Crowing, Conscience, Corruption With Buccaneering Bankers and Oafish Prime Ministers

By Santhananaban:

As a civil servant, I was certainly not naive, neutral, nice, or polite about cheating the government through corrupt, illegal, misleading, or wasteful activities. I could not however make too much noise about corruption while in the Foreign Service because that would have been dangerous and inimical to my survival.

Whistleblowers would customarily be criticised , sidelined and stigmatised if not sacked. Or they would be put in cold storage as if there was a cloud over their conduct. This is generally how the public service works.

I worked in the public sector of Malaysia for 45 years. I must confess that I had lived dangerously because of that uncompromising attitude to corruption and abuse of power. I sincerely think I can speak somewhat authoritatively on that issue.

Very few of my peers and superiors who were with me on overseas postings measured up in terms of honesty and integrity.

At the Ministry of Foreign Affairs in Kuala Lumpur I had some superb superiors who were men of exceptional integrity. It was a pleasure to work with them. I recall with much affection men like Tan Sri Zakaria Hj Mohd Ali, Tan Sri Zain Azraai, Tan Sri Zainal Abidin Sulong, Tan Sri Razali Ismail, Tan Sri Abdul Halim Ali, Tan Sri Ajit Singh, Dato’ Hashim Sultan, Dato Renji Sathiah, Dato V Yoogalingam , Dato Abdul Malek Mohamad, Ambassador John Ng, Ambassador Walter Ayathury and a few others.

But overseas, working in a fairly isolated mission, especially in non-core or peripheral posts we were inclined to believe that we were far from any prying or watchful eye. That remoteness could turn the often silent, smooth and seemingly straight diplomats into wispy weasels, wicked warlords or wheelers and dealers. There were a few virtuous men like Zainal Abidin Ibrahim, Anaitullah E A Karim and Abdul Majid Mohamed with whom it was a pleasure to serve with while overseas.They maintained integrity in financial matters and were not unduly susceptible to fawning and flattery, two great evils in our office and social environment.

With my rather self righteous and strict attitude and suspicion of corruption and abuse of office I would have been perceived as a pesky and problematic fellow by some of my superiors overseas.There is no room for enmity or any ill feeling from either side now but where a preference has to be made I probably became a lifelong irritant to at least two of my superiors overseas. Being human they naturally would have given me mediocre confidential reports.

All this became clear to me when, after two overseas postings, I was ensconced most delightfully in Vientiane, the most idyllic, bucolic and laidback township in Southeast Asia from the 1970s. While there I ascertained that five people of my batch has been promoted over me. In the next few promotion exercises those five officers and many many more of my juniors in service were also promoted above me.

I had been posted to Vientiane, Laos in August 1981 after a tour of just 31 months in Hongkong. Hongkong was by far the most memorable, grandest and personally the most rewarding posting for me. It was, as I remember it, a Meet-and- Greet place frequented by all kinds of important personalities from Malaysia. The more fascinating and larger part of my job was China-watching.

After the launch of the ‘Four Modernisations Program’ by Deng Xiaoping China entered a robust phase of reform and development which was well covered by journalists in Hongkong. Some of these journalists including Derek Davies, Nayan Chanda, V G Kulkarni, Rodney Tasker, David Chen, Bing Wong and Cheah Cheng Hye became good friends. I was acting Malaysian commissioner ( as the Consul-General’ was designated then) there for eight months and during that time I also had the opportunity to meet prominent Hongkong banking and business leaders including Robert Kuok, Sir Run Run Shaw, Lord Micheal Sandberg, S. K Lee and others.

While stationed in Hongkong I met almost all the personalities of gravitas of Malaysia, including our first prime Tunku Abdul Rahman Putra, the then prime minister Hussein Onn and several leaders especially of the central government, Penang, Sabah and Sarawak. These encounters gave me a rare insight into Malaysia. I remember the long hours I had with Tunku Abdul Rahman, Tun Tan Siew Sun, Tan Sri Hamzah Abu Samah, Tun Syed Ahmad Shahabuddin, Tun Ismail Ali, Tun Ling Liong Sik, Tengku Razaleigh Hamzah Dato Khoo Siak Chiew and the many conversations about Malaysia.

I also made some great friendships with people like Fr Lancelot Rodrigues, Saw Hock Siew, Tim Chan See-meng, the Leitao family of Macao, Tan Sri Abdul Rahman Jalal, Dato Syed Hussein Abu Bakar and others.

The Nation’s Best Investment Overseas

While in Hongkong I had the opportunity to bring to the attention of the government the availability of a commercial building that could serve as an office for our Consulate General and all the related government agencies. One of the now disgraced Bumiputra Merchant Finance(BMF) bankers was keen to handle this transaction. I went above the heads of the mediocre meddlesome Wismaputra officers who were wary of this project. They cautioned me I was too junior, jousting for what was beyond me, too pushy ,that I did not have the authority, and was just being impertinent.

