Tun Dr Mahathir Mohamad expressed appreciation that Singapore helped Malaysia reclaim funds allegedly laundered from 1Malaysia Development Bhd (1MDB). That’s great. Now, all we need to do is seek assistance from the Government of Hong Kong to recover funds laundered from Bumiputra Malaysia Finance (BMF). But it’s highly unlikely that the Tun will agree to this, let alone call for an RCI into the whole affair.
Well, in 1980, Bank Bumiputera Malaysia Bhd (BBMB) was receiving RM50 million a month from Petronas as part of an agreement to stock the coffers of the bank, established primarily to benefit the bumiputras. To facilitate offshore transactions, Bumiputera Malaysia Finance (BMF) was set up in Hong Kong and began channelling parts of that sum to intermediary companies.
Sometime that year, the (then) Minister of Finance, Tengku Razaleigh Hamzah, got the then chairman of BMF, the late Lorrain Esme Osman, to approve borrowings worth USD292 million to a Hong Kong based entity. The money was channeled in four tranches between the 19th of December 1979 and the 25th of June 1980.
It was soon discovered that the then owner of UMBC, Chang Ming, had facilitated the transfer of another USD50 million from UMBC to a BBMB subsidiary in Bahrain. In the years that followed, both BBMB and BMF approved a series of loans totalling about RM2.5 billion to a Hong Kong registered entity to facilitate investment into the territory’s booming property market. However in 1983, that entity, the Carrian Group, went bust after the property bubble burst and the loans could not be recovered.
A Committee of Inquiry was quickly called into the affair and discovered multiple violations in banking protocols. Not only did BBMB and BMF fail to make certain entries into their books, many transactions were not in sync and pointed to elements of fraud. But the biggest elephant in the room was the murder of senior BBMB auditor Jalil Ibrahim, who was said to have unearthed enough evidence to end the career of a minister and several other government officials.
Mahathir was coy about the whole affair.
When met by reporters on the 1st of January 1984, he insisted that a Royal Commission of Inquiry (RCI) could not be called as “BMF was registered in Hong Kong, not Malaysia.” However, I was told by one of his own men that an RCI would have risked disclosure of his role in the whole affair and the true identity of Jalil’s murderer. According to the source, Mahathir’s biggest fear was that Najib, who was then the Menteri Besar of Pahang, would leak sensitive details to the Yang di-Pertuan Agong given his ties with the Pahang royal household.
That seems to explain why Najib was quickly pulled out from the Ministry of Finance in 1982 and turned into the Menteri Besar of Pahang and why Mahathir preferred a Committee of Inquiry (hereinafter referred to as the Noordin Committee of Inquiry, or NCI) over an RCI. Not only was Najib’s ‘transfer’ meant to minimise leaks to the palace of Pahang, Mahathir knew that the NCI lacked jurisdiction to subpoena persons or confidential documents and did not grant legal immunity to investigators against possible cases of defamation.
It is for this reason, above all, that he got the late Tan Sri Ahmad Noordin Zakaria to lead the committee. He believed that Noordin would never reveal what was not meant to be revealed as the latter was known to be an overly cautious man. But not only did the Auditor-General dig as deep as he could into the whole affair, he insisted that the NCI report be made public “as the people have the right to know.” When Mahathir refused to entertain the idea, Noordin made a very public plea for disclosure by insisting that the Prime Minister made available all of the committee’s findings even if it brought shame to the GoM.
The very next day, Mahathir said this:
“If damage is done to the credibility or credit-worthiness of BBMB”, as a result of publishing the report, “the bank will be fully justified in suing you for damages.”
But not only did Noordin agree to take full responsibility, so did one other NCI member, a lawyer by the name of Chooi Mun Sou. Seeing no alternative, Mahathir quickly got his men to attach a RM250 price tag to the report before agreeing to make it public. Now, imagine getting someone to purchase a copy of the RCI report into the Nineties Forex Scandal at RM1,250, which roughly is what the NCI report would have been worth today. Back then, the average Malaysian would likely have found the price too hefty and would probably have given the report a miss.
Still, just to be sure nobody would find a copy of it anywhere, Daim quickly instructed his men to snap up most copies almost as soon as they were published. To appease members of public, Mahathir got the GoM to release a ‘white paper’ that was so scant on details, Aliran Monthly insisted that it was a “white wash” and not the white paper. But according to Mahathir, the release was proof that he had done no wrong and that the GoM was sincere in getting to the bottom of things.
Now how’s that for a story?