Malaysia抯 Exim Bank: A Morass of Bad Loans

pasolatido

Bank Negara sits on a report that a government-owned bank has lost millions on loans to politicians and royalty

An explosive auditor抯 report on the government-owned Malaysia Export-Import Bank that details tens of millions of dollars in politically tinged nonperforming loans and possible illegalities has been hidden away in a central bank file for more than four years without being acted upon.

The report, by auditors from Bank Negara Malaysia, the country抯 central bank, probes borrowers closely tied to the United Malays National Organisation, the leading party in the country抯 ruling coalition, as well as companies tied to the Sultan of Terengganu, the current Malaysian king. The report into the bank抯 lending activities details inadequate risk management on projects amounting to RM116 million (US$37 million).

A copy of the report was submitted to Malaysia抯 Anti-Corruption Agency in February by Norhayati Abdullah, a former bank employee who was fired after 12 years, allegedly for taking kickbacks from an advertising firm. She denied the charges and said she was being made a skapegoat for corruptin inside the bank. She was joined in going to the ACA by disgruntled Exim bank officials in alleging that top management were involved in taking kickbacks and other malpractices.  Senior bank managers were said to have illicitly purchased luxury cars while also receiving millions of ringit in cash. The whistleblowers also submitted documents claiming that bank managers enjoyed protection from powerful politicians, which gave them a free rein to do as they please.

Despite repeated requests for comment, Bank Negara officials have refused comment on why the report was never acted upon. One official acknowledged the existence of the report and then passed the question on to another official who didn抰 call back. While an Anti-Corruption Agency spokesman said that the case is being investigated, there seems little evidence that the agency has spoken to any of the complaining witnesses about the allegations.  Under Malaysia抯 Prevention of Corruption Act, public officials must declare their assets and are required to account for the source of any unexplained cash that doesn抰 appear to be earned at their salary levels.

Mohd Fauzi Rahmat, the new head of Exim Bank who was appointed this month, could not be reached for comment.

Founded in 1995 on the order of former Prime Minister Mahathir Mohamad, the bank was part of his attempt to turn Malaysia into an export powerhouse. It was intended to provide investment credit to help open overseas doors for Malaysian companies.

However, according to several sources inside and outside the bank, its first round of financing, just before the Asia Financial Crisis of 1997-1998, fell into a river of red ink.  None of the bank抯 original loans were ever paid off, the sources say.  A second round of financing in 2002 also turned into non-performing loans, the sources added. The magnitude of the NPLs is not listed in any of the Exim Bank抯 annual reports and, although it is a government bank, it declined to divulge the amounts to Asia Sentinel.

Among other shortcomings, according to the Bank Negara report, was a RM13 million (US$4.13 million at today抯 exchange rate) loan to companies related to BTM Resources Group Bhd ‑ Besut Tsuda Wood Products Sdn Bhd, Besut Tsuda Industries Sdn Bhd and Gimzan Plywood Sdn Bhd. The name of Besut Tsuda Wood was earlier changed from Mizan Timber Industries Sdn Bhd to BTM Timber Industries Sdn Bhd. Mizan Zainal Abidin is the name of the current Malaysian king. Sources within the Exim Bank and other Malaysian financial industry sources say the group is headed by Mizan, who is also the Sultan of Terengganu.

Besut Tsuda Wood Products, according to the Bank Negara audit report, 搒uffered repeated losses, tight liquidity and was technically insolvent" and "appeared less efficient than the market because its competitors were making profit despite lower sales." The report described the firm as a "loss making company, (that) resulted to declining shareholders funds."

The loans were classified as "high risk lending that may expose Exim Bank to unnecessary losses" and "potential NPLs." Additionally, as valuation reports were not addressed to the bank, the auditors indicated, it might not be possible to claim assets pledged as collateral should the loans turn bad, which they apparently did.

A second US$14 million term loan was made to Sun Holding Co Ltd in 2004 to finance the five-star 240-room Don Chanh Palace Hotel in Vientiane, Laos, which hosted the 10th Association of South-East Asian Nations  Summit in the same year, and a tourist complex. The company was started by the Cheok family, a property developer helmed by Cheok Thian Sang, who maintains close ties to the Malaysian Chinese Association, the second-biggest ethnic party in the Barisan Nasional.

Discrepancies included not assessing the guarantors' and related companies' finances. Another US$2 million was later approved as the initial request did not include a variety of preliminary development costs. In addition, the terms and conditions of the loans were waived and relaxed after approval, the auditors found.