The problem could perhaps be summarised in one sentence. .

‘ Bureaucratic routine had robbed senior officials of energy and initiative, ‘ as Lord Curzon, Viceroy of India(1899-1905) put it to Queen Victoria. David Gilmour highlights this kind of ‘laggards, the languid and the lethargic’ that Lord Curzon found in India in the early 1900s during his viceroyalty. This is contained in Gilmour’s impressive biography of Lord Curzon (David Gilmour, Curzon, Macmillan’s General Books,London, 1994).

A Clean Government

Fortunately for me the clean government we had then under the leadership of Tun Hussein Onn agreed to buy the building for HK$212 million. The S& P agreement was signed on February 14, 1980. I was the sole negotiator for this purchase. Two colleagues stood by me as confidantes during the tense days in the second week of February 1980 when I was involved in negotiating this purchase. They were Jaafar Abdul Manaf and Teh Hock Keat.

BMF’s Suspected Strategy

At one stage the BMF chaps had convinced us the vendor of the property was asking for HK$264 million. They had a good reason for this but I did not know the basis of that reason then. They kept upping the price to a high of HK$308 million. Their reason, I suspect, was that the higher the price it was less likely the government would commit on buying Lap Heng House. Then there would been a greater prospect of their flogging two floors of Gammon House to our government. After all the corrupt-to-the-core BMF chaps were working in cahoots with George Tan.

The then Secretary General of the Ministry of Finance, Tan Sri Thong Yaw Hong in a letter dated May 7th 1980 commended me for arranging the purchase of the building and saving the government or telah ' menyelemat dan menjimatkan wang yang besar.’

The Background

Teh Yik Koon in her well researched and forthright ‘From BMF to 1MDB(2018) and Ian Robinson in his ‘ The Joker’s Downfall(2014) provide an excellent insight into the lapse of conduct of BMF officials. Chooi Mun Sou also highlights such lapses in his Memoir, Malaysia My Home(2022).

I have relied on them for the following information on the first big loan granted by BMF.

On December 19, 1979 the BMF board had approved a facility of US$292 million to Plessey Investments, a company controlled by George Tan. That loan was utilised to purchase Gammon House, one of Hongkong's most iconic buildings then for HK$998 million in early January 1980.

When George Tan’s purchase became public knowledge most people were impressed . Tan became recognised as somewhat of a phenomenon. In August 1980 Hongkong was somewhat bedazzled again by fresh news that Gammon House had a new buyer for HK$1.68 billion. It was a scam by George Tan which involved transferring it to another of his companies. At that time however a HK$700 million profit in eight months on a billion HK dollar investment seemed spectacular. BMF officials were complicit in this scam.

Tengku Razaleigh's Visit

About three weeks before this startling news of the Gammon House purchase surfaced, in mid-December 1979 the then Finance Minister, Tengku Razaleigh Hamzah had visited Hongkong. He was there en route to the US. While there he attended a grand reception to celebrate the third anniversary of the opening of the BMF OFFICE. Prior to his departure at Kai Tak Airport, at the VIP lounge he had mentioned to me that a certain building was available for purchase. At that point I did not know the name or location of the building. When this information was intimated Ibrahim Jaafar, the then general manager of BMF, Hongkong was also present.

Subsequently, after seeing off Tengku Razaleigh when I returned to my office in Permanent Comfort Building, Ibrahim called and asked me if I could provide him with a letter to authorise him to look into this purchase. I politely informed him that I could not do so.

A week after Tengku Razaleigh’s visit our office received word that a team from Kuala Lumpur would be visiting Hongkong to look into the prospective purchase of Lap Heng House which was located on 47-50 Gloucester Road in Wanchai. After receiving this news I contacted the BMF office to alert them of this impending visit. Very promptly we were informed that no one from the BMF office would be available to help the team. Their senior people had prior bookings to leave Hongkong for their well deserved year-end holidays. It was also intimated to me that the vendor of Lap Heng House wanted a private low profile sale and there was already a firm offer from a buyer for HK$264 million.

This preference for a private low profile sale and the firm offer of HK$264 million turned out to be blatant lies that had been manufactured to dissuade the team from KL from visiting Hongkong.

Fiction of Gammon

At that specific time BMF was, it would seem, somewhat confident that two floors of Gammon House could be flogged off to the Malaysian government for an astronomical sum on the basis that property prices were rising very fast. Or the BMF fellows were in in a bind. They had provided a US$292 million facility to George Tan on December 19 and obviously wanted to show that that was a sound bankable proposition. It was claimed if the Malaysian government bought the two floors the new owners would rename the building Malaysia House. That would give Malaysia much prestige. Gammon being a product from pork was offensive to Malay Muslims, hence it was explained the name change was necessary. This was the corridor talk at that time.

With the clout they thought they possessed with the then respected Cambridge educated Lorrain Esme Osman as their chairman they must have been certain that they could pull off this deal with the acquiescence of the Finance Minister Tengku Razaleigh.

