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RINGKASAN DAN KESIMPULAN Tujuan

U n t u k menjelaskan kedudukan sebenar Koperasi Pengambilan (KPD) orang ramai dan menghilangkan 'apa keraguan perlunya tindakan Kerajaan ke KPD itu, Kerajaan telah untuk Kertas Putih berhubung dengan KPD
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2. Akiljat daripada pengeluaran wang yang banyak dan ketidakupayaan Koperasi 'Belia Bersatu ~ e r h a d(KOSATU) untuk memenuhi tanggungan depositnya, Kerajaan telah 'mengumumkan - secara -rasmi Peraturan-Peraturan Perlu (Perlindungan kepada Pendeposit) 1986 pada 23hb Julai- dan memb'eri kuasa kepada Bank Negara Malaysia (BNM) untuk .membekukan aset KOSATU dan. urusan-urusan koperasi tersebut. pengurusan. utama serta menyiasat ~ k . d r a ndar'i.T.pengeluaraiideposit -yangbanyak, ke atas. liiii-lain, KPD . dan atas perrnintaan K P D yang 'Kerajaan t e l a h - . . mernbekukan as& 23 buah KPD yang lain .pads 8hb Ogos, 1986 di biiwah eraf fur an-~eraturan Perlu (Perlindungan kepada Pendeposit) 1986 dan melantik 17 firrna perakaunan untuk membantu BNM di dalam penyiasatannya.

3. . Pada i 7 h b 1986 akauntan-akauntan teiiebut telah : memajukan kesimpulan awal mereka tentang aktiviti-aktiviti dan kedudukan kewangan KPD t c s e b u t , yang m e h j u k k a n bahawa 24 KPD yang sedang disiasati itu mernpunyai ~$88,00Oahli,.630 cawangan dan jumlah deposit sebanyak lebih kurang $1.5 bilion, dengan ;3,000 p e k i r j a . Laporan lengkap penyiasatan 24 KPD tersebut, terrnasuk laporan ringkas dan akaun tiap-tiap satu .24' KPD yang disiasat, di .lampirkan bersama Kertas ini.
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Keadaan . .:... Kewangan . .:.. Koperasi-koperasi

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kadar faedah yang untuk rnembiayai pelaburan p a n j a n g d i maria pelaburan yang tidak rnenghasilkan pendapatan yang cukup atau tidak ada menghasilkan pendapatan membayar tersebut. Sebilangan besar dari koperasi mengalami kesulitan kerana pengurusan yang cekap, sama ada disebabkan dan, dalam kurang pengalaman profesionalisma atau disebabkan kurang setengah-setengah hal, tidak jujur. Ini mengakibatkan penyelewengan pengurusan kewangan, misalnya pelaburan- dalarn dan harta benda yang :;!.: k&&rlbluan di.;mdria hampis salu per lima baiipada aset keselufuhan di ,'-'d&'$d~lijiojekpembiii~$n'rukah, tetap, setengahnya pasaran harta benda berada pada. tahap-yang tinggi. . . .

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5. Terdapat juga penglibatan yang keterlaluan dalam subsidiari-subsidiari dan syarikat-syarikat yang berkaitan yang hanya membawa rugi atau tidak menghasilkan pendapatan, di mana sebanyak $746 juta atau 43% dari jumlah aset terikat dalam bentuk pinjaman atau pelaburan modal di dalam syarikat-syarikat tersebut. Kesemua 24 KPD tersebut mempunyai 66 subsidiari dan 40 syarikat yang berkaitan. Kerugian yang agak besar telah dilakukan oleh subsidiari-subsidiari dan syarikat-syarikat yang berkaitan dengannya, termasuk kejatuhan harga syer bagi pelaburan-pelaburan milikan syarikat-syarikat tersebut.

6. Koperasi-koperasi tersebut juga mengalami kesulita,n kerana pelab~iran spekulasi dalam syer-syer disebabkag mereka memegang $114 juta atau 6% dari... .. _. . ... jumlah aset dalam bentuk sjier yang'aisebutharga. Koperasi-koperasi tersebut juga . . . memberi pinjaman berjumlah $351:-juta atau 20% dari jumlah aset mereka (selain dari, pinjaman kepada syarikat yang berkaitan), di ,mana pinjaman-pinjaman tersebut berpotensi untuk mengalami. kerugian. Pihak .akauntan telah mencadangkan' peruntukan permulaan untuk kerugian sebanyak 102 juta atau'29% . . dari j u m ~ a h ~ i n j a m a n . ,. :'.
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~alam beberapa buak koperasi; kegiatan penipuan dan 'konflik kepentingan .... tidak . ... . pengarah%engarah dan l ~ i c - l . $ ~ ~ i ~ yang h a k
mempunyai ke6c?ntingan tertentu. Ini L,',L'+.2"' .< ....' membawa kepada pelaburan fang- tidak bijak atau
pinjaman yang boleh rnenambah. lagi kerugian.
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8. Pihak polis pada masa ini sedang menyiasat 6 kes yang mungkin melibatkan kegiatan jenayah dan pihak BNM sedang mengkaji dengan mendalam 13 kes lain
yang mungkin terdapat konflik kepentingan. Bidang penyiasatan merangkumi pemberian pinjaman kepada pengarah-pengarah atau syarikat-syarikat yang dikuasai oleh pengarah dan lain-lain pihak yang ada kepentingan tertentu dengan tidak dikenakan faedah, penyalahgunaan kewangan secara tipuan dan penggunaan wang dalam urusniaga yang membayangkan konflik kepentingan.
9. . Tambahan lagi, kebanyakan koperasi tersebut tidak mempunyai kuasa meminjam, ada yang telah melebihi had kuasa rneminjam mereka, dan . sebilangannya telah.,melabtir-.di .... . . dalam aset atau projek tanpa.mendapat kelu~usan'.':~"~~ :&ri,.-:Jabatan Pembangunan .Kopirasi (JPK)-:;tau dengan lkbih tep,at. .ligi,, . . . .,..-, JPK, termasuk dalam satu:misalan,. iaitu pdabu&in, ;: . . ,' ..* .bei.tentangan:deng$q.~$~~~usan , . . . , .,.. .;,. ... d i dalapi syer di ~ustra1ia:Keban)lakan daripada mereka tidak,.mengekalkan aset rnudaht,u.nai yang rnencukupi dengan melanggari peraturan,.nisbah mudahtunai mipima, sebanyak 25% daripada deposit, yang menyebabkan. sebahagian besar daripada mereka tidak mempunyai wang tunai yang mencukupi pntuk memenuhi pengeluaran wang oleh pendeposit.
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10. Setelah mengkaji semula akaun-akaun KPD tersebut, pihak mencadangkan harga atau penyelarasan
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untuk menampung jumlah tanggungan deposit sebanyak $1,491 juta pada 8hb Ogos, 1986.

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11. Oleh kerana sebahagian besar daripada aset-aset mereka terikat dengan asetaset jangka panjang yang hanya memberi pendapatan yang rendah sahaja atau tidak mendatangkan hasil, KPD tersebut tidak mempunyai pendapatan yang mencukupi untuk membayar faedah pinjaman mereka. Dalam tempoh tujuh bulan pertama tahun 1986, pendapatan faedah mereka hanya berjumlah $80 juta, berbanding dengan faedah yang dibayar ke atas pinjaman dan deposit berjumlah $97 juta. .Berdasarkan kepada kajian semula daya maju jangka sederhana, pihak akaintah telah rnengesyorkan bahawa 11 dari 24 KED dibubar4.m berdasarkan atas pertimbanzan semata-mata.

