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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

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
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
that BMF had lost RM2.5 billion and

Boleh Malaysia Finance (Part One) 1/5

Phase Three was never implemented as Esme Osman (BMF Non-Executive
by now the Carrian Group was facing Chairman), Ibrahim Jaffar (BMF GM),
massive liquidity problems. The murder of George Tan (Carrain Chairman) and a few
BMF Assistant General Manager, Jalil Carrian “chaps”.
Ibrahim, hastened the end of a sordid
chapter involving fraud, CBT, criminal When Dr Rais questioned this unorthodox
conspiracy and murder. Klang transaction, since the Malaysian
businessman Man Fook Than was Government could have purchased this
eventually convicted of the murder and property outright, he obtained no answer
sentenced to life in prison, a crime he from Datuk Hashim. BTW, the Gammon
vehemently denies. House deal fell through and George Tan
became the beneficiary of Gammon House
In the later Bank Negara Malaysia forex as the S&P was already signed. In fact
debacle of 1992/1993, we had creative BBMB approved a loan of US$292 million
accounting practices to offset the massive (146% financing) to Plessey Investment
losses. Here and now in 1984, no such Limited for the purchase of Gammon
actions were undertaken as none were House after it was made known to BMF
deemed necessary. BBMB was going to and BBMB that the Malaysian Government
take the “hit" and the subsequent bailout was not interested in Gammon House.
by the Federal Government means the
bank “did not suffer any losses”. In fact all BBMB’s single US$292 million loan to
BBMB Chairman Tan Sri Kamarul Ariffin Plessey Investment Limited, a HK$2 shell
got was a rap on the wrist by TDM for company, represented the largest ever
receiving HK$3.3 million in consultancy loan ever given out by BBMB at that time.
fees. He was never held accountable for (They eclipsed it with another US$580
the RM2.5 billion loss even though part of million loan later on.) Ever wondered why
these losses was made on his watch. BBMB approved the loan? When PIL was
asked by BNF loan officers just who their
First we come to the Gammon House deal. major shareholder was, the answer was
The Carrian Group was supposed to make BBMB. Carrian Investment Limited has by
a clean and quick US$50 million profit. now grown from a nonentity in 1981 to
According to the BMF Final Report, then become Hong Kong's sixth largest
BBMB Chairman Dr Nawawi Mat Awin met company by market capitalisation after
BNM Governor Tan Sri Abdul Aziz Taha (on merely one year in business.
12 November 1982) and Dr Nawawi
indicated to the BNM Governor that he Tengku Razaleigh denied these
was merely acting on instructions by the accusations and said that the Gammon
Minister of Finance (Tengku Razaleigh) to House was never even considered. The
“purchase Gammon House as a centre to Malaysian Government later bought the
house the operations of various Malaysian Lap Heng Building instead. However this
agencies in Hong Kong”. does not detract from the fact that George
Tan telexed Datuk Hashim on 3 January
This was confirmed by Dr Rais Saniman 1980 that he has been offered US$250
(alternate BMF Director) on 7 August million for the property and needed
1984 when he reported to the Inquiry prompt advice. If the Carrian Group was
Committee that he was informed by Datuk merely in it for the profits, they could
Mohamed Hashim Shamsuddin (BBMB have easily sold Gammon House and
Executive Director) that Tengku Razaleigh pocketed the US$50 million as would have
has decided to acquire Gammon House been the case if the property was sold to
with George Tan acting as the agent for the Malaysian Government. Why it didn’t
the Malaysian Government. Amongst do so can only point the finger at “more
those present at this meeting were Lorrain powerful” people behind the scene with a

Boleh Malaysia Finance (Part One) 2/5

different agenda. (Rais) spoke to the DPM.

The implications that Tengku Razaleigh Datuk Musa confirmed this but said that,
was involved was tabulated inside Special “Ada satu kali di mana Dr Rais menyebut
Brief One of the BMF Final Report (2 serta cuba menghuraikan hal-hal
volumes). However, these two volumes perusahaan/perniagaan personalnya di
were never distributed to Parliament. Hong Kong. Tetapi saya telah menahannya
What the MPs got were 5 volumes of oleh sebab ini tidak ada kaitan langsung
Special Brief Two and 3 volumes of Special dengan tugas-tugas resmi kita. Saya tidak
Brief Three. Moreover, the Inquiry tahu menahu atas apa-apa yang lebih
Committee strongly recommended that daripada itu.”
BBMB make a police report as the loan is
tantamount to theft. BBMB never did The Inquiry Committee is of the view that
lodge any police report. there is insufficient evidence to come to a
conclusion that the Malaysian Government
As with the Gammon House, Grand Marine is involved in the GMH affair. What is
Holdings Limited (GMH) was bought with evident is that BMF provided the entire
the sole intention of being resold to the financing for the purchase of GMH,
Malaysian Government at a profit. Once releasing its funds to 7 borrower
again BMF became the “sole provider” to companies for the purpose of
the tune of US$580 million in six tranches “investment”. That BMF was unable show
of US$138 million, US$100 million, US$97 documented evidence that the bank has
million, US$143.5 million, HK$643.7 done an evaluation into these companies
million and SD$20 million. before disbursing the first tranche of the
loan of US$138 million is not the matter
This is beside the fact that BMF was over here. What was terribly wrong then was
concentrating its loan portfolio on the that all of these 7 borrower companies
Carrian Group as up to 65% of its total were HK$2 companies and that 4 of these
lending were made to them. companies were only incorporated after
the loan has been approved. Get it?
Once again George Tan was left standing “After” the loan has been approved.
alone on the line when the Malaysian
Government declined the offer to That BMF tried to recover the loans of
purchase GMH. How in the world did US$138 million and US$100 million from
George get the impression that the these 7 companies was another “mystery”
Malaysian Government had intentions of of its own. 7 writs were filed against
purchasing GMH, if not under instructions George Tan but no attempts were ever
from the BMF management, specifically Dr made to serve these writs on George.
Rais? When this issue was brought up to BBMB’s
attention (after BMF finally served the 7
When Ibrahim Jaffar was questioned by writs on George’s lawyers), the BBMB
the Inquiry Committee, Datuk Musa hierarchy “over-ruled” this action and
Hitam’s name came up as the party within instructed BMF to “recover” these writs
the Malaysian Government that was immediately.
interested in the GMH deal. When Dr Rais
was questioned, he denied knowing about On 26 October 1982, Carrian announced
the GMH deal. He however admitted much that the company was not in a position to
later that George offered to sell the meet current payments and was facing
controlling interest in GMH to the temporary liquidity problems. What is
Malaysian Government and that he had beguiling is that BMF continued to
asked him to act on his behalf to speak to disburse funds to the Carrian Group after
the Malaysian Government, which he such an announcement.

Boleh Malaysia Finance (Part One) 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.”
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

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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 -


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