‘Thugs, mafia buying up NPLs’

September 20, 2012 Thugs are organising syndicated auctions – allegedly with the help of local banks – as a means to launder money, claims a consumer association.

 

SHAH ALAM: Underworld mafia and thugs have allegedly infiltrated the local banking system.

According to Subang, Shah Alam and Selangor Consumers Association (Cassa), bookies and loan sharks are working in cahoots with financial institutions to take over banks’ non-performing loans (NPLs) and are manipulating the property auctions.

Cassa president Jacob George said “agents” were forming companies and debt-collecting agencies to carry out their activities, and urged the authorities to quickly set up a task force to probe into the matter.

He alleged that these agencies were controlled by the underworld figures, who would offer to take over bank’s NPLs in order to launder illicit monies.

These companies would organise syndicated auctions with banks.

George claimed that one politically connected bank had in fact sold over 43,000 NPLs to debt- collecting agencies while another had traded in 28,000 NPLs.

“Based on our latest study, more than 63% of the victims are alleged to be Bumiputeras,” he told reporters today after lodging a report with the Malaysian Anti-Corruptions Commission (MACC).

He alleged many bank officials, for the sake of self-interest, were willing to reveal privileged information of properties to these thugs.

“These people would then split into four teams, one would bid for one particular property and another would bid another. On paper it might record 20 bidders have attended, but in fact only four people made bids,” he said.

George alleged that in two cases in Penang and Selangor, a successful bidder was found to have set up the company just three weeks ahead of the bid.

“When we investigated the background of the company, together with our police source, we found out that the owners were a bookie, a tobacco smuggler and loan sharks,” he claimed.

He also cited another case whereby the bank auctioned off a property owned by a Bumiputera company, after allegedly increasing the redemption sum from RM13 million to RM15.8 million within two months.

“The successful bidder paid RM15.8 million in cash! This is unheard-of. From where did he get the money?” he asked.

George said he had submitted the evidence to the MACC and is now demanding that the Finance Ministry, Bank Negara, MACC and the police set up a special task force to address the issue.

“We are giving them 21 days to react, failing which we will stage demonstrations outside of banks all over Malaysia,” he said.

Land buyer claims bank cheated him

Leven Woon | September 5, 2012

Paul Murugesu accuses a bank of manipulating the redemption sum and eventually auctioning off his property last month.

 

SUBANG JAYA: When Paul Murugesu bought a piece of land in Klang for RM11.5 million in December 2010, never did he expect that the seller’s bank would auction off the land two years later.

The 53-year-old Klang-based businessman felt even victimised as the bank allegedly did not grant him a chance to pay the bank loan and increased the redemption sum by RM8.6 million within 18 months.

He claimed that he had suffered more than RM3 million in losses, while risking to be evicted soon from his land.

Speaking at a press conference with Consumer Association of Subang and Shah Alam (Cassa) today, Murugesu claimed he entered into a valid Sales and Purchase Agreement (S&P) with a Malaysian registered company for the land that come with three units of warehouses and three jetty points in Port Klang.

The six-acre property was valued at RM11.5 million, forced sale (liquidation) value at RM8 million and fire insurance value at RM8 million.

The bank priced the property at RM8 million, due to previous attempts to auction off the land as the seller was unable to pay; while Murugesu proceeded to pay 10% of the RM11.5 million as down payment to the seller.

On Jan 5, 2011, a bank redemption letter was addressed to both the seller and Murugesu, indicating that the bank was aware of the dealing being initiated between all parties.

In the letter, it is said that the bank required a balance redemption sum of RM7.2 million to be paid by March 15, 2011.

Murugesu then spent RM2.5 million to renovate the property in hope to secure a certificate of fitness (CF) for his building, despite the seller having lied that the property had a CF when the agreement was signed.

When he thought things would finally get better, the bank allegedly sent another letter on May 2 this year informing him that the redemption sum was RM13 million, only to be increased to RM15.89 million on June 18.

Seven-day deadline for bank

Cassa president Jacob George slammed the bank for conspiring with hidden hands to manipulate the redemption sum and later auction off the land.

“How could they approve loan to a property without CF in the first place? How did they strike a deal with the seller?” he asked.

“The bank also fixed a ceiling price for the property at RM11.5 million, how could the bank now deviate from this?

“If the said sum is as stated, RM15.89 million, this represents a hike and interest rate of approximately 100%, which would be against all rules set by Bank Negara,” he said.

Meanwhile, Murugesu alleged that he was barred from taking part when the bank auctioned off his property on July 17. A company eventually succeeded in taking over the property on Aug 1.

“I really don’t know what to do now,” he said.

Describing the event as a “sham auction”, George urged the bank to rectify the matter within seven days, failing which he would bring it to the MACC, police and the Bank Negara.