12. Berikutan dengan itu, Kerajaan telah menimbang beberapa pilihan yang ada
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untuk menyelamat KPD tersebut, termasuk kemungkinan menubuhkan Dana Keselamatan (Safety Net Fund) untuk KPD tersebut. Kajian telah memaparkan beberapa masalah praktikal yang terlibat. Isu-isu ini, termasuk penukaran wajib deposit kepada ekuiti yang tidak adil (yang sebagai satu elemen yang penting di dalam pengubahsuaian struktur .dirasakan .. kewa!ii.ai,':: , ? .-.. kperasi-koperasi. tersebut$: -ada ditetangkan . . secara terperinci dalam . . .. . . . . Bab iV"R3rtas ini. . . . . . . . . .. .
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13. Dari 8hb September sehingga 13hb September 1986 p e g a w a i - p e g a w a i ' ~ ~ ~ bertemu dengan pengarah-pengarah KPD yang disiasat, bersama dengan akauntan-akauntan yang dilantik, untuk menyelidik pelbagai pilihan dan skim yang i ~ pernbekuan ke atas KPD tersebut. Kebanyakan daripada. ada 'untuk m e n a ~balik cadangan-cadangan telah dikaji. dengan mendalam dan didapati tidak praktikal atau tidak saksania.
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Rumusan "25:25:50"
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14. Rancangan penyelamat awal (secara kasarnya dirujuk oleh pihak. akhbar yang sedang giat dipertimbangkan oleh Kerajaan,
sebagai pengeluaran .deposit serta merta hingga 25% dalam deposit
. .2 tahun pada kadar faedah maksima 6%
bakinya . ., ini untuk mengubahsuai - ,st*&tur kqpei&i;koperasi tersebut dan .ti$ak .be&-ksud ;'seperti mana yang.telati'" ditafsirkan' oleh bebelapa pihak tertentu,-sebagii'formula yang akan digunakan, kepada . semua koperasi yang disiasat. :- Se,belum keseinua . butir skim: dan implikasinya dikaji dan dipertirnbangkan, sebahagian dari skim. ini dibocor pihak akhbar yang mengakibatkan pendeposit menolak prinsip penukaran deposit rancangan kepada.ekuiti termasuk
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Tindakan Koperasi (JTK).


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pandangan dalam isu yang terlibat; Kerajaan telah melantik

Tindlkan:

~ o ~ e r a(JTK) si pada 25hb September, 1986 yang dipengerusikan oleh Timbalan Gabenor BNM, wakil-wakil dari Perbendaharaan, Jabatan Peguam Negara (JPN) dan Ketua Pengarah JPK dengan enam orang penasihat yang terdiri dari Tan Sri Thong Yaw Hong, YM Raja Arshad bin Tun Uda, Dato' Kee Yong Wee, Dato' Wong Tok Chai, Encik Chee Kee Leong dan Encik Ng Kek Kiong, untuk mengkaji masalah-masalah dan menyarankan rurnusan yang sesuai untuk pelaksanaan. Jawatankuasa juga akan mendapatkan pandangan daripada ketua wakilwakil koperasi dan pendepositnya. 16.. Jawatankuasa telah rnembuat sebanyak 10 dari 26hb 1986 ke Oktober, dengan 'wakil-wakil pendeposit, pihak pengurusan KPD, akauntan-akauntan dan diberi taklimat oleh pegawai-pegawai dari BNM dari

17. Pihak Jawatankuasa mengambil bahawa pendeposit-pendeposit telah pandangan tegas supaya deposit dijamin jika perlu, dengan sokongan Kerajaan tanggungjawab dan tersebut juga membaritah tindakan dengan keras terha'dap penukaran ekuiti dari deposit dan , . '.hEi;zxa bGr.fBfl~gufi'gj+&~~ C' .. atau kesalalian .
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18. Setelah mengkaji beberapa pilihan, Jawatankuasa tersebut mengesyorkan bahawa bagi KPD yang sokongan aset bersihnya untuk setiap $1 deposit bernilai hampir dengan $1, Kerajaan patut menjemput beberapa buah bank yang kukuh atau syarikat kewangan untuk mengambil alih Liabiliti deposit dan aset iringan KPD tersebut. Tertakluk kepada persetujuan KPD rnenerima pilihan ini, dan kiranya pendeposit-pendeposit bersetuju dengan sedikit penyusunan semula tentang syarat-syarat, (seperti tidak rnengeluarkan wang sepenuhnya dengan sertamerta dengan faedah selaras dengan kualit~ aset yang diambil alih sebagai g a n t ~ ) , GNM akan menyediakan pinjaman ringan pada kadar-kadar faedah lebih kurang 5% setahun, (bergantung pada kualiti aset yang diambil alih) untuk memenuhi keperluan mudahtunai bank-bank dan syarikat-syarikat kewangan yang berkenaan.
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., . .. . .Y. . ; ... . , mengakibatkaii k&ugian yang besai kepada semua yang berkenaan kerana penjualan terpaksa akan mengurangkan nilai sedia ada aset KPD'. Melalui kombinasi pengurangan kadar faedah dan penangguhan pengeluaran wang serta pengurusan yang lebih baik oleh bank-bank dan syarikatsyarikat kewangan yang di bawah pengawasan BNM, kerugian dalam nilai bersih KPD boleh dikurangkan untuk kepentingan pendeposit-pendeposit
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unit b a n ,-memerlikan :$krfimbangan yang . .. . . - . ini,,.m.ihgQn ....... dibenarkan d i b u k i s l ~ ~ a ' r e r t _.... a k l u k k e u . a . d k . a e . ~ u t u a n : k h a s :: : ; -!. ,'::: ..~;;!;~,~:~,_ik.?g<~s,., .. ,..,_ .. -'vizb:~ .. : . '! ~ ! ~ . ! . ' : : 2 ! . . :. : ._.. .__..., . . . . koperasinya oleh : : , . .!',,f. . . . . . .
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dalarn keadaan kewangan yang teruk, dengan kerugian dan pendapatsn yang dijangkakan negatif (atau ternpoh 3-5 tahun akan datang, di mana tidak dan tidak rnampu rnenimbulkan keraguan daya . disyorkari. supaya rnereka ini
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KPD

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tankuasa juga terhadap KPD

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. mempertimbangkan pandangan-pandangan . Jawatankuasa. ini, berpendapat bahawa . orang ramai tidak sepatutnya bertanggungjawab kerugian yang besar dari pengurusan- koperasi yang Atasdasar prinsip, Kerajaan tidak sepatutnya menanggung setiap kerugian . sama . ataupun . menggalakkan . pengurusan . . tidak . . . . ramai. ..... .. . . telah menyebabkan . pembayar cukai kerugian koperasi-koperasi. yang $600 Oleh yang demjkian, Kerajaan tidak . boleh deposit. . KPD. Pendeposit-pendeposi . dapat menerima jumlah deposit mereka mengikut kadar sokongan aset bersih tiap-tiap KPD tersebut, dinilai oleh bank atau syarikat kewangan, dan tertakluk t kepada persetujuan ahli-ahli setiap KPD. Kerajaan bahawa ekuiti tidak seorang pun pendeposit boleh dipaksa untuk kepada ekuiti. Semua skim penyusunan semula tiap-tiap KPD akan. dengan itu kepada didasarkan mengikut proses biasa undang-undang dan . akan penerimaan oleh majoriti bagi berkenaan semasa Mesyuarat Agung yang diadakan untuk tujuan ini. .
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oleh dua buah KPD. membuat lieputusan bahawa KOSATU dan Syarikat Kecil Berhad yang aset bernilai . . dibubarkan. $1 . . .
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(3) Kesemua 24 KPD dilarang mengambil deposit baru dengan serta-merta.


(4) Kerajaan berazam mendakwa mereka yang bertanggungjawab dalam penyelewengan pengurusan dan tindakan undang-undang yang wajar akan diambil terhadap pengarah-pengarah atau kakitangan KPD yang d~dapati bersalah melesapkan wang, pecah amanah jenayah atau sebarang perbuatan yang menyalahi undang-undang.

