Why didn't Anwar ban local banks from lending to Genting, Zafrul asks

 

Finance Minister Tengku Zafrul Abdul Aziz has hit back at PKR president Anwar Ibrahim after the latter asked why three government-linked banks provided RM2.51 billion in unsecured loans to Genting Hong Kong Ltd.

In an explainer on social media, Zafrul said if lending to gambling companies was a problem, Anwar should have done something when he was finance minister in the 1990s.

"If (lending to gambling companies) is a really important issue, why did you (Anwar) not order local banks not to lend to Genting Group when you were the finance minister?" he asked.

Zafrul (above) also said that in multiracial Malaysia, the Islamic banking sector was progressive enough that it can differentiate between Syariah-compliant and conventional assets.

Genting Hong Kong filed for bankruptcy on Jan 19.

According to Singapore's Straits Times, three banks - Malayan Banking Bhd (Maybank), CIMB Group Bhd, and RHB Bank Bhd - had a combined exposure of US$600 million (RM2.5 billion) in Genting Hong Kong.

The government has stakes in these banks through Permodalan Nasional Berhad (PNB), Khazanah Nasional Bhd, and the Employees Provident Fund (EPF).

Anwar, in a statement on Thursday, did not directly raise moral questions regarding gambling when questioning the loans.

However, the header of his statement was titled "Why did PNB, Khazanah, and EPF give loans to a gambling company".

He questioned how Zafrul allowed Maybank, CIMB, and RHB to provide unsecured loans to Genting Hong Kong.

Zafrul, in his response today, said neither the Finance Ministry nor the government companies who are shareholders in the banks are involved in the operations of the financial institutions.

"If the finance minister or shareholders interfered in the daily affairs of banks in Malaysia, it would clearly be wrong from a governance and administrative standpoint.

"I am confident that as a former finance minister, Anwar is aware of the difference between the roles of a companies board of directors and its management," he said.

Zafrul also said unsecured loans were not unusual and that banks had the freedom to do grant such loans based on their risk appetite.

In the case of Genting Hong Kong, he said the loans were approved prior to the Covid-19 pandemic - which gravely hurt the cruise operator's business.

He said other banks had also given loans to Genting Hong Kong too.

Zafrul did not respond to Anwar's concerns that the government should avoid a repeat of the Bumiputra Malaysia Finance (BMF) scandal.

The BMF scandal broke in 1983, also involving large loans to a Hong Kong-based company.

The government eventually had to bail out Bank Bumiputra Malaysia Bhd (BBMB) to the tune of billions. - Mkini