Bank Islam Loses RM479.8 million. Govt. Blames 'Weak Credit Management'!

The RM479.8 million loss incurred by Bank Islam Malaysia Berhad (BIMB) last year was due to weak credit management in its offshore operations in Labuan and not because of any misappropriation. The loss was an isolated case and did not involve the bank's domestic operations which recorded a profit that year. What kind of explanation is this? Nearly half a billion in legal tender has disappeared and some poor credit manager is being primed to take the rap.

Sure enough, Parliamentary Secretary to the Finance Ministry Datuk Seri Dr Hilmi Yahya says that with changes made at the bank's management level in Labuan and in peninsular Malaysia, the government is confident that a situation like that will not recur. ("Oops, sorry it happened. I know huge piles of cold cash has gone down the tube but we are confident it won't happen again.") Great! I feel so good listening to his reassuring statement.

He further added that following the loss, the bank had taken steps to strengthen its corporate governance and risk and credit management framework in Labuan. ("We've sacked a couple of clerks and an office boy and transferred one assistant credit manager.")

I'm no economist, but tell me what have the regulatory authorities and the higher management of the bank been doing, apart from playing golf and politics? Or perhaps ten years down the road when another spat between national leaders takes place can we expect to hear other canaries singing, ala Rashid Hussain and Tajuddin Ramli? I wonder who the canaries will then blame for forcing them to take loans or certain decisions. Khairy Jamaluddin perhaps?

Apparently the bank had received capital injection from its existing shareholders and other investors who were interested to hold equity eg. from Dubai Investment Bank of the United Arab Emirates and Tabung Haji, which collectively hold 49 per cent of BIMB's total capital. Hopefully this should help overcome its financial trouble.

However capital injections is a double-edged sword, especially if current methods of doing things persist as many bad habits tend to. It is high time for the Finance Ministry and Bank Negara to intervene and set things right, at least for the time being, until another financial scandal erupts as it surely will. At the very least it will delay the disappearance of Bank Islam into a bottomless financial sinkhole.

UPDATE: From Harakah comes this report about the allegations of misappropriation. Read on..... Kerugian yang dialami Bank Islam Malaysia Berhad (BIMB) sejumlah 479.8 juta pada tahun 2005 sekali lagi dibincang di Dewan Rakyat hari ini.

Dato' Ismail Muttalib (BN Maran) berkata, beliau amat bimbang kerugian bank tersebut yang didakwanya berpunca dari adanya penyelewengan dan bukannya kerana masalah silap tadbir cawangan 'offshore' di Labuan.

Jika benar dakwaan itu, ianya sesuatu yang memalukan kerana ianya adalah bank yang berasaskan Islam yang kini telah mula dipandang oleh bukan Islam untuk menggunakan perkhidmatannya, katanya.