30. Kegiatan koperasi-koperasi melibatkan pengumpulan sumber-surnber modal ahli koperasi-koperasi di dalam menceburi kegiatan-kegiatan perniagaan, untuk faedah bersama ahll-ahlinya. Tidak pernah disangka sama sekaJi di dal,am berbagai bidaig,% kebanyakan koperasi akan mengenepikan pertimbaigaridan peiigawalan "checks and balances" yang bijaksana bagi melancarkan pengambilan deposit secara pelbagai cawangan dan pelaburan dalam projek-projek jangka panjang di dalam berbagai bidang. Perniagaan-perniagaan ini, berserta dengan penyelewengan dan penyalahgunaan pengurusan telah mengakibatkan kerugian yang besar ke atas wang awam. Koperasi-koperasi ini tidak beroperasi mengikut had semangat dan bidang pergerakan koperasi yang mengambil deposit yang berorientasikan untung sebaliknya bertindak semata-mata sebagai pemaju dan. . . . ..:;. . . . -.. . .- . . . . . .- . . -. . .
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.31. ~ a ~ o r i & . , ; ~ e r i ~ i a soleh a t a n'BNM yang dirujuk di


clalim 'K~rfis..E?utih.:ini . dilampirkan bersama
Kertas ini.

BIDANG MASALAH
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-3 2. Penyiasatan yang awal oleh.17 buah:firrna akauntan, yang,dilanfik oleh BNM, ke atas 23 buah koperasi pada 8hb Ogos, 1986 di hawah ~ e r a t u r a n - ~ e r a t u r a Perlu n (Perlindungan Kepada Pendeposit), 1986 telah sclesai pada 17hbOgos, 1986. Oleh sebab halangan masa, penyiasatan. -ini berdasarkan akaun-akaun pengurusan bagaimanapun, laporan-laporan koperasi yang belurn diaudit sepenuhnya. ~ a l a u ini m a s h rnernberi gambaran menyeluruh tentang keadaan urusan:,koperasi yang disiasat. ~ e s e m u a . 2 buah 4 KPD(terniasuk KOSATU, yang tei'ah dibekiikan pada .23hb Julai, 1986) bersama dengan. 588,000 ahlinya: dan 522,000 akaun-akaurt, melibatkan deposit-depositnya berjumlah $1.5 bilion-yang telah dikumpul dari 630 cawangan-cawangannya. Koperasi-koperasi itu mempunyai seramai 2,982 orang pekerja. . . . . .
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.33., Pada

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akabntah-akauntan telah .berjaya 8hb 19.86 . KPD KOSATU pada 23hb :j.k&-:;. -r -..:986. : . ... .'. (taiikh
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34. Akaun-akaun yang terakhir menunjukkan bahawa keadaan-keadaan kewangan 24 buah koperasi makin merosot antara bulan Jun hingga 8hb Ogos, 1986, disebabkan oleh pengeluaran deposit yang keterlaluan. Jumlah depositdeposit telah jatuh dari $1,600 juta (termasuk faedah terakru) dalam bulan Jun kepada $1,4.90 juta, akibat dari pengeluaran deposit-deposit terutamanya sebelurn pembekuannya. Jumlah aset bersih 24 buah koperasi pada 8hb Ogos, 1986 berjumlah sebanyak $889.7 juta, seperti berikut:
Seperti dalam buku
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Penyelarasan Setelah yang di, cgdcrlgkan selaraskan


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tefap . . . . . . . . Projek perumahan Pelaburan dalam syer . . . . . . Pinjaman . . . . . . . . . .

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150.5 185.5 263.6 948.0 98.1 116.2


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154.9 170.0 415.2


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51.9 103.8

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juta 19.1% dan perumahan. Ini termasuk 99 projek perumahan yang melibatkan unit, 162 kejatuhan harga beberapa harta benda, pihak akauntan telah supaya aset dan projek perumahan diturunkan . . sebanyak $35.0 35.. telah
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36. Pelaburan dal'am subsidiari-subsidiari dan syarikat-syariliat be.rkaitan .dan lain-lain syer-syer sebanyak $860.8 juta atau 48.9% daripada jumlah aset, termasuk pinjaman-pinjaman kepada syarikat-syarikat berkaitan sebanyak $597.2 juta, akauntan supaya nilai syer-syer diturunkan harga sebanyak sebanyak $524.6 juta, yang mana KSM di dalam Multi-Purpose Holdings Berhad., yang dipegang
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ahli sebanyak $350.8. juta atau 20.0% daripada aset. Pihak telah mencadangkan .supaya nilai pinjaman diturunkan sebanyak $101.8 juta atau 29.0% daripada pinjaman, di rnana tersebut

. berjurnlah hanya $97.9 atau Ogos, 1986, berbanding . .... I.:"... -dalam , bui$h:'Jun; 'alsetiabkan oleh dengeluaran depo$t:deposit.. Uhtuk imembayar . . bank juga telah dari. juta ' . dalam bulan'lun kebada $51.9 juta pada 8hb Ogos, 1986. 0ldh\It&ana~ebah&~igiaii

38.

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dari wang tunai telah dicagarkan sebagai jaminan untuk pinjaman bank, koperasikoperasi mengalami kekurangan wang dan tidak dapat memenuhi permintaan untuk pengeluaran deposit. 39. Jumlah aset bersih yang ada untuk diagihkan, selepas membuat peruntukan yang telah dicadangkan oleh akauntan-akauntan sebanyak $673.1 juta, ialah $889.7 juta. Ini bermakna bahawa koperasi-koperasi rnempunyai jumlah kekurangan modal sebanyak $600.8 juta. Selepas membuat peruntukan untuk pinjaman bercagar dan lain-lain sipiutang, nilai met bersih setiap $1 deposit berkisar di antara 30 sen untuk KOSATU, 41 sen untuk KSM sehingga $1.82 untuk KOJADI. Akaun-akaun, terperinci setiap KPD diringkaskan dalam Lampiran IZIII kepada yang ~a~&an'~en~iasa [ a ndimajukan bersama in,. 40. Pendapatan koperasi-koperasi juga merosot dalam ternpoh rnasa tersebut hingga ke 8hb Ogos, 1986. Akaun-akaun menunjukkan kerugian yang sekian meningkat sebanyak $710.8 juta, yang mana termasuk pelarasan yang dicadangkan oleh pihak akauntan dengan pendapatan sebanyak 12% daripada jumlah perbelanjaan. Jumlah faedah yang akan dibayar ke atas deposit-depos~t dan pinjaman-pinjaman sahaja ialah $97.0 juta, berbanding dengan faedah yang akan diterima ke- atas,pinjaqaii sebanyak .$80i$-juta. ...:: . . : ..,..... . ;,,-. . _ ..-.-'. . " ; . ' 41. Kesirnculannya, koperasi-koperasi tersebut mernpunyai terlalu banyak met yang terikat dengan syer dun harta benda. Mereka juga tidak rnernpunyai wang tunai yang mencukupi untuk rnenjelaskan pengeluaran deposit dan tidak berupaya men~atasi beban kadar bunga yang
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42. Oleh sebab itu, sebarang Rancangan Penyelamat yang realistik mesti diarahkan kepada faktor-faktor kritikal, iaitu (a) "Dana Penyelamat" yang mudahtunai untuk mengatasi modal kerja dan beberapa pengeluaran deposit, dan kadar bunga bagi KPD. (b) pengurangan

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B AB 111
.
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43. berikut: . .

kewangan

. . . .. . ,.

KEWANGA,N K.PD . . .
.

