(Petaling Jaya, Saturday): Bank Negara probe into Sime Bank loss is pointless if it is not part of a process of greater accountability and transparency resulting in a White Paper giving the whys and who’s who involved in the RM1.8 billion loss in six months
The Deputy Finance Minister, Datuk Dr. Affifuddin Omar said yesterday that under the Banking and Financial Institutions Act 1969, it was up to Bank Negara to conduct an investigation into Sime Bank Bhd’s loss of RM1.8 billion for the half-year ended Dec. 31, 1997.
What upsets Malaysians is that the Deputy Finance Minister could not give a categorical statement as to whether Bank Negara is conducting an investigation into the Sime Bank loss, as he could only say "I think so" to the question whether Bank Negara is currently undertaking such an investigation. In any event, a Bank Negara probe into Sime Bank loss is pointless if it is not part of a process of greater accountability and transparency resulting in a White Paper giving the whys and the who’s who involved in the RM1.8 billion loss in six months in the second half of last year.
Up to now, Bank Negara has no such tradition of greater accountability and transparency as part of a culture of good corporate governance, as the many banking scandals in the country in the past had been swept under the carpet, joining the long list of "heinous crimes without criminals".
There had for instance been two previous Bank Bumiputra bail-outs, the first time in 1986 when Petronas had to pump in RM2.5 billion to bail it out of insolvency as the result of the RM2.5 billion Bumiputra Malaysia Finance (BMF) scandal and the second time in 1989, when the government pumped in another RM982 million after BBMB chalked up losses of RM1.06 billion that year largely due to a monumental provision of RM1.23 billion for non-performing loans.
However, no one had ever been brought to court for causing the loss of close to RM3.5 billion of public funds - and now Bank Bumiputra may need a third bail-out involving another government capital injection of RM750 million.
What is shocking is the statement by the Prime Minister, Datuk Seri Dr. Mahathir Mohamad last week that any injection of capital by the Government into Bank Bumiputra should not be regarded as a bailout or rescue.
Speaking to reporters after opening the International Timber Conference 1998 on 5th March, Mahathir defined a bailout as supporting some financial institutions "which has no value".
However, referring to Sime Bank and Bank Bumiputra, he said these banks had the right value and they were affected by the devaluation of the ringgit and their share value.
Mahathir said: "They were very sound institutions before but when you knock off their financial strength, then naturally they will suffer."
Going by Mahathir’s logic and reasoning, there is nothing wrong with the management of either Sime Bank or Bank Bumiputra, that no one in the banks should be blamed for the colossal losses, and if that is the case, what is the point of Bank Negara conducting any investigations into the losses of Sime Bank or why Bank Bumiputra has to be rescued the third time in 12 years.
The National Economic Action Council (NEAC) had been formed to restore confidence, and one of the pre-conditions for such confidence-restoration is having a more responsible, accountable and transparent banking and financial sector.
There should be no attempt to sweep under the carpet the banking and financial problems in the country, especially by blaming them all on external factors and elements.
If those who had defaulted with their mega loans which they could not service or pay, resulting in the need for the banks to be bailed out with public funds to avoid insolvency, are not to be taken to court to enforce their debts, the public should be told why they are being given such extraordinarily lenient treatment. At the very least, the whole list of these defaulting borrowers should be made public so that Malaysians know who are the corporate players who are responsible for giving the Malaysian banking and financial system a bad name.
It is disappointing when Affifuddin was asked whether he knew about market talk that the Employees’ Provident Fund may also be involved in financing Rashid Hussein Bhd’s acquisition of Sime Bank to provide the funds to re-capitalise Sime Bank, the Deputy Finance Minister replied: "I don’t think I have enough knowledge to comment on that. I am not privy to any knowledge on the decision. You need to ask the Finance Minister himself."
The nine million Employees’ Provident Fund contributors are entitled to a straight and honest answer from the government as to whether EPF funds would be used in three of the five bail-outs currently underway, namely the bail-out of UEM, Sime Bank and KUB.