Useless watchdogs, Tinju Dunia and 1MDB

“It would appear... [that] Cerberus, the mythological three-headed hound guarding the gates of Hell, virtually guided and controlled the destinies of the Bank and held its fortunes in [the hands of the 3 accused]. The analogy is perhaps not inappropriate in view of the canine element injected into these proceedings, what with references to watchdogs, toothless, barkless, spineless, chained and all, Government or otherwise, and not forgetting the Press hounds.”

That quote is from Justice Abdoolcader’s 1976 judgment (upheld on appeal in 1978) at the conclusion of the 2 months long trial of Datuk Haji Harun bin Haji Idris & 2 others.

Abdoolcader explicated various aspects of the law. And, in ripe words, he caricatured the so-called watchdogs: toothless, barkless, spineless, chained.

The case concerns crimes committed in 1975, in the Tun Razak era. Abdoolcader spelled out the political culture in Umno and the slovenliness of the watchdogs: at best wilful ignorance and at worst deliberate disregard for the law. Note: The judgment doesn’t implicate Tun Razak.

Tinju Dunia Sdn Bhd was the vehicle Harun used for Umno Youth to bring the Muhammad Ali-Joe Bugner fight to Malaysia. Harun was at that time president of Umno Youth and (non-salaried) chairman of Bank Kerjasama Rakyat Malaysia Berhad.

Malaysia was in recession. The government was low on funds. Razak wanted to do something to cheer the nation. A decision was made to host the Ali-Bugner fight. It had to happen within three months. The government couldn’t finance it, but offered to cover losses if any were incurred. And, as a sweetener, the government would exempt any profits from tax.

Umno had no money. Tinju Dunia was a two dollar company which was still a gleam in the eyes of its shareholders to-be. Money had be quickly wired to the USA to book the fight. What was to be done?

Of the seven eventual directors of Tinju Dunia, five were employees of Bank Rakyat and two were members of Umno Youth. Harun was managing director.

The trio, Bank Rakyat’s chairman, managing director and general manager/secretary – the latter two were shareholders in Tinju Dunia – collaborated to “borrow” assets of Bank Rakyat and use them as collateral to obtain a loan of RM6.5 million from First National City Bank.

The problem was, as a cooperative, Bank Rakyat could not use the stocks as collateral without the explicit agreement of its board of directors and the Registrar of Cooperative Societies.

In Abdoolcader’s judgment, the trio were aided by “the apathy and acquiescence of the directors, including the Government watchdogs or official sentinels or whatever and not excluding even the Registrar of Cooperative Societies himself” and representatives of the Treasury.

The trio concocted a document which created the fiction that the decision to use the stocks as collateral was properly authorized. Abdoolcader said the document, the central exhibit in the case, “would easily qualify for an academy award for court exhibits if there was one on the basis of the renown and publicity it has received.”

Blazing with rage at the extent and magnitude of lapses, the judge wrote of “a grotesque picture of passive connivance on the part of the directors in all these irregular and indeed unlawful activities.”

During the trial it even emerged that Datuk Abu Mansor bin Mohamed Basir, the managing director of Bank Rakyat, carried out his own private business which had some conflict with that of his employer: “[Abu Mansor] was a shareholder in Aman Properties Sendirian Berhad which was acquired by Rakyat Corporation of which he was the Managing Director and as a result the shareholders of Aman Properties obtained a profit of about $1.2 million out of which he personally made a clean profit of some $200,000 which apparently was never disclosed to the Bank.”

The judge didn’t have an ounce of sympathy for Abu Mansor, but had some sympathy for Harun.

During sentencing Abdoolcader said to Harun: “If a soldier stood before me to receive sentence I would have to take into consideration the service he has rendered to the country. Likewise, in your case I cannot efface consideration of the services you have in the past rendered.”

But the judge was very clear about what was at stake. He would excuse no one.

Not averse to quoting himself, he wrote: “No one is above the law, and I would repeat what I said in my judgment in Mak Sik Kwong v Minister of Home Affairs, Malaysia (No 2) [1975] 2 MLJ 175 182 that ours is a system of law which no expediency can warp and no power can abuse with impunity.”

Abdoolcader characterized the case as “a grotesque picture of passive connivance.” 40 years on, so is 1MDB. – July 23, 2015.

* This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.