. . .
.
,

seperti

( 1 ) Koperasi-koperasi yang berpengurusan menyeleweng. Bukan sahaja kebanyakan pihak pengurusan melaburkan aset KPD yang berlebihan dalam tanah dan syer, tetapi terdapat juga berbagai-bagai kejad~ankes penipuan, kecuaian, konflik kepentingan dan kemungkinan perbuatan pecac amanah jenayah. Pihak berkuasa kini sedang menyiasat 6 kes kemungkinan perbuatan penipuan dan 13 kes konflik kedentingari:

(2) K P D adalah tidak mudahtunai. Pada 8hb Ogos, 1986, KPD ini mempunyai wang tunai dan deposit tetap sebanyak $97.9 juta di mana kebanyakannya telah dicagar untuk pinjaman bank yang berjumlah $51.9 juta. . . Kebanyakan aset ini terikat dalam harta benda dan syer, yang mana rnenghadapi kerugiqn yang besar sekiranya dibubarkan dalam keadaan penjualan paksaan.

(.

.....

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v

, ~ e b ~ ~ ~ i zK k PD i z n tidak ' mrimpu niembayayar.hutizizg. Sebanyak 21 daripada * J,> l f *D, . gg'!.;; , mpunyai modal yang negatif, setelah dise.~~;ii~&an. untuk 9. A \ . kerug,an:.'pada keseluruhannya, KPD mempunyai m'odal yailg negatif berjumlah $600.8 juta dan ini akan mernbawa kerugian kepada pendeposit. Untuk memastikan KPD mencapai kedudukan yang teguh, modal gerlu ditambahkan.. . . .. .

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,(4) Kebanyakan KPD mempunyai

I-

bergerak maju jangka Oleh kerana kebanyakan aset KPD adalah dibiayai oleh deposit jangka pendek dan juga terikat dalam projek yang bertempoh panjang, pendapatan daripada pelaburan ini tidak mencukupi untuk menampung pembayaran faedah. dasar komersial, akauntan-akauntan telah mengesyorkan 11 daripada 24 KPD dibubarkan, kerana tidak mempunyai aliran wang tunai yang cukup untuk menampung pembayaran faedah dan perbelanjaan tetap. Sebarang cadangan seharusnya bertujuan untuk . rnengurangkan kos faedah dan deposit..., . memerlukan teratur untuk Dengan . ,. , . yang baik, pengawalan yang ketat dan struktur
yang teguh memerlukan deposit modal), mungkin dapat mengurangkan kerugian mereka bersih-k epada pendeposit.

(6) Pendeposit memerlukan mudahtunai dengan serta-merta. Sebarang mestilah mengandungi pembiayaan untuk menampung oleh pendeposit.
,
.

telah . peraturan. 14 24 K P D tidak merninjam yang diberikan oleh JPK. 7 daripada 10

kuasa meminjam telah melebihi had pinjaman mereka. Hanya 3 koperasi tidak melebihi had pinjaman mereka. Kebanyakan KPD tidak mengikut nisbah mudahtunai yang ditetapkali oleh pihak-pihak pengawasan. Kebanyakan pelaburan dan pinjaman telah dibuat tanpa kelulusan pihak JPK sama ada secara khusus atau tidak.
44.

Butir-butir kedudukan kewangan KPD adalah seperti terdapat dalam laporan . . . penyiasatan penuh. . . . . . . . . ,
,

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dielakkan. o . .l .i h . .iebab'iliesemua :p.eidbp6sitaka". men'galimi 'kerugian dan tidak .'akan'.henei,ma .... 'seba&rig .&lam :tempoh .,31.4;itihdi,sehingga .. ..: :p&fi,&iima.p&nerba&$at, &e&blihka",aset ; ; ~ f b' ~ '& : hj~i~.& .paksa ~ . . . .
. . . . kan'; k.&rugia""KPD. 'K;i;an , d i ~ & t i . : : , : ;,: . . . . . .
. . . . . . . . , .: ........... . . . . . . . . . . . . . (:$j ; ,,;p . . -- . . .
. . . . .enukarirx deposit iepado:unit-uni~I amanah.. ~ d a l a h d t k i d ~ k g k $ n ! , b $:.h ~ ~
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pendeposit dibenarkan memegang ;uriit:.amanah.sebagai-.:tuk.aran :.kepada deposit. Tidak semua :.pendeposlt :akan '!bers.et;j~i ..untuk 'menukarkan deposit, . , .:. mereka . kepada . . . unit . amanah, namun demikian undang-undang mengen.ai &it -am81iih kepid; ;j:iiii; ;g ' .;t; d,.;&ina. ~ i ~

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..unit.amanah boleh..d!pegang .(kebanyakannya.:aset Kebanyakan


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awarn. l~ehindah$n.:,aGtdan. : ... li'abiliti~ :KPD .ke ..dalainsyarikat :aw,am menyebabkar! - kettigian kepada syirikat awarri.:Yang.lebih penting, oleh:kerana iiset;i.ni boleh harapan untuk 'laba ..modal adalah lemah. 'Pendeposit yang wang mudahtunai.akan
menjuaIkan..syer-syer:dan,ini akan.mengakibat.kan kejatuhan harga syer
dari seterusnya membawa .kerugian kepada pemegang-pemegang syer.

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beberapa . KPD kepada bank-bank apeks besar. Pemindaha'n KPD kepada apeks yang besar akan hanya menyalurkan, masalah institusi apeks itu kerana masalah kekura'ngan modal dan masalah asas supaya KPD :bergerak maju sebagai'perusahaan.hidup masih ujud. Institusi apeks yang .:>.','-'"":"lebih .besar akan 'terus -memegang aset yang ;kukng atau tidak . . . .1 . "men'Clatangkan"had sementara liabillti deposit .terpaksa. dibaiar-derigan. . . . _. . i~,&didh?'$&ii$atuan bebeiapa pihak pengurusahdan
k a k i f ~ k ~ a bebkrapa h' .. KPD' ykig beiliiinan akan
menimblilkan m a s ~ l a h :peki'ufihin::.~ite&na oleh setengah pendeposit tetapi tidak munkkin mudah dilaksmakan.
(4)
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. ' ( 5 ). Jaminan:penuh,oleh Kerajaan. ke:atas deposit. :Ini bererti bahawa .Kerajaan .mesti sanggup mengeluarkan ..wang tunai sebanyak $1.5 bilion dan .di . samping .itu menanggung :.kerugian sebanyak $600 .juta. ;Dalam keadaan kewangan.sekarang--yang Kerajaan tidak kerugian besar. ........... .

...

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yang

dipilih oleh

bagaimanapun, Kerajaan sedia memberi bantuan dari segi kepada institusi kewangan yang terlibat dalam rancangan penyelamat. Kerajaan juga harus meminda undang-undang berkenaan untuk mengawal operasi-operasi KPD dengan ketat. Tidak diterima.

(6)

deposit kepada debentur. Adalah dicadangkan bahawa selain dari ekuiti, pendeposit-pendeposit patut diberi debentur. Walau bagaimanapun, ini tidaklah praktikal kerana bank-bank dan syarikatsyarikat kewangan yang memberi mudahtunai kepada pendeposit di mana tersebut, tidak boleh menuntut aset KPD dicagarkan untuk cagaran itu. Pengeluaran debentur untuk deposit kecil juga tidak praktikal yang perlu dibayar
kepada debentur. Tidak praktikal.

undang-undang mengenai penukaran deposit kepada ekuiti

penting proses pengubahsuaian Struktur KPD melibatkan asas.-modal KPD untuk faedah kerugian yang,. Oleh. ahli-ahlinya sedia tidak. mungkin akan modal. mereka, dicadangkan pendeposit ekuiti supaya KPD dan juga memberi masa Walau bagaimanapun. JPN telah tidakadil dan berketerlaluan untuk memalisa pendeposit menukar sebahagian atau. semua deposit mereka kepada ekuiti: JPN juga tidak menyokong skim penyelamat ini yang melibatkan penukaran wafib. Sebarang penukaran harus dilakukan secara sukarela. . .

