Sun (Used by permission)
The former chairman of Bumiputera Malaysia Finance (BMF) Lorrain Esme Osman speaks for the first time in more than two decades about the country’s biggest bank scandal and his trials and tribulations. R. Nadeswaran and Terence Fernandez have the exclusive.
FOR 23 years, he remained silent. Having served almost seven years at the
Pentoville Prison and later at Brixton in the United Kingdom and at Stanley
Prison in Hongkong, earning the dubious honour of Britain’s longest–serving
remand prisoner, he never uttered a word. Having been brought from London, he
appeared before a Hongkong court in a flak jacket. He nodded his plea and said
no more. His lips were not exactly sealed. If people were expecting him to spill
the beans, they were utterly disappointed. If there were those who expected him
to exact vengeance on those who did him in, he perhaps embraced the adage: "love
thy enemy and drive him crazy".
In a London pub, Lorrain Esme Osman, the former chairman of the now defunct, Hongkong–based Bumiputera Malaysia Finance (BMF) broke his silence on Malaysia’s biggest financial scandal of which he was faulted for – the RM2.5 billion collapse of BMF which preceded the murder of the bank’s assistant general manager, Jalil Ibrahim, who was conducting an audit in Hongkong.
Lorrain spoke about the trials and tribulations; the heartache and the heartbreaks; the friends who suddenly disappeared and his dogged determination to fight for justice and fend off the allegations against him. Incarcerated for almost seven years, the 76–year–old lawyer–turned banker (part–time non–executive chairman) is not bitter about the events that changed his life and perhaps shaped the political landscape in Malaysia.
Despite his low–profile existence in a house in an upmarket residential area in London, and in the company of a few friends, he has not been left alone. As much as he wants to stay out of the limelight leading a life with a coterie of close friends, Lorrain, for no apparent reason found himself in the news yet again early this year, on yet another false assumption and bad detective work by the journalistic fraternity.
Four months ago, websites linked him to the disgraced former Irish Prime Minister Bertie Ahern who was forced to resign over a land scandal. And when he spoke, there was no venom against such self–appointed guardians of morality and justice, but disappointment that his name has been unnecessarily been brought into a mud–slinging exercise.
"I don’t even know the man and somehow, I got linked to him. Many years ago even before he became PM, a few friends and I had wanted to acquire a parcel of land which was classified as heritage. Ahern was not even the PM and our offer was not proceeded with and we dropped out of the picture many years ago. We did not pursue it further," Lorrain stressed during the two–hour interview.
When Ahern resigned, the skeletons of BMF were dug up from the grave and Lorrain was erroneously linked to the deal. He laughs about the link, but perhaps understands that two and two do not always make four.
Lorrain fought a long, costly and arduous battle to remain in Britain against the Independent Commission Against Corruption (ICAC) in Hongkong which wanted his head on a platter. It fought tooth and nail to have him extradited and in support of the request, the Hongkong government submitted more than 30,000 pages of evidence.
Five–and–a–half years of legal battles in the High Court, the Court of Appeal and the House of Lords, it was the same conclusion: Lorrain Osman alone is responsible for the position he finds himself in, and that anytime he wants, all he has to do is give up his fight for freedom and allow himself to be extradited to Hongkong. He refused and the fight continued until he exhausted all avenues for justice and fair play.
After the long–drawn battle, Lorrain was put on a plane, escorted by Scotland Yard officers and flown to Hongkong.
Lorrain laughs and says: "They knew the verdict before it was read out in the House of Lords. They had already booked the plane tickets earlier and I was whizzed off."
The ICAC had 43 charges against him, or that’s what was said at all the court hearings. But the ICAC’s joy had little to go on. And losing the war after all the costly battles does not exactly appear good in law journals.
"I was prepared to do battle all the way ... they gave me a strong deal. But I did not jump at it. Having come so far, why should I make any deal?" he asked.
The ICAC officer, Lorrain said, had asked him a soul–searching question: "You have been fighting all this while for the benefit of others. Isn’t it time to do something for your own benefit?"
