By P Gunasegaram
Malaysiakini
May 28, 2015
QUESTION TIME Malaysia had no major financial scandals – as in billion-ringgit ones – until the infamous case of Bumiputra Malaysia Finance or BMF emerged in the early eighties and captured the imagination of the press and the public.
Before we are a bit quick to point the finger at former prime minister Dr Mahathir Mohamad for that, let’s point out that Mahathir became prime minister only in 1981, after BMF, Bank Bumiputra’s wholly-owned Hong Kong subsidiary, started loaning money to George Tan’s Carrian group, eventually amounting to RM2.5 billion in all.
The loans were made between 1979 and 1983, which means that loans continued to be made to Carrian even after Mahathir became PM, implying that Mahathir cannot be totally absolved.
Carrian was a rising star in the Hong Kong property market then but subsequently went bust, making it the biggest bankruptcy in Hong Kong at the time. The scale of the scandal was simply enormous and record-breaking, putting Malaysia on the top of the list in terms of banking failure at that time.
The question is what was a unit of Bank Bumiputra, a bank set up to provide bumiputeras access to funding as part of the effort to increase their participation in business, doing lending money to a Hong Kong property group?
This was at that time, the largest banking scandal in the world and the interest in it spiked further when a Bank Bumiputra senior officer sent to Hong Kong to investigate was murdered and his body dumped in a banana plantation. Continue reading “Why things like 1MDB happen”