49; Pendeposit-pendeposit- berhak mendapat sekian banyak daripada, deposit . mereka berda~a~kan: kepada, kualitl:. dan: ,sokongan.. asetr bersih KRD- yang ('. : ,.! ' beikenaan. ~ e b a h a ~ i a k d a n ~ a dip'oiit di' itb; 'ber)r;mlih iehingga 25% boleh dibayar:secara.t,gnai.:.Semakin:banyak muclahtunai KPD, semakin,tinggilah.nisbahpe'mbayaian:jra~g::boleh:-dibuat dtnganiserta-me~ta:,'~-aki~~a:h~ndaklah.dijadikan.. deposit jan&apanjang dala~'te~p~h--2-3::ta~uri..d~ngan.bank/sya~ikat kewan'gan pada :Kaday . . faedah i..::: :::. yang . tidak. : . : . . rnelebihi:6% setatiun. Semaliin. tinggi kualiti. aset.,. . mengha$Ikan . penijapatan;'iemiki& tinggilah kadai faedah a s i t KBD.yang.bole,h y a r i g ' . b ~ @bay+ h kq;atasdepositrdepo~it. ini,. $ia;at-syarat pefigel"aian- deposit . . . ..diumumkan . I . i q . .. . .." ,.. . ' ~ s ;.~.e .l a h , . , ' s .,bankis)arikat: e~ap~ . . . . keviibg&'. . $&ij'i.i ::&ncapai ak& p ~ e r s e t u j . u a ~ ~ ~ ~ @ a m . p d - ~ e n g ' < r ! ~ ~ ~ 'din.tertakl'uk ~ . ~ . b . .k.~. k ~ n a a. k.e,pa-Ja~p~rsetuj~?an~. a .n . _ , .. .. . . ...... I . .., . . ..s.emuaahli ban.:@endkposlt: dalam:'mesyu&at,.,agung; luarbiasa:, . . . . . . . I. , : , . ,..;
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50:: selep& Qenyusunansernula; KPDakafi menjadi KPDkecil,yang meppunyai sumbangan. modalriya sendiri~(.~'~slimmed-down.? capital subsc crib in^: co:operatives). Kesudahannya . . . . hanya: institusi-institusi- kewangan, termasuk koperasi-koperasi ape+:: beil;se'";:a'i::.ba&afi' ;penyeliia". B ~ ~ ak8n-,.dibenaikaa,, ~ "eil&ima ~ ~ . . . ., . . . . . . ;. .. . . . . . . . . .. . . . . . . dsbbs;itrdCposit darip;ida,,oiaiig: rarn5i: . . . . . . - . .. .. . . . , . . . . . : ;.,. <,.,
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pengawalan "checks and:balances7'yang bijaksana bagi.mel'ari~~rkan pengambilan deposit secara, peltjagai. cawangan , dy,, pelaburan . . . .dalam . . . . . . . . . . . projek-projek. jangka di .d{lai.:\jk<bagii:b$adg:, ~e;ni$~i$n-p@ri@ga$n. irii',&tserta dengan paijing: ... kiii mengakibatkan .~ ..... penyele.wengag .,dan].pe,nyalahguna~n , & l ~ . : p e i @ t ~ d a ~ h ~ s~ .?, ......................... keiuglan yang::Lbesar,ke prig . ~~,~r&i-k$.pe~~~i ini.,; tidak lagi beroperasi..,mehgikut.-. had:, semangat . d a i {::$i+ng .;&rgeiak8n. "kbliiitasi yang sebaliknya bertindak:..sebagai. pengambil :depositi:.yang;b e ~ ~ r i k i t ~ s i k an untung semata~mata., pemaju5perumahan..dan peramal s'yer-syer.:Pindaan-pindaan kepada mengubah ipergerakan.: koperasi .kepada peruridanga'n:~kopera~si.'~beitujuan.-.untuk: .... ....: 1 t~rt"tup,-.' y8fig; niana kealiliirinya dihadkan . kepada . ahli-ahli k6peiaSi-li-peiasi.
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tujuan mempertiaiki kesejahteraan ahli-ahli.

. .

DEPOSIT-TAKING 60-OPERATIVES

TABLE OF CONTENTS
'Page CHAPTER CHAPTER
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Summary and Conclusions . .

.. ..

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'

- Scope of the Problem . .

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27

CHAPT 111 ~ - '*FinancialPosition of the DTCs : . CHAPTER IV - ~lternative Options . . . . - :. . ..

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31 33

CHAPTER V - Proposed Course of Action

..

SUMMARY AND CONCLUSIONS Objective


. .

1. In order to explain the true position of the deposit-taking co-operatives (DTCs) to members of the public and to dispel any doubts as to the necessity of Government actions relating to the DTCs, the Government has decided to issue a White Paper on the DTCs.

Background
,

2 . -, As a result of and the of Koperasi Belia Bersatu Berhad (KOSATU) to meet its deposit liabilities, .the Government promulgated the Essential (Protection of Depositors) Regulations, 1986 on July 23,. 1986 and empowered Bank Negara. Malaysia (BNM) to freeze the assets of KOSA-TU and its key management, and to investigate into the affairs of the co-operative. Following heav y withdrawals on the deposits of other DTCs andat the request of the boards . =. .;Z;~L a$yytts.. .., of 23.bthei of directors!of: se+elal.large D'TCS, t h e : Govirament froze-!he :8, under the Essential Regulations addwdiinfed-17 firhs of, ~Te&.~..pu~u ~1986 t .. . acc.ountan6.to assist BNM in its investigations. . : . . .
I

3. On August 17, 1986, the accountants submitted their preliminary findings on the activities and financial position of the DTCs, which showed that the 24 DTCs being investigated had 588,000 members, 630 branches and total deposits of about $1.5 billion, with 3,000 employees. The full report of the investigation of the 24 DTCs, including the summary reports and accounts of each of the 24 DTCs investigated, is appended to this Paper.

The State of the Co-operatives


were grossly under-capitalised, having borrowed high short-term. deposits finance long-term which yielded or to service the debt. A co-operatives:. suffered'
bad management, due to . lack of or or throughimprudent, some cases, resulted in gross mismanagement 'of funds, such as. over-investment in land of assets development projects and and property, with fixed assets, some of which were purchased at the height of the property market.
.
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4.

On

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5. There was. also over-commitment. in or non-income generating subsidiaries and with as much as $747 million or 42% of total o r capital investments such companies. . and related companies. losses were by and related the fall i n share . -. .. .: . . ..prices o f 'investriients owned by such companies.
i.

l1

6. The co-operatives also suffered from speculatrve investment in shares, as they owned $114 million or 6% of total assets in quoted shares. The co-operatives also extended $351 million or 20% of total assets in loans (other than loans to related companies), which are subject to potential loan losses. The accountants have suggested preliminary provisions for losses of as much as to $102 million or 29% of total loans.
7. In certain of the co-operatives, incidences of fraudulent activities and conflicts of interest led to imprudent lending of funds, including to directors and other inerested parties. 'These have led to imprudent investments or lbans which were stibjkc't to aci'ditional losses: . . . . :..... .... ."; " , , . .
.
. . .

..

-..,

8. The police arecur~ently investigating 6 cases of possible criminal activities and . theBNM'investigators are examining in.depth 13.other cases of possible-conflicts of interest. Akeas being investigated include. interest free lending to directors or director-controlled companies. . and other. interested. parties', fraudulent . misappropriation of funds.,.and utilisation of funds in transactions which allude to conflicts of interest.
,

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,,. . . ~:d..!~$dit~~,n-,::many co-operatives did not h i v e boirowiag powe~s: .i. or.,exceeded, .,


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them, a d a number of them invested:in assets'or the specifically against the Department of Co-operative Development approval of JPK, including in one instance, investing in shares in Australia. Many did not maintain adequate liquid assets in contravention of the minimum liquidity ratio of 25% of deposits, as a result of which, the majority of them did not have the cash meet 10. .,. After a review of of the accountants have proposed write-downs or provisions for .lossesor adjustments to the value of the assets of million. After these adjustments, and provisions, the the DTCs amounting net assets of the 24 co-operatives would amount to $890 million, which were insufficient to meet total deposit liabilities of $1,491 million as at August
.