He didn’t want to give them an immediate answer and wanted the offer to be repeated. "I wanted them to come around a second time. I wanted some time. At the end of the day, even the decision to plead guilty was made after a lot of soul searching as it affected me in the sense I had fought for seven years ... Then I thought my reputation is already muddied, so one little bit more is not going to make any difference, and if I get a decent deal, I’d take it!"
But why cave in after all the effort?
"Even if people are sympathetic towards me, I knew I did not have a great future, I was already over 60. (He was 53 when he was arrested) So, what’s the point?" he reasoned.
So, when they came back again to make a deal, Lorrain told them: "I will plead guilty to one single charge and it will not be a corruption charge."
They agreed and the deal was done – financial negligence. A year’s penance so to speak in jail but he had already spent almost seven. After two months in Hongkong’s Stanley Prison, he flew to London a free man.
The BBMB story
IN 1980, Bank Bumiputera Malaysia Bhd (BBMB) was receiving RM50 million a month from Petronas as part of an agreement to increase the coffers of the bank which was set up specifically for the benefit of bumiputras.
Bumiputera Malaysia Finance (BMF) was set up in Hongkong as a vehicle to channel parts of this money. A series of loans totalling about RM2.5 billion were given to Carrian Group’s investment into the territory’s booming property market. However in 1983, Carrian went bust after the property bubble burst and the loans could not be recovered.
BBMB assistant general manager Jalil Ibrahim was sent to the then British colony to conduct an audit. According to court transcripts, on July 17, 1983, he told his staff that he was leaving to meet a "Datuk". The next day, his body was found in a banana plantation outside Hongkong. The connection between Jalil’s death and BMF, and the unseen hands behind the collapse were never established. Klang businessman Mak Fook Than was convicted of the murder and sentenced to life.
At his trial, Mak had claimed that he merely disposed of Jalil’s body – the murder committed by a Korean working for a man named "George".
Mak had also retracted an earlier statement that he was working for the Finance Ministry and was sent to Hongkong to collect money for a high–ranking public official.
Lorrain, however, feels there were no links between Jalil’s murder and his investigations into BMF’s finances, believing that Jalil was a victim of a blackmail that went wrong.
"From what we had gathered then, Jalil had late night visitors at his hotel room where he was staying. On the day of his murder, Jalil had taken HK$20,000 purportedly for ‘Ibrahim’, but he was not in Hongkong then. That money was to pay off someone. Something went wrong and excessive force was used.
"We the directors of BMF welcomed Jalil’s audit for it showed that we were on the right path to recover the loans. There were no secret accounts or that Jalil was going to expose more wrongdoings. Jalil’s report in fact, helped the board by showing that we had done them (the loan transactions) properly. Jalil was doing us a favour."
Investigations revealed that irregular and even fraudulent lending practices led to the loss of billions – losses which were eventually absorbed by BBMB.
Lorrain who was BMF chairman then,alternate director Dr Rais Saniman,
Carrian Group chairman George Tan and BBMB executive director Datuk Mohamed Hashim Shamsuddin were implicated in the collapse and given jail sentences in Hongkong.
In 1986, a Commission of Inquiry headed by former auditor–general Tan Sri Noordin Ahmad established that what was going on in BMF was just "the tip of the iceberg", implying that bigger hands were at play. The commission report was not tabled in Parliament and had limited public release – 2,000 copies at RM250 each. Noordin was ostracised by the Mahathir administration for his findings, where he was even accused of colluding with the Opposition.
The cause celebre
WHILE Lorrain was fighting his legal battles from prison, human rights campaigners were taking their fight everywhere. Petitions, public meetings and numerous appeals were sent. They claimed that the telephones of his wife and legal team were tapped.
His house was raided by armed policemen while he was behind bars. Campaigners claimed it was an act of blatant intimidation. Scotland Yard claimed it had received a tip–off that one of his wife’s bodyguards was armed.
Interestingly enough, the original complaint went missing!
They also charged that Lorrain had been the scapegoat and the victim of dirty politics in three countries – Hongkong, Malaysia and the United Kingdom, and that the governments of Hongkong and the UK were suppressing some 150 documents which could clear his name.