Significantly, the security value of landed properties pledged was reduced from RM80 million to RM60 million and the percentage of sales proceeds to be placed in Debt Service Reserve Accounts was decreased from 20 per cent to not more than 5 percent, giving the company more cash reserves to operate with at the expense of potential creditors. The bank also waived requirements for purchases from Malaysian contractors of at least US$8 million, valuation reports on land charged as security and a one per cent upfront fee.

A third cross-border credit for RM30.3 million to Jabalpur Corridor (India) Private Limited to build a toll road was approved in 2004 despite feasibility studies that indicated the project might not be viable and that documentation was incomplete.

That company is an overseas subsidiary of Dhaya Maju Infrastructure Asia Sdn Bhd (DMI), another UMNO-connected company.  Established in 1996, it is a Class A bumiputera contractor. This allows it to tender for the biggest projects of more than RM10 million from government and government-linked companies allocated to ethnic Malays under the country抯 New Economic Policy affirmative action program.

A traffic consultancy, Frischman Prabhu (I) India Ltd, forecast that traffic flow would not meet the Dhaya Maju projections, only increasing from 3 percent to 5 per cent, not from 5 per cent to 9 per cent as assumed by Jabalpur, which was not enough to repay the loan.  The report also criticized projected cash flow submitted by Japalbur as inflated.

Earlier in 2002 and 2003, two loans totaling RM28 million were made through UE Development India Pvt. Ltd. a wholly-owned subsidiary of UEM Builders Bhd, a construction that historically has been closely linked to UMNO, to a firm called TDI Infrastructure, which is a subsidiary of Dhaya Maju, to finance another highway in India. Again the loans were improperly secured against a deed of assignment for contract proceeds between the bank and the company. The central bank抯 internal auditors deemed the arrangement to be "ineffective due to (the) lack of monitoring by (the) Loan Administration Department on the project account.

t@t

tu diaa ehhh.....nama sultan mizan pon naik...

DarkBaron

Hmm..power corrupts...Absolute Power corrupts Absolutely..

freebird

ni report bila ni??

Earlier in 2002 and 2003, two loans totaling RM28 million were made through UE Development India Pvt. Ltd. a wholly-owned subsidiary of UEM Builders Bhd, a construction that historically has been closely linked to UMNO, to a firm called TDI Infrastructure, which is a subsidiary of Dhaya Maju, to finance another highway in India.

masa ni, UEM bawah Wahid Omar, who is now CEO of Maybank...

takut Maybank pun jadi bermasaalah ...

Acong

Originally posted by t@t at 23-4-2008 19:57
tu diaa ehhh.....nama sultan mizan pon naik...

masa kes nie, agong baru umur bape? cam siyal punya media..! :@:@:@:@

Acong

Spin machine spinning out of control
Posted by Raja Petra   
Wednesday, 23 April 2008

The Agong is not the only victim of this spin machine. There is a book called

Acong

masa tu Agong kita baru sekolah rendah......! babi laa pembohong

rasyid

siyalan ... bangkai tol la ... men sebut je nama sultan .

king_kenny

anything named as mizan,agong punye,,
ni sape punye reporter ni?

dacing mizan di akhirat nanti pun,agong punye ke,,

bodo piang punye report :@ :@ :@

freebird

Originally posted by pasolatido at 23-4-2008 07:29 PM
Bank Negara sits on a report that a government-owned bank has lost millions on loans to politicians and royalty

An explosive auditor’s report on the government-owned Malaysia Export-Import Ban ...
It makes one wonder who is behind this ‘leaked information’ and whether it was done to intentionally embarrass the Agong as punishment for throwing a spanner in the works. Last month, the Agong rejected Umno’s choice of Terengganu Menteri Besar and it is an open secret that His Majesty’s displeasure resulted from the siphoning out of RM1 billion a year in oil royalty since 2000.

...boleh jadi langkah seseorang yang marah dengan Sultan kerana di malukan dalam kes爌emilihan燤enteri燘esar燿an爅uga爌ermintaan燽alik爎oyalti爋leh爇erajaan爊egeri.....tapi,爏iapa,爕a???

Feno

desperado politik punya cara :@ :@

petit-saconnex

Originally posted by t@t at 23-4-2008 07:57 PM
tu diaa ehhh.....nama sultan mizan pon naik...

tak terkejut pun aku...

Muntz

UMNO bukan macam kakitangan kerajaan. Kalau pekerja gomen, diorang tak mudah nak lari, jadi non-performing loans di kalangan pekerja gomen sangat2 tipis... ada org kata dalam 10,000 pekerja gomen yg meminjam, cuma sorang jer yg jadi defaulter. Tapi UMNO bukan pekerja gomen. Diorang boleh come n go. Pembangkang boleh tumbangkan diorang anytime. So it's not safe enough to deal with them. Kalau royalti tu agak safe lah.