George Tan was charged and convicted.

Not one cent was ever realized from these

Boleh Malaysia Finance loans but the matter of fact was that BMF
(BMF) Part One gave out loans in amounts that exceeded
Posted by admin its capital. This can only happen if strict
Saturday, 22 August 2009 11:34 instructions from BBMB were given to
officials in BMF.
By Hakim Joe
An Inquiry (with limited powers and

W
restricted terms of reference) was
hen a bank has too many initiated instead of a Royal Commission
(just like the MACC case these days). The
deposits (excessive funds),
Inquiry Committee comprising of Tan Sri
what does the bank do? Why,
Ahmad Nordin, Chooi Mun Shou and Ramli
they relax their loan requirements to offer
Ibrahim produced a 6,000 page (13
more loans out in order to maximize their
volumes) report after two years of
profits. What if the national loan
intensive investigations. On paragraph
requirements are already “very relaxed”
74.2(2) of the BMF Final Report, the
due to favorable economic conditions in
committee reported that “apart from few
the country? Why, you loan the excessive
members of the staff, the Committee did
liquidity overseas!
not receive the full co-operation and
assistance from the Board and
Bank Bumiputera Malaysia Berhad
Management of Bank Bumiputera Malaysia
(BBMB), found itself in such an enviable
Berhad (BBMB), which was the Appointing
situation in 1979/1980. This was partly
Authority.”
due to the fact that Petronas was
“instructed” to remit RM50 million a
The BMF Final Report started off by
month into its BBMB banking account. The
stating that “There might not have been
dilemma that BBMB was facing then was
Carrian without BMF.” The BMF Inquiry
how it was going to lend these excessive
Committee also identified a “Concerted
cash out when other Malaysian banks
Plan” by various BMF top officials and
were already in the picture. BBMB could of
George Tan “to make use of BBMB funds
course lower their interest rates but the
to make money in Hong Kong” during the
potential profits could not be maximized
property boom of 1979. This plan was
and the fact that the other competing
divided into three phases where Phase
banks could also do likewise was not lost
One involve the takeover of a Hong Kong
on them. Allowing the money to be left in
public-listed company (Mai Hon, which
the bank’s coffers is not productive either
was later renamed Carrian Investment
as BBMB would have to pay interest on it.
Limited), the purchase of Gammon House
at US$200 million (to be resold later to
So, in order to maximize their profits, the
Malaysian Government at US$250 million)
top hierarchy within BBMB decided to
and the setting up of Plessey Investment
channel these funds out of the country
Limited (PIL) as the recipient vehicle for
and Bumiputera Malaysia Finance (BMF)
the BMF loans.
based in Hong Kong, was selected as the
vehicle targeting the foreign exchange
Phase Two involve the purchase of Grand
and money market operations. George
Marine Holdings Limited (GMH) at HK$800
Tan Soon Gin of Carrian was more than
million to be resold later to the Malaysian
willing to be the recipient.
Government at HK$1 billion, and the
necessary cash flow for the Carrian
After the financial debacle, it was reported
Group.
that BMF had lost RM2.5 billion and