In leaflets, the group said: "The only thing that is relevant is that Lorrain Osman has now served the equivalent of a 10–year sentence with remission and a 15–year sentence with parole, and he is still, in law, not guilty."
‘I should have left Bank Bumi’
DESPITE his trials and tribulations, Lorrain Esme Osman remains philosophical.
"If I allow myself to feel bitter, then I’ll never have peace of mind because regret is fodder for a completely distorted life.
"But one thing I kick myself for is for not taking immediate control of Bank
Buruh. I was on the verge of acquiring the bank and I had not done the transfer
yet as it was pending, but I kick myself for not leaving Bank Bumiputera (in the
Just before news of the bank’s exposure in Hongkong became public, Lorrain was already in the final stages of taking over Bank Buruh.
"I should have left and then run my own bank then I won’t be involved in this bull****," he says.
Emphasising that he was not being too big–headed among the four directors; Lorrain says he was the most knowledgeable and the most strong–headed because he used to insist on a lot of things. After all, Bank Bumiputera, he had then held, was set up to help bumiputras, not to make money for the government.
"So three years into its setting up, during the AGM, a director mentioned something about ‘it’s time for our dividends’. I stepped in very strongly and said the purpose is not to give the government any profits but for the profits to go back to the people, the bumiputras, many of whom did not have the same access to banking facilities at that time. That made me very unpopular, but the question was never raised again."
So if that was the conservative approach and thinking, then why go off–shore to Hongkong and set up BMF?
"By that time, notwithstanding the principal purpose was to help bumiputras, the fact remained that Bank Bumi was a commercial undertaking and if we wanted to be successful, we needed to provide a full range of services.
"The rationale was for BMF to be part of the international scene. We first opened in a middle–eastern country and subsequently in London, New York, Tokyo, Hongkong, so that we have branches circling the globe.
"Also we were awash with money from Petronas. Now if you have that money on deposit, you pay interest, and if it ended up in Hongkong at the time of the property boom, it would be used to generate income."
But the loans that were given to George Tan and Carrian Group went awry after the property market collapsed with then British Prime Minister Margaret Thatcher announcing the date of the official hand–over of the colony to the Chinese government. Lorrain opined and still maintains that Thatcher forced Beijing to retake Hongkong.
"If she had said nothing, I’m sure the Chinese government would have been happy to leave Hongkong alone."
His reasoning is that Hongkong is a potential nuisance as it has rights other parts of China do not.
"Any dissident will try to escape to Hongkong and when you talk about the western imperialists, all they need to do is point at Hongkong. But Thatcher said a treaty is a treaty! If she had just shut up, the British will still be there."
Was he the fall guy?
"One has to accept the fact that if you are put there as chairman, you have to accept responsibility. At the end of the day, the fact that there was prosecution, I myself believe it was a means to attack the Malaysian government by certain British civil servants who were very anti–Malaysia and anti–Mahathir. I have no evidence to support this but there was no other purpose in it."
From what initially appeared to be a domestic problem, Malaysia played into the hands of the British, and he faults the late Tan Sri Bashir Ahmad, who by then had become chairman of Bank Bumiputera.
"Bashir fell into the trap and lodged a report in Hongkong by claiming that the (Malaysian) Attorney–General had said that Malaysia has no jurisdiction for offences in Hongkong, which is not true. If they wanted to prosecute me in Malaysia, they could have. The Anti–Corruption Act provides for that," he says.
"That is why I say, if I had left (Bank Bumi) once gaining control of Bank Buruh, I’d still be in Malaysia making money," he half–joked.
Was he used as a pawn in the protracted political battle between then prime minister Tun Dr Mahathir Mohamad and Tengku Razaleigh Hamzah in the Eighties?
"I have no evidence of Mahathir’s involvement.
"I know for a fact that the executive directors of the bank who were overseeing the running of BMF were doing things that I knew nothing about. I didn’t know what they were doing, but I believe they were up to something. Only after my release did I realise this," said Lorrain, without elaborating.