..
.

the,bulk income,'

a review of of the
: I ;

their tied up in 'long-term


did not
sufficient to meet their' interest months of 1986, with interest paid on loans and 'Based on the accountants have recommended that medium-term -b e on purely commercial considerations. . .
. . . .

.
.

..

LI .

12. . Subsequently. the Government considered a number of options available to rescue the DTCs, including the feasibilit) of the establishment of a,Safety Net Fund - . . ,. * , -for thp,DTqs;:,The studies revealed the numerous complex &sues, pmcrical .!:.... 1:: :,,.;;pcoblevw and.. lekal hrinciples. involved. These issues, .includiris, ..the ii&q"ity. of -- ~~~::~~:.r~~~ompul~o~y~~conv~rsionrof deposits .into equily:(which. was considered A. essential . - ,.. :-element in the financial restruCttiring of the bo-0~6~ati'"es),, are,&ctibed,indetail . . . . . . . ' . . . . ;.:., . .. . . . . . . . . . . in Chapter IV of this Paper.
'
'

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1 1
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13. Between September 8 and 13, 1986, BNM officials met with the directors of the DTCs being investigated, together with the appointed accountants, to explore various options and schemes available to unfreeze the DTCs. Many proposals were studied in depth and were found to be neither practical nor equitable.

The "25:25:50" Solution 14. A preliminary rescue plan (loosely referred to in'the press as the 25:25:50 solution), which was actively being considered by the Government, involved the p_a,ymentof up to 25% of deposits immediately, a further 25% in two year deposits and the balance converted at a Saximuiri. of 6% was designed as a general framework to restructure the co-operatives and was not intended, as interpreted by'certain quarters, as a fixed formula to be applied to each and every co-operative investigated. Before the full details of the scheme and its implications were examined and considered, leakage to the press of parts of the scheme res'ulted in the depositors rejecting the principle of conversion of deposits into equity as well as the plan.
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-15. In full cognizance of the need to take into consideration the views of the depositors in any rescue plan and the complicated issues involved, the Government appointed on September 25, 1986 a Special Action Committee on Co-operatives (ACC), chaired by BNM, with representatives of the Treasury, the AttorneyGeneral's Chambers and the Director-General of JPK, and six'advisers, comprising Tan Sri Thong Yaw Hong, Y.M. Raja Arshad bin Tun Uda, Dato Kee Yong Wee, D a t o Wong Tok Chai, Encik Chee Kee Leong and Encik Ng Kek Kiong, to study the problems and to suggest suitable solutionsfor implementation. The Committee would also seek the views of the representative co-operative leaders and depositors.
.
:

..

~.

16; The Committee met 10 times between Septe'mber 26 and October 10, 1986, I s of the depositors, the manageqgnt ... . . .of . the . DTCs, the
. . ... .
! . . . . .. .. . . . . . . ........ by officials.from BNM'$nd''JPK'?; ,. ;,+ . ; , . : ; : . ) . , ! : , : ; . : ; . ; ' : ;: : . ' ;.I .. . .. . .. . ..., .. ,;. . ..... . . . .
, . ' ! " . '. " . . . . . . . . . -that the depositors views that . . . . . eed in full, necessary, with Government I responsibility'. The objected-strongly posits and also. demanded prompt legal action r criminal breach
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the. recommended of: -e ach $1 was-: a...number oft strong and the attendant assets of these 23

the.

agreement of the DTCs for this option, and that depositors agree to some restructure of the terms (such as no immediate full cash withdrawals, with the interest rate consistent with the quality of assets taken over In exchange), BNM would provide soft loans at interest rates about 5% per annum (depending on the quality of assets acquired) to meet the liquidity needs of the banks and finance companies concerned.

19. The Committee noted that the alternative for most of the DTCs, if no restructure were adopted, would be immediate liquidation, leading to large losses for all con'cern:ed, since forced sales would significantly reduce the inherent value of the assets of the DTCS: ~ h i o u ~ acornbination h dfre.d~ced:i~teres~~ and:, a1e~ postponement of withdrawal, as well: as improved maiagement.under the banks and 'finance companies which are'under the supervision'of BNM, the loss"inva1ue of the net assetsof the DTCscould be ininimized in.the iriterest of the depositors.
"

. . ., .

20. For those D T C ~ &hose :pro61&ns . a i - e ' ' ~ & ~ .u and & . requires special donsideration, these i n a i be all6wed tp re-open subject to special decision by
the. management o f the co:operatives and the members throuah a
General ' ~ e e t i n g .

. :

. .. .....; .
,

.4',:!>:'<.,

:,:.;,

-:

.
,

21. Fb6 tKose;DTCs which are in b a d financial shape,: .yith .significant; capital.. . , , ; :., .- _ _ . . losses and projected negative (or insignificant) .income flowsin3nd .next!3~5years, these being illiquid and insolvent (which question their long-term viability as it was recommended that they
.

-,,

., .

'22.
DTCs shbuld
. .

rkcommended that the


.
.
.

report a White

the investigations
.
. . .

. . . .
.

Decisions of
.

Government

23. Having taken into consideration the views of the Committee, the Government

is of the view that the should not be responsible for the large iosses from the bad management of the co-operatives. The Government should not as a of principle. underwrite each and loss in institutions,' be they . . ; ;8.c,ompanied;"~co-operra,ttives or even sYatutory.bodies. This..hction would encourage , . at . expense of. the ebvironrnenthas already placed significant strain on-the government:^ . . and the payer should not be made' bear'the .losses of. the cooperatives .which are .in.excess of $600 million. The Government therefore cannot guarantee the deposits. of the. DTCs: The depositors will be able to receive the amountof their deposits in prbportioli to the net isset backing of their respective DTC, aft'er due. evaluation by the bank,or finance company, and subject to.the agreement of the members of each DTC. The Government recognises that. the . . that no depositor should be forced to his . deposits of for , .. . .be .: . .-..,.
.L..?.>

'

,..

.,

,, ,

of the members of each DTC concerned at a purpose.

. . . - . this.

, , . ,.

24. The Government will take the necessary stringent measures against those found responsible for the mismanagement of the DTCs, including criminal breach of trust or fraud. One director of a DTC has already been charged and investigations are proceeding simultaneously against a number of officials of DTCs in which suspected instances of fraud and criminal negligence have been found. 25. Due to the large losses sustained by two DTCs, the Government has decided that KOSATU and Syarikat Kerjasama Penjaja-penjaja dan Peniaga-peniaga Kecil Selangor Berhad (SAKAPP), which have net asset backing per $1 of deposit .... at. 30 sen and 37 sen respectively, should be put intoliquidation. estimated . .. ... . . . . . .. . . '.. . . .<,. . .
.. .... . . . . . . .*'. . . ,..<." . . . . . .. . .. . ; ;. . . . . . . , :
i ;

'

'

i . .

26. In view of the special circu,mstances surrounding ~ o p e r a s iSerbaguna Malaysia ~ e i h a (KSM) d which had, suffeied large losses (although much of it as yet unrealise'd) due to the sharp fall in' the'prices of its investment jn Multi-Purpose Holdings Berhad through a related company, leading to a net asset backing.per $1 deposit of an estifiated 41 sen; the ko-operative would'be unfrozen' pknding a. decision from the management andits members on its.appropriate course of action. The co-opeiative"does not ha"e sufficient income. from its 'dividends from investmefits in shaies to mtet its"iiterestpayments to depdsitors. ~ h e c o - p ~ e r a t i v e &oi3id,.,.g,?..te &enibers:so wish, join the sche@k ~ f ' t a k e - ~ ~ ~ r . i . bb,lks;&id ~~.tfi& .,. ,:. ;< l,'.f . *..;,;,..: fihl:,&G;&n;!$a$ie~f they ark able negotiate satisf~ctory>ms~:wlth?~~f~ese .. , . . . institutions. . .
,

....

