AN increase in bankruptcies among civil servants is anticipated following the recent enforcement actions by the Malaysian Anti-Corruption Commission (MACC) against a financial consultancy syndicate.
Datuk M. Bakri Abd Majid, the director-general of the Malaysian Department of Insolvency, indicated that civil servants who have taken out “unusual” bank loans are likely to default once the syndicate ceases to cover their payments.
“We don’t have a clear picture of the total loan amounts or their ability to repay based on their salaries.
“However, if an individual has secured loans from four different banks at the same time, each for RM200,000, they could face bankruptcy.
“Before that occurs, the banks will take action, as I suspect these individuals will struggle to meet their payment obligations.
“Some may have already been declared bankrupt,” he mentioned during an episode of Berita Harian’s Borak Harini podcast.
Recently, MACC dismantled a corruption and money laundering scheme involving a financial consultancy firm and bank officials from various institutions through Operation Sky.
This operation, conducted by MACC’s Anti-Money Laundering Prevention Division in partnership with Bank Negara Malaysia (BNM), resulted in the arrest of at least 27 individuals, including 18 bank officers, eight employees of the consultancy, and one civilian, to aid in the investigations.
The inquiry also included three celebrities who acted as brand ambassadors for the consultancy — singer Ziana Zain, actor Datuk Jalaluddin Hassan, and Malaysia’s first astronaut, Datuk Dr Sheikh Muszaphar Shukor.
It was confirmed that they were compensated solely for their endorsement roles and had no involvement in the company’s operations.
During the operation, MACC confiscated around 4,000 documents and froze 98 bank accounts holding over RM17 million.
Bakri acknowledged that there are cases where civil servants have been declared bankrupt due to excessive bank loans.
Source : The Vibes
The Malaysian Anti-Corruption Commission has found that nearly RM700 million in bank loans were approved to borrowers linked to a syndicate that enabled civil servants with bad debts to obtain personal loans from local banks.
A source revealed that the loans were approved over the past five years, starting from the Covid-19 pandemic in 2020, during which officers from the financial institutions involved in the syndicate profited from service fees and fees for settling bad debts.
“The total value of loans approved so far is about RM700 million, resulting from various personal loans obtained simultaneously from several banks,” the source told FMT.
MACC has seized 4,000 documents in its investigation into the syndicate after it conducted raids in 24 locations in the Klang Valley and arrested 12 people on Monday.
In a Harian Metro report, MACC chief commissioner Azam Baki said four more bank officers were detained yesterday to assist in the investigation under Op Sky.
The syndicate is understood to have visited government ministries and departments nationwide to engage with civil servants after claiming they offered financial consultation services.
It was previously reported that more than 4,000 public servants were deceived by the syndicate, which was also run by bank officers from various financial institutions in the country.
Yesterday, Azam said the commission is tracking down at least 16 more individuals in the financial sector to be investigated.
Azam said MACC began investigating the syndicate following suspicions that officers from several banks had received kickbacks from financial consulting firm personnel in return for helping process and approve personal loans for certain clients.
The bank officers were reported to have received RM5,000 for each loan they approved, with the bribes amounting to 1% of the loans’ value once they were approved.
MACC has frozen 70 company and individual accounts totalling more than RM16.2 million as part of its investigation into the syndicate.
It has also seized nine vehicles of various brