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Tuesday, February 7, 2017

‘How I covered the BMF scandal in the 1980s’



Exposing the Bumiputra Malaysia Finance (BMF) scandal was the most exciting assignment I had while working as a journalist with the New Straits Times (NST) in the mid-eighties.
The report by the three-person panel led by auditor-general Ahmad Noordin was released by the Finance Ministry in January 1985.
There was no cover-up or censorship of the auditor-general’s report then. It gave a clear and closer perspective of the BMF loan scandal that embarrassed the government and the bank.
I covered the BMF scandal extensively in 1985 and 1986 because the late auditor-general Ahmad Noordin lived in the same Petaling Jaya neighbourhood as myself, opposite the University Hospital.
Sometimes when I went to his office, if he was busy he would ask me to drop by his house in the evening for tea and goreng pisang (fried bananas).
An NST editor and mentor then, PC Shivadas, along with other editors, encouraged me to continue breaking the BMF stories because he knew about my personal contact, friendship and relationship with Ahmad Noordin.
Another senior editor told me when you have got a reliable source speaking to you, “Milk him well for your exclusive page one stories.”
Reporting then was taken professionally and personally by some of us, the reporters, as the NST then competed with The Star for exclusives.
The competition was good and healthy because ultimately the public and readers benefitted from the breaking news with no holds barred from both newspapers at that time. The Star edged the NST then by nominating Ahmad Noordin as ‘Man of the Year in 1986' and with some leading headline news on the BMF.
Those were the days when the NST and The Star both carried good BMF exclusives, and most of the time Ahmad Noordin was willing to be quoted, unlike government officials today who decline to comment. Their fear is that their ministers do not want them to be seen taking the limelight.
Then, the astute, transparent and forthright auditor-general would spend hours narrating the details of the BMF scandal. He related how the defunct Carrian group and its former chief executive, George Tan, schemed and operated to get the BMF bankers on his side to approve the loans.
“Tan would make a grand entrance at Hong Kong’s plush hotel parties organised by him. Flanked with a bevy of gorgeous women at past midnight when most of the bank officials were drunk, he would clinch the deals,” Ahmad Noordin told me.
Anecdotes of Carrian affairs
To me, the auditor-general was a fine gentleman and would relate these stories in an amusing way and reveal the climax laughingly, and I enjoyed his entertaining way of storytelling the anecdotes of Carrian affairs.
If the conversations stretched past 8pm, he would ask me politely if I could stay for dinner. He would then call his wife and tell her, “Prepare something good because Krishna is joining us for dinner.” And, the dinner was always excellent with ayam percik and sambal rice.
Our comradery, between a senior government official and a reporter, was so good and I looked up to him with respect as an elderly father figure.
The three-person investigative panel’s report on Jan 7, 1985, disclosed details of the biggest financial scandal in Malaysia’s history (at that time).
It took years for the police in Malaysia and in Hong Kong to unravel the web of corruption and financial mismanagement in the state-owned Bank Bumiputra, the country’s biggest bank in the 80s.
Despite the financial setback, then prime minister Dr Mahathir Mohamed gave the three investigators a free hand to get to the bottom of the truth on how BMF officials hoodwinked the bank and the government.
The investigative committee disclosed the bank’s many bad loans to Hong Kong property developers. Ahmad Noordin was the man who went out all the way to dig into details.
One of the auditors, Jalil Ibrahim, who was sent to investigate the scandal, was murdered in Hong Kong.
The bank’s Hong Kong subsidiary, Bumiputra Malaysia Finance Ltd., commonly known as BMF, paid US$1 billion between 1979 and 1983 in bad loans to developers such as Carrian which quickly made and quickly lost a fortune in Hong Kong’s turbulent property market, Reuters reported.
George Tan was charged in Hong Kong in 1984 with conspiracy to defraud in connection with the collapse of his financial empire in 1983.
In its report, the committee accused six BMF executives of corruption and urged the authorities in Malaysia and in Hong Kong to begin investigations with the aim of charging them in court.
A Hong Kong Attorney-General’s office spokesperson told Reuters, “'When we’ve got the report, we’ll be in a position to consider what action is appropriate.'”
The report pointed out that the six executives and some of their relatives received payments directly or indirectly from Tan and companies in his Carrian group. The 33-page report (with a 350-page appendix) tells of personal loans and payments made by Tan to the people who were lending millions of dollars to Carrian.
The committee’s report prompted Malaysian police to investigate a US$40 million loan by BMF to Carrian Nominee Ltd and consultancy fees paid to BMF employees without Bank Bumiputra’s knowledge.
The committee found that BMF continued to lend to Carrian after it announced in October 1982 that it could not pay its debts.
The disclosure that loans were made in 1983 embarrassed Bank Bumiputra’s former executive chairperson, Nawawi Mat Awin, who resigned later that year.
The bank’s new chief, the late Basir Ismail, had frozen all loans through foreign branches and executed a shake-up of the senior staff, the New York Times disclosed.
The cabinet’s decision to release the report was welcomed by the opposition and other political groups who feared that the government might try to cover up the scandal.

“'The government now has no choice but to prosecute them and bring them to court,” said Chandra Muzaffar, the then-leader of Aliran.

M KRISHNAMOORTHY was a freelance journalist for Al Jazeera, CNN, BBC and several other foreign television networks. Formerly a journalist with The Star and New Straits Times, he has authored five books and teaches journalism. -Mkini

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