27. For the 21 other DTCs, with estimated net asset backing of between 39 sen [Koperasi Serbaguna Fortiss Berhad (FORTISS)] to $1.00 for each $1 of deposit [Koperasi Jayadiri Malaysia Berhad (KOJADI)], a number of strong banks and finance companies have agreed in principle in the national interest to assume the assets and liabilities of these DTCs at the net asset value of the DTC concerned, subject to the depositors and members agreeing to the restructure scheme. The depositors will have to agree to some restructure of their terms of deposit, indluding reduced interest rates and no immediate full withdrawal of deposits-. The Government through BNM would provide soft loans of as much as $400 million to .provide.liquidity to the banks and finance companies joining in the scheme,. The alternative is a voluntary liquidation of the DTC concerned. ;.
. - . . .........

..,

,, . , . . .

--:.,...

the individual bank or : , i n by Ihe members and depositors of. each,DTC, :the% $che'ine ,of a several restruct'urk fdr each DTC will be announced over the next few weeks: DTCs, the negotiations are already at an advanced stage of discussions.
1

...

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I.

... . . . ;.. . . . . . . . . . . . ,,.A9*.,2 .

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......

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9 .

. . . . .. . * .

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..........;.....

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29. The Government has also decided on the following:(1) Changes in the co-operative laws to limit' co-operatives to take only from their members, such as for housing ........
..

..

. .

,.

eventually into "capital-based" co-operatives after consultation

BNM

and JPK. In the meantime, the apex co-operatives will be re-organised to effectively function as true apex co-operatives, with deposit-taking powers, and with consideration for them to be placed under the direct supervision of Bank Negara, which will provide lender of last resort facilities.

(2)
(3)
.

24 DTCs under supervision until all borrowings from . the soft loan Net Fund" has been repaid.
. .

24 DTCs . . .

cease to

with immediate effect.

taken.
. .. .

is determined to bring the responsible-for the of the DTCs to book, and legal be the staff of found guilty of funds, criminal of trust or . .

the capital resources of its 30. The co-operative movement involves the members in co-operatives to enter into ventures for the mutual benefit of their members. It was never' envisaged that 'many 'would .blatantly disregard and launch, into piti-branch. and in long-term . . together with now lead to in public funds. are operating within the spirit and framework of the co-operative movement, seeking instead to be pure profit-oriented deposit-takers, housing developers and share . .
.:

. . .

investigation report b y BNM 31. appended to this Paper.

to in this

is now

SCOPE OF THE PROBLEM

32. Preliminary investigations by the 17 firms of accountants, appointed by BNM, into the 23 co-operatives on August 8, 1986 under the Essential (protection of Depositors) Regulations, 1986 were completed on .August 17, 1986. Due to the constraint, the investigations were based on management accounts of the
been subject to full audit.
of affairs of the co-operatives The 24 deposit-taking co-operatives (including KOSATU, which frozen on July 23, 1986) together have 588,000 members and involving $1.5 a total of 2,982 staff. billion deposits collected from 630
. .

..

1986, theaccountants were able to update the accounts of 33. By the 23 deposit-taking co-operatives to August 8, 1986 (date of freeze) and for KOSATU {Q r~ul~,l~3.,:~1,986 (date-of freeze)

34. The latest accounts show that the financial position the 24 deteriorated in the period from to August 1986 due to large deposit withdrawals. Total deposits fell from $1,600 million (including interest accrued) in June .to $1,491 million, due mainly to deposit withdiawals prior, to the freeze.. The , total net assets of the 24co-operatives a s at ~ u ~ i8, s 1986 t amounted tp $889.7 million as follows:
.

! !

i
I

Per Suggested boob . adjustments $ million

Adjusted

Housing projects . . . . . . . Investments in shares . . . .


. . .

Loans..

. . . . . . . . .

Cash i'n hand and'with banks

Less: Due to banks . . . . . . ' . . Other Liabilities


. .

55.9'
:

( 4.0)
.

. 51.9

. . . . . . . . . .

1093 33.7 199.1

( 5.7)

103.8
33.4
,
.

Housing Deposits . . . . . .

( 0.3)
.

(10.0) '(673.I)
. .
:

189;l
,

.. ..- .. Netassets, 1. . .--.:. . . . . . . . . . .


-7

. -.>

. . .

1,562.8
.

. -. '._.

. '889:7

Represented b j :
.

. .
.

. . . . s. . . . .
-.=

,. .
,

. ..

Net capital Deposits'. .

. . . . . . . . . . . .
. . . . . . . . . . . . .
. . . ,

73.8 1,,489.0 1,562.8


.

'(674.6)
. .

(600.8) 1,490.5 889.7


.

. .

1.5
.

(673.1)
.

.
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.
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. . . ... .. . . .

. . .. . ,.. .
.,.. ' -35.. . . .+-,Lvk :?;~1~jac6-b@er~t*v&s 1 .' . ..: ..- -\.,. .hid 'inbest& $336.0 millibn
or 19.1% ,. .. . . .of 3A.,.. thgir asse!s:n, land,
1
A

$*

,v.9

, ,

'propecty arid hobsing. These included 99 housing projeck ~m+ljr~iig~, 5;88O,housing prices, units and 162 commercial units. Arising from the decline in so&: the accountants have suggested a write-down of $35.0 million in the value of the , , . fixed. assets and housing,projects.
, >

36. ~nvestments. in subsidiaries arid related companies and other shares, ,jncluding
loans to: related companies of $5'97.2 million; amounted to '$860.'8
million.or 48.9% the of total assets.
~ o l l o w i n ~ decline in shire piices generally, the accountants suggested a write-down of $524.6 million, which comprisemainly the write-down of $386.6 million in KSM's shares in Multi-Purpose Holdings Berhad held indirectly through an associate company.
. .

.... ..

. .

.+-:

37. The co-operativks also extended $350.8 million or 20.0% of total assets in ,:>fb.ans to members and,non-members.The accountants have suggested a write-down ...L ., . ' . r:;c .of :$1:01.8 dillion ..qf29.0% of total.,loans;'.wh'kre '.,i'uch '%,.: .?. Ida'ns ..!:, are :. considered . . .+!': .... . . . is insufficient . , . . .
,

--

...... . . ;. . .

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' ;

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..

38. Cash and liquid assets amounted to only $97.9 million as at August 8,1986 or of total gross assets, compared with $180.2 million in June, due mainly to deposit withdrawals. To meet such withdrawals; bank loans also 'increased from million in June to million as at August 8, 1986. Since part of the cash is pledged to meet the bank loans, the co-operatives are completely. illiquid and cannot,meet ., . .
:

......

for the $673.1-million, is $889.7 million. that have a total capital deficiency million. After providing for secured loans

and other creditors, the net asset value per $1 deposit has been estimated to range from 30 sen for KOSATU, 41 sen for KSM to as much as $1.82 for KOJADI. The detailed accounts of each DTC are summarised in Appendices 1-111in the attached Investigation Report. 40. The income of the co-operatives also deterlorated in the period to August 8, 1986. The accounts show an increased loss of $710.8 million, which included the adjustments proposed by the accountants, with income being only 12% of expenditure. Interest payable on deposits and loans alone was $97.0 million, as compared against interest receivable on loans of $80.4 million. . . _ ......... . .' . 41 i s that the co-operatives down in .property and shares: They have also insufficient cash to meet deposit withdrawals and cannot withstand the continuing interest burden. . .
.-,

,,

i
...

42. A n y a liquidity withdrawals,, and

Package must therefore address factors of (a) to meet working capital and some deposit a reduction in the interest burden of the
.

