Sunday, July 3, 2022

Zafrul schools Anwar on loans for ‘gambling’ firm after Genting-linked cruise company winds up

Tengku Zafrul Aziz says as a former finance minister himself, Anwar should be aware of the role of shareholders.

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Finance Minister Tengku Zafrul Aziz has hit back at Anwar Ibrahim after the opposition leader suggested that the government had allowed three banks with government shares in them provide unsecure loans to a cruising company owned by gambling firm tycoon Lim Kok Thay.

Zafrul said although government bodies own shares in the banks, the decision to provide loans ultimately rests with the banks after having conducted due diligence in line with Bank Negara Malaysia’s regulations.

“The fact is that the decision to lend is not determined by the finance minister, the finance ministry or the shareholders, but by the banks themselves.

“Each bank has a due diligence and credit assessment process carried out by their respective credit committees to evaluate prospective borrowers,” Zafrul said.

Maybank, CIMB and RHB Bank had provided combined loans of about RM2.5 billion to Genting Hong Kong, which recently filed a winding-up petition over a US$2.8 billion debt triggered by the bankruptcy of its shipbuilding subsidiary in Germany.

The government’s Permodalan Nasional, Khazanah Nasional and the Employees Provident Fund have share ownerships in the three banks.

This prompted Anwar to question Zafrul on why the loans were “easily” approved to a “gambling company”, a reference to casino operator Genting Group headed by Lim.

“How could unsecured loans be given so easily to this gambling company?” Anwar had asked.

Zafrul said Genting Hong Kong was among leisure companies around the world hit by Covid-19, adding that the decision to provide unsecured loans was made before the pandemic.

The former banker said it was not unusual for banks to give unsecured loans such as in the case of Genting Hong Kong.

“A bank may approve unsecured loans based on its willingness to take risks according to its risk appetite, as well as credit assessments that meet the criteria and approval based on internal governance,” he added.

He said Malaysian banks were not the only ones who provided unsecured loans to Genting Hong Kong.

“Does Datuk Seri want to give the impression that all of these foreign banks were reckless in providing loans to Genting Hong Kong?”

Zafrul said as a former finance minister, Anwar should know that the shareholders of a bank do not interfere in its day-to-day operations.

“If the finance minister or shareholders interfere in the day-to-day affairs of banks in Malaysia, it is wrong in terms of governance. I am sure that as a former finance minister, Anwar is also aware of the difference between the roles of board members and a company’s management,” said Zafrul, referring to Anwar’s position during Dr Mahathir Mohamad’s first term as prime minister.

Anwar served as deputy prime minister from 1991 to 1998 before he was sacked by Mahathir over allegations of sexual misconduct and abuse of power.

Zafrul also took Anwar to task for questioning loans to a “gambling” company, saying Malaysia has a progressive Islamic banking system that draws the line between conventional and shariah-compliant assets.

“So if the issue is really important, how is it that when you were the finance minister, no instruction was issued to local banks barring them from lending to Genting Group?” he asked, adding that Malaysia’s banking sector had improved since the time of the Asian financial crisis in the late nineties, when Anwar was the finance minister.

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