Malaysian Maverick: Mahathir Mohamad in Turbulent Times by Barry Wain (fantasy novels to read .TXT) 📕

Act prevented the company from getting into the banking business. Dr. Mahathir, though, was unfazed, and defended the legality and logic of the takeover. "Petronas has excess funds and is the only organization capable of absorbing such things," he said.[60] But when a lawyer representing the Democratic Action Party filed suit in the Kuala Lumpur High Court challenging the transaction, the government pushed a retrospective amendment to the act through Parliament clearing Petronas's participation in any non-oil venture. While the government succeeded in legislating the litigation "out of the window", as the Malaysian Bar Council said, the High Court imposed a price for the government's lack of respect for the rule of law: It ordered Petronas and the government to pay the lawyer's legal costs.[61]

Unrepentant as ever, Dr. Mahathir claimed victim status on behalf of bumiputras when he addressed the UMNO General Assembly in 1986. In the same speech as he admitted Malaysia's involvement in the tin drama, he said, "Why is there only a fuss about Bank Bumiputra? Because it is a scandal, or because it is bumiputra?" The collapse of Singapore's Pan-Electric Industries Ltd., he said, caused the loss of RM16 billion in stock market capitalization, but it did not elicit the same reaction. "Why was it not raised by the scandal-mongers from the opposition parties? Could it be because it was not committed by bumiputras?"[62]

The comparison was spurious and contained ethnic overtones — what former deputy premier Anwar Ibrahim called, after he had been discarded by Dr. Mahathir, "subtle racist innuendos" — to suit the Malay audience. Pan-Electric, one of Singapore's biggest conglomerates, rocked the Singapore and Kuala Lumpur stock exchanges and triggered an unprecedented three-day halt in trading when it suddenly went into receivership in late 1985. It brought down affiliated companies, sent share prices crashing across the board and exposed a tangled web of precarious stock-contract agreements. But no public funds were involved, and the paper losses could conceivably be retrieved as the markets recovered. Furthermore, Tan Koon Swan, Pan-Electric's influential shareholder — who also headed the governing Malaysian Chinese Association and was a member of parliament — was held responsible. He was jailed in both Singapore and Malaysia for his role in the company's financial demise.

Hussein Onn, the former premier whose integrity was unquestioned, took the opposite stance to Dr. Mahathir over Bank Bumiputra's brush with oblivion. "We are asking for trouble if the matter is played down," he told local reporters. "It will happen again if we don't learn our lessons...".[63] Appalled by the skullduggery and upset by the government's weak and reluctant response, Hussein maintained a critical profile as events unfolded. As an adviser to Petronas with access to Bank Bumiputra's accounts, Hussein said in early 1985 that questionable loans in Malaysia, given out to all kinds of people, could match those in Hong Kong.[64]

His warnings were as prophetic as they were ignored. Five unhappy years later, in October 1989, Petronas had to save Bank Bumiputra again. The bank announced a loss of RM1.06 billion for the year ended 31 March 1989, after making RM1.23 billion in provisions for interest payments from loans previously recorded as revenue but never actually received by the bank. Once more shareholders funds were wiped out — RM949 million this time.[65] Petronas injected another RM982.4 million, giving the energy company almost 100 per cent ownership of the bank. The restructuring package included an extra RM450 million in provisions made in earlier years but never reflected in the bank's paid-up capital, in addition to the RM1.23 billion already noted.[66]

This time around Bank Bumiputra blamed heavy lending for real-estate and property development in Malaysia, not Hong Kong. Mohamed Basir Ismail, the new executive chairman who had brushed aside Hussein's comments with the assurance that Bank Bumiputra's bad loans were no different from those of other Malaysian banks, now admitted that the bank was struck by plummeting property prices in 1984-85. As he put it, "We lent a lot of money all over the place."[67]

While Basir cited Malaysia's Banking Secrecy Act in declining to identify delinquent borrowers, records from a court case revealed how politically-connected clients had treated the publicly-owned bank as their own private account. According to the records, the major offender was UMNO, which borrowed RM200 million from Bank Bumiputra in September 1983 to build a convention centre and office tower in Kuala Lumpur to house the party's headquarters. For the huge project, UMNO also borrowed RM50 million from state-controlled Malayan Banking Bhd., and RM13 million apiece from United Malayan Banking Corporation and Perwira Habib Bank Malaysia Bhd.[68] UMNO for years failed to repay any of the loans or the interest on the loans, which by July 1988 amounted to nearly RM300 million owed to Bank Bumiputra alone. The details were contained in records released in a legal suit after Malaysia's High Court ruled in early 1989 that Bank Bumiputra could foreclose on UMNO's Putra World Trade Centre, as the headquarters complex was known. Bank Bumiputra filed the suit, uncharacteristically, only after UMNO was declared illegal in 1988 and its assets surrendered to an Official Assignee, a government official.[69] Consistent with Bank Bumiputra's plundered history, UMNO avoided foreclosure after "negotiations", during which the party agreed to repay the loans but resisted the payment of interest,[70] which was estimated at RM126 million in late 1989.[71]

Petronas and Bank Bumiputra split towards the end of 1990. Typically, the sale of the bank to the government was not announced at the time, but Petronas confirmed it when queried by foreign reporters. The energy company said it wanted to "concentrate on its core business and other businesses with strategic fit to its core business". The price, also unannounced, was estimated RM1.15 billion.[72] Since Petronas did not have to disclose its financial details, it was hard to calculate how much it lost in total when acting as Bank Bumiputra's holding company and financial saviour.

Although Petronas was out of the picture, Bank Bumiputra failed to mend its wayward ways. It went bust twice more in