FINANCIAL POSITION OF THE DTCs 43. The financial position of the 24 DTCs investigated may be summarized as follows: (1) The co-operatives are 'badly managed. Not only did many DTC management over-invest the assetsof their DTC in land and shares, there were'numerous instances of fraud; negligence, conflict .of interest and possible criminal breach of trust. The authorities are currently .-.'" :-investigating6cases of possible fraudulent conduct and :. ... 13 cases of conflict ,:., . , , . . . . of inter&.
.

(2)

DTCs August 8,1986, they had only fixed were against bank loans deposits of $97.9 . of $51.9 million.-.Most of their assets were tied up in property and shares, if liquidated under of forced which are. subject . . . . . sale. -

..

:'

..

.. .

( 3 ) Many of the DTCs are i-olvent. 21 out of the 24 DTCs have negative . . ~-.~a~~!al;~~ft,er,adjustin~ for
lossss. Altogether, the DTCs have negative . . .'~-~~~~ta~,~f!f.$600~ whichthirkfore . 8 n i i i l i o n , lead to loss&~.for;.th~;de~~sitors., . . To p l a ~ e the DTCs intp a viable position, their capitzhiiiT&h6 increased. .
,
:

(4) Many D have problems of long-term viability. Because too much assets are funded from short-term deposits and are tied in projects with long gestation periods, the income from their investments are not sufficient to meet their interest payments. On pure commercial grounds, the out of 24 DTCs be placed in accountants recommended that liquidation, since they cannot earn sufficient cash flow to meet their interest payments and overheads. Any solution must comprise an element to reduce their interest costs on loans and deposits.

(5)

co-operatives need time to rehabilitate or their assets in an orderly manner to deposit With proper management, a-viable financial is likely to require tight supervision of deposits to be capitalised), the DTCs may-- be able to reduce . the net losses depositors.. . (6) need Any-solution, must take,. into consideration to meet the need for liquidity by the depositors.
(7) Many DTCs had contravened the rules and regulations. 14 out of 24 DTCs did not have borrowing powers granted by JPK. 7 out of the 10 which had borrowing powers exceeded limits. Only 3 had kept within limits. Numerdus DTCs did not adhere to the minimum their .. by the authorities. investments and loans . . were made, against the specific ,disapproval of. .
,

. .

..

. .

44. the investigation report.

condition of the

are

full

45. The ACC

various

follows:

(1) Place all 24 DTCs under liquidation. This is the least preferred solution, since all depositors would stand to lose and will not receive any funds for perhaps 3-4 years until the Receiver is able to realise the assets of the DTCs. Forced selling would increase the losses of the DTCs. Least preferred.

: -(2J ~$chdn&:.ifejbiitSf &


.
,
'

..

unit trusts. It was suggested thai%he-depositors~may;' wish to hold units of unit trusts in exchange for their deposits. Aside fr6m the ;. fact . . that . not all depositors may agree to coiveit their deposits intounit thsts, .the law on.unit trusts is strict as to th6 type of assets which a unit trust may hold (usually trustee assets).; Most 'of the-.assets'of tkie DTCs cannot qualify as tiiistte assets, Such. assets be vested in the duty on a trustee company; which would incur , . transfer 'of assets of the DTC. Impractical. . . .
,

,
,

Conversion......... of,,dep:bS[tr, of . . . . . ...D ---..x:-2, lye +ssqt,s . . . . . . and'liabilities ,.... into a pubiic company ,woiilQ&lti~. .i$;thel: the losses to the public company. assets are unlikely to generate real profits in the near future, the prospects for capital gain are poor, at liquidity would sell their shares, leading to a collapse in the 'prices of these shares, and resulting in losses to other depositors and the shareholders. Impractical.,
(4) M erging several into large apex co-operativebanks. Transferring the losses of several DTCs into 'a larger apex co-operative institution would only mean passing the problem to the apex institution, because there still remains a large capital deficiency and the fundamental problem of the viability as going .concerns. The larger apex. institution would continue to hold.assets which yield little .or no income, while deposit liabilities have to be met with interest. Merging different managements of .different would also problems of unlikely to 'be.+>able. ." .. . ,..- . . . . .-. . . . . . . . . . 1 , . . . . ........ . . . . guarantee of deposits., 'This would! Government must be prepared to inject $1.5 ultimately, and . bear losses of over $600 million Under present conditions of financial stringency and fiscal restraint, the Government is not able to bear such large losses. should the tax-payers, as a matter.of principle, be asked. to bear the full burden to rescue the DTCS, whose problems were caused by poor management, duly elected by The Government, assist the of . , a viable rescueto.tighten .
I

. . .

,,

.,

'

?i

( 6 ) Conversion of deposits into debentures. It has been suggested that instead


of equity, the depositors should be given debentures instead. This is not practical because such debentures may override the claim by the banks and finance companies which provide liquidity to the depositors against the security of the assets of DTC. The issuance of debentures for small deposits.is also.not practical since substantial stamp duty onconvecrion to . debentures would be incurred. impractical.
. .

Legal implications of conversion of deposits into equity

of the restructuring of the DTCs involve the increase in in order to reduce and t o . the capital base of the cushlon the DTCs again~t~existing losses. Since it is unlikely that the existing membership can increase their capital contributions, it has been suggested that the depositors should convert of into equity, in order to place the' onto a viable and give the sufficient time and capital to recover. However, the ~ t t o r n e ~ - ~ e n e r Chambers al's has pointed out that it would be harsh and unjust to compulsorily force any depositors to convert part or all of his deposits ey-General's Chambers would find it d~fficultto support nvolving compclsory conversion. Any conversion should . , be
,

' I

I
I
I

I
. ... . .. . .
I
I

.
'I

.. .. . . . . . .
.
%

, ,. ,

PROPOSED COURSE OF ACTION

After taking into the views of the ACC and submissions by the depositors and has decided on'three lines of action as the DTC management, the ~ o v e r h m e n t follows:
47.

(1) Liquidation. Due to the large losses.sustained.by two DTCs, which had also suffered from gross mismanagement, both K O S A TU.and S A K A PP,' e t backing per $1 of deposit estimat.$. a t 3 0 sen and13!;,, i! . . . .- each with.a. ~ ~a2set '-.. s&fi'~~~~&~[iveij;,'sho~ld be placed in liquidation. ~ ~ b e i v ' ~ t i ' ' f & f i . t w o
: i . .

"

DTCS would be appointed to ,recover whatever assets are available for distribution to.the depositors'. Some:liquidity loans will be made available to the Receiver to pay some funds back to the depositors, depending on the net assets available for distribution.
'(2) Voluntary unfreezing. In view of the special circumstances surrounding KSM, which had suffered large losses (as yet unrealized) due to the sharp .. . .. . . shares; leading , , .+.

:.:.

. .

from the and its members on its appropriate course of The co-operative could, if their members so wish and if they are able to negotiate' satisfactory terms with the banks arid finance companies, join the third course of action.

(3) Transfer the deposit'liabilitiesand the accompanying assets to strong banks and, finance companies. For the other 21 DTCs, the banks and finance companieshave agreed in principle and in the nation'al interest to assume the deposit liabilities of these DTCs at the net asset value of each DTC, subject to'mutual agreement on the terms and conditions of exchange, and the depositors and members of the DTCs agreeing to the restructure scheme. The depositors will have to agree. to some restructure of their ,.........aerrns of deposit, including interest at not more ... . than 6%'+r annum for an . .. . . ..extended time;.-period;'depending . on . .the quality of assets ofithe DTC .concerned. -. . .. * . . .,
.,
i

--

.<

To assist the DTCs and the banks and finance companies involved in the restructure package, BNM will provide soft loans to the compan'ies which assume the assets and liabilities of the DTCs at an interest rate of about 5% per annum and up to 3 years in maturity. The final terms will need to suit the financial conditio-ns of ;the based on the that . . the . involved<i~;lr;thdf restiudtGring ready , .
48.
.

of up to a secured basis.
33

million