They did not expect that a fledging first secretary from the Malaysian Commission had the courage, confidence and connectivity to approach the Finance Minister directly or indirectly with his own proposal.

This approach to the Finance Minister came about in rather fortuitous circumstances.

January 30th, 1980 being a Wednesday was a working day In Hongkong. Our Commission was however closed as it was Prophet Mohammad’s birthday.

I had on that day this great craving to have mee Mamak. So I contacted my good friend, the grand chef Abdul Aziz Kassim and asked him if he would oblige. I then invited him for lunch. After lunch both of us went to the market in Happy Valley. After I had parked my car we walked to the market and bought the necessary ingredients. As we were returning to my parked car there was a sudden downpour. We had to take shelter somewhere.

I spotted the Dolfra Furniture Hire company and decided to go on in there to wait for the rain to stop. There I met Gwen Roden, the managing director of Dolfra. She offered us tea and we chatted.

In the course of the conversation she asked me if the Malaysian government would be interested in buying a property in Hongkong. I told her we had explored such a possibility in December but nothing had come of it.

Five days later I received a call from a Christopher Palmer of Richard Ellis & Co informing me that a building was available. I went with this information to my boss but he was not interested.

On February 5, 1980 at 6 pm I met Christopher Palmer at the Talk of The Town in the Excelsior Hotel in Causeway Bay. At this meeting Palmer informed me that Lap Heng House was for sale at HK$247 million. I was somewhat sceptical because my BMF friends had earlier told me the vendor had a firm offer for HK$264 million. Rather impetuously I took a position, as a negotiating gambit, that my Government would not pay more than HK$200 million. I also said my government would not be interested as the price was too high. I maintained this position consistently.

When I went to meet the managing director of Lap Heng company with Palmer a few days later also I maintained this HK$200 million offer. At my first meeting with John Chuang, the MD of Lap Heng Company indicated to me their offer price had come down to HK$232 million.

I enquired if they had a valuation on the property. Chuang indicated that he had one that had been done three months before our meeting by Jones, Lang Wootton . In October -November 1979 Lap Heng House had been assessed ,at HK$223 million by them . In the upbeat property market in Hongkong it might logically have been worth more in February 1980. I did not budge from my HK$200 million figure.

The Midpoint Figure

Chuang proposed to me that since he had a valuation for HK$223 and my offer was for HK$200 million could we agree on the midpoint figure of HK$212 million. I asked for time to take this up with KL. The Finance Ministry agreed to the purchase price of HK$212 million within a few days and remitted HK $5 million to be paid

as earnest money. After prior consultation with KC Vohrah, our Treasury solicitor, I engaged through Helen Kong who was then( she is still there, now as chairman) working there for Hastings & Co to handle this transaction. I met the partners of Hastings and handed over our draft for HK$5 million.

On February 14, 1980 the Sale & Purchase agreement was signed . On June 1,,1980 we took possession of the building. Work started on the fitting out and furnishing of the four top floors of the building in August. That work was not completed satisfactorily even in March the following year. The remaining 20 floors of the building have since 1980 earned the Malaysian Government rentals amounting to billions of HK dollars.

With the benefit of hindsight it must be realised that by finalising the sale and purchase agreement with the help of certain senior officials( Mohd Salleh Ahmad, Yahya Baba, KC Vohrah, Fong Keh Chong and Sundaram) I had prevented the BMF chaps from having any role in the negotiation and purchase of Lap Heng House. From the grapevine I heard that a very senior BMF man had expressed unhappiness with the purchase describing the building as being in the vicinity of brothels.

Needless to say almost all the BMF chaps did jail time in Hongkong in the 1980s.

There used to be the assumption that public service officials were indolent, incapable and gutless. I think I proved the opposite in 1980 in spite of my relatively junior status and standing within the Foreign Service. That however did not help my career although it benefited my country's finances immensely.

My attitude towards corruption, abuse of office and the widespread use of the currency of fawning and flattery remains unchanged. There were some very senior officers who were blatantly so corrupt that I had to actually cut myself off from them, being unable to acknowledge even their passing.

In 2023, some 50 years after I had first joined the public service it is a matter of deep disquiet that there is this kind of talk that all officers of the Foreign Service are equally capable, of high calibre and of high integrity. Some of the officers in that service had these qualities combined with cerebral acumen. To talk of all of them as well equipped to handle every important ambassadorship or assignment is wrong.

The Foreign Service has in the past decade or so experienced a phase of more than one head of mission in important posts being suddenly recalled at very short notice and then disappearing from the public service radar. There may be good or bad or arbitrary reasons for these unusual happenings. There have been instances where the prime minister himself was involved in the abrupt recall of these ambassadors. These oafish prime ministers had no business to interfere in the work of the Foreign Ministry which is there to serve the country’s larger interests and not their personal agenda.

Dato' M Santhananaban

February 23, 2023

The writer is a retired Malaysian ambassador with 45 years of public sector experience