Boleh Malaysia Finance (Part One) 1/5

Phase Three was never implemented as
by now the Carrian Group was facing
massive liquidity problems. The murder of
BMF Assistant General Manager, Jalil
Ibrahim, hastened the end of a sordid
chapter involving fraud, CBT, criminal
conspiracy and murder. Klang
businessman Man Fook Than was
eventually convicted of the murder and
sentenced to life in prison, a crime he
vehemently denies.
In the later Bank Negara Malaysia forex
debacle of 1992/1993, we had creative
accounting practices to offset the massive
losses. Here and now in 1984, no such
actions were undertaken as none were
deemed necessary. BBMB was going to
take the “hit" and the subsequent bailout
by the Federal Government means the
bank “did not suffer any losses”. In fact all
BBMB Chairman Tan Sri Kamarul Ariffin
got was a rap on the wrist by TDM for
receiving HK$3.3 million in consultancy
fees. He was never held accountable for
the RM2.5 billion loss even though part of
these losses was made on his watch.
First we come to the Gammon House deal.
The Carrian Group was supposed to make
a clean and quick US$50 million profit.
According to the BMF Final Report, then
BBMB Chairman Dr Nawawi Mat Awin met
BNM Governor Tan Sri Abdul Aziz Taha (on
12 November 1982) and Dr Nawawi
indicated to the BNM Governor that he
was merely acting on instructions by the
Minister of Finance (Tengku Razaleigh) to
“purchase Gammon House as a centre to
house the operations of various Malaysian
agencies in Hong Kong”.
This was confirmed by Dr Rais Saniman
(alternate BMF Director) on 7 August
1984 when he reported to the Inquiry
Committee that he was informed by Datuk
Mohamed Hashim Shamsuddin (BBMB
Executive Director) that Tengku Razaleigh
has decided to acquire Gammon House
with George Tan acting as the agent for
the Malaysian Government. Amongst
those present at this meeting were Lorrain
Boleh Malaysia Finance (Part One)
Esme Osman (BMF Non-Executive
Chairman), Ibrahim Jaffar (BMF GM),
George Tan (Carrain Chairman) and a few
Carrian “chaps”.
When Dr Rais questioned this unorthodox
transaction, since the Malaysian
Government could have purchased this
property outright, he obtained no answer
from Datuk Hashim. BTW, the Gammon
House deal fell through and George Tan
became the beneficiary of Gammon House
as the S&P was already signed. In fact
BBMB approved a loan of US$292 million
(146% financing) to Plessey Investment
Limited for the purchase of Gammon
House after it was made known to BMF
and BBMB that the Malaysian Government
was not interested in Gammon House.
BBMB’s single US$292 million loan to
Plessey Investment Limited, a HK$2 shell
company, represented the largest ever
loan ever given out by BBMB at that time.
(They eclipsed it with another US$580
million loan later on.) Ever wondered why
BBMB approved the loan? When PIL was
asked by BNF loan officers just who their
major shareholder was, the answer was
BBMB. Carrian Investment Limited has by
now grown from a nonentity in 1981 to
become Hong Kong's sixth largest
company by market capitalisation after
merely one year in business.
Tengku Razaleigh denied these
accusations and said that the Gammon
House was never even considered. The
Malaysian Government later bought the
Lap Heng Building instead. However this
does not detract from the fact that George
Tan telexed Datuk Hashim on 3 January
1980 that he has been offered US$250
million for the property and needed
prompt advice. If the Carrian Group was
merely in it for the profits, they could
have easily sold Gammon House and
pocketed the US$50 million as would have
been the case if the property was sold to
the Malaysian Government. Why it didn’t
do so can only point the finger at “more
powerful” people behind the scene with a
2/5
different agenda.
The implications that Tengku Razaleigh
was involved was tabulated inside Special
Brief One of the BMF Final Report (2
volumes). However, these two volumes
were never distributed to Parliament.
What the MPs got were 5 volumes of
Special Brief Two and 3 volumes of Special
Brief Three. Moreover, the Inquiry
Committee strongly recommended that
BBMB make a police report as the loan is
tantamount to theft. BBMB never did
lodge any police report.
As with the Gammon House, Grand Marine
Holdings Limited (GMH) was bought with
the sole intention of being resold to the
Malaysian Government at a profit. Once
again BMF became the “sole provider” to
the tune of US$580 million in six tranches
of US$138 million, US$100 million, US$97
million, US$143.5 million, HK$643.7
million and SD$20 million.
This is beside the fact that BMF was over
concentrating its loan portfolio on the
Carrian Group as up to 65% of its total
lending were made to them.
Once again George Tan was left standing
alone on the line when the Malaysian
Government declined the offer to
purchase GMH. How in the world did
George get the impression that the
Malaysian Government had intentions of
purchasing GMH, if not under instructions
from the BMF management, specifically Dr
Rais?
When Ibrahim Jaffar was questioned by
the Inquiry Committee, Datuk Musa
Hitam’s name came up as the party within
the Malaysian Government that was
interested in the GMH deal. When Dr Rais
was questioned, he denied knowing about
the GMH deal. He however admitted much
later that George offered to sell the
controlling interest in GMH to the
Malaysian Government and that he had
asked him to act on his behalf to speak to
the Malaysian Government, which he
Boleh Malaysia Finance (Part One)
(Rais) spoke to the DPM.
Datuk Musa confirmed this but said that,
“Ada satu kali di mana Dr Rais menyebut
serta cuba menghuraikan hal-hal
perusahaan/perniagaan personalnya di
Hong Kong. Tetapi saya telah menahannya
oleh sebab ini tidak ada kaitan langsung
dengan tugas-tugas resmi kita. Saya tidak
tahu menahu atas apa-apa yang lebih
daripada itu.”
The Inquiry Committee is of the view that
there is insufficient evidence to come to a
conclusion that the Malaysian Government
is involved in the GMH affair. What is
evident is that BMF provided the entire
financing for the purchase of GMH,
releasing its funds to 7 borrower
companies for the purpose of
“investment”. That BMF was unable show
documented evidence that the bank has
done an evaluation into these companies
before disbursing the first tranche of the
loan of US$138 million is not the matter
here. What was terribly wrong then was
that all of these 7 borrower companies
were HK$2 companies and that 4 of these
companies were only incorporated after
the loan has been approved. Get it?
“After” the loan has been approved.
That BMF tried to recover the loans of
US$138 million and US$100 million from
these 7 companies was another “mystery”
of its own. 7 writs were filed against
George Tan but no attempts were ever
made to serve these writs on George.
When this issue was brought up to BBMB’s
attention (after BMF finally served the 7
writs on George’s lawyers), the BBMB
hierarchy “over-ruled” this action and
instructed BMF to “recover” these writs
immediately.
On 26 October 1982, Carrian announced
that the company was not in a position to
meet current payments and was facing
temporary liquidity problems. What is
beguiling is that BMF continued to
disburse funds to the Carrian Group after
such an announcement.
3/5
 paperwork allowing all Carrian’s US assets
Three days after the announcement was to be pledged to BMF, BMF in fact had to
made, the BMF Board approved another fork out another US$76 million, and do it
US$30.2 million loan to Carrian although through a third party (Mr Yap Lim Sen
Carrian Holdings Limited (CHL) only from Ipoh Garden), to complete this
applied for a US$30 million loan (for theirundertaking.
US-based Oakland Project). Why the
additional “unasked-for” US$200,000? This is on top of yet another US$7.6
million “loan” made payable to the city of
Another thing is that BMF did not ask nor Oakland for the purchase of an Oakland
obtained the Oakland project as security property by the Carrian Group. BTW, Mr
against its loan, in fact no security was Yap paid for a trip to US to check out
ever requested. What is even more these properties and reported to BBMB
questionable is that the money is released that they are merely slums that nobody
to a company called Paris Ride and not wanted.
CHL (the loan applicant).
On 20 May 1983, the BBMB Board
CHL and CIL were both undergoing approved the proposal to acquire Carrian’s
restructuring at this time (after the US Assets through a third party. The two
announcement) and the Wardley/Hambro nominee companies were Dragon Base
scheme required both companies to lodge and Darton and the agreement allowed for
HK$250 million (US$40 million) in an a rescission period of 4 weeks whereby
escrow account to be used as working the agreement can be rescinded “in the
capital for both companies. Now, how event of any adverse disclosures about
were CHL and CIL capable of this the property.”
requirement?
Jalil Ibrahim personally flew to the US on
All I can say is that within 30 days after 7 June 1983 and engaged a renowned
releasing the US$30.2 million loan to CHL, property valuer (Levanthol) to value
BMF released an additional US$40 million Carrian’s US assets and was told that the
into the escrow account at the Bank of properties were nowhere near the US$76
Communications. This newest loan is million S&P figure.
secured by the personal guarantee of one
Mr George Tan Soon Gin. Another valuer, Perini, valued those
properties at US$56 million only. (That’s
Another US$3 million was released on 9 36% over-valued at US$76 million.) Jalil
April 1983 to yet another George’s promptly informed BMF of his findings and
companies (Fitarget) and again on the 10 tried to get BMF to rescind on this deal.
June 1983 (US$4.5 million). Both loans
are once again secured by the personal On 9 June 1983, Jalil wrote to his wife
guarantee of George Tan. detailing his frustrations about this deal
but the letter was never completed or
Part of Carrian’s US Assets were meant to posted. Jalil was also against the release
be the security for the group’s loans from of another US$4 million loan to the
BMF but since these same assets were Carrian Group for the purchases of China
initially procured using the same loans Underwriters Life & General Insurance Co.
offered by BMF, this would defeat the Ltd (CUL) and the Union Bank Hong Kong
purpose of securitizing it. Limited (UB).

As only part of it were pledged as security As the deputy GM of BMF, he personally

(due to the fact that they were all not blocked the US$4 million loan. On 18 June
fully paid for) and to complete the 1983, Jalil Ibrahim was found murdered

Boleh Malaysia Finance (Part One) 4/5

and his body dumped in a banana
plantation outside Hong Kong.

On the same day, the loan was released

to Fitarget. Coincidence? Maybe…(Lorrain
Osman broke his silence after 23 years
and in 2008 he ventured that Jalil had late
night visitors at his hotel room where he
was staying, and on the day of his
murder, had taken HK$20,000 purportedly
for ‘Ibrahim’ to payoff someone.)

To be continued…Part Two

Originally published at -

http://mt.m2day.org/2008/content/view/25954/8
4/

Boleh Malaysia Finance (Part One) 5/5