housing land in Batu Berendam in Malacca, in January 1980 at a nominal premium, and two years later, these two Malacca UMNO leaders sold their entire rights for $18 million! The eventual house purchasers of this area would have to finally bear the additional cost of this $18 million ‘windfall’ profit of these two UMNO Malacca State leaders.
A good case where for political reasons , the government leaders are not prepared to hold government companies or bodies to strict public accountability for their stewardship of public funds is the present scandal of the Bumiputra Malaysia Finance , a wholly-owned subsidiary of Bank Bumiputra in Hong Kong , which gave some $600 to $700 million loans to Hong Kong property speculator companies , one of which the Eda Investments Limited ( with some $100 million BMF loans is being wound up ) , while another , Carrian Investments Ltd. , with even more massive BFM loans is tottering on the verge of collapse awaiting a rescue operation.
These hundreds of millions of dollars loan by BMF are not only a deviation from the original objectives of the establishment of the Bank Bumiputra , but betray abysmal and dubious judgement and management by BMF and Bank Bumiputra officials.
Instead of causing an independent inquiry into the Bank Bumiputra and BMF affairs, the Government appears to be more preoccupied at the moment in denying Malaysian responsibility for the BMF loans, claiming it was a matter for the Hong Kong regulatory authorities, when Bank Bumiputra, with the full knowledge and approval of Bank Negara, had guarantted the Hong Kong authorities responsibilities for the obligations of the BMF. Furthermore, the BMF’s lending activities in Hong Kong were funded primarily by advances by Bank Bumiputra in Malaysia.
I call on the Prime Minister and Cabinet to invoke Article 106(2) of the Constitution and other the Auditor-General to examine the accounts and activities of Bank Bumiputra and the Bumiputra Finance Malaysia in particular , to ensure not only strict compliance with financial regulations but control and protect public funds from being misused and mismanaged .
If the Government is not even prepared to invoke Article 106(2) of the Constitution over the Bank Bumiputra and Bumiputra Finance Malaysia scandal , then clearly , the fetters tying the hands of the Auditor-General from independent action in Section 5(d) of the Audit Act should be removed , so that without any order from the Yang di-Pertuan Agong , the Auditor-General is free to examine the accounts of a company or body receiving a grant or loan from the Federal or a State government , and where more than half of its paid-up share capital is held by the Federation , a State or a public authority , or it so held in the aggregate by two or more them .
Finally I call on the Government to empower the Auditor-General to audit the accounts of Petronas, Pernas and other government companies and bodies to ensure that their activities can withstand public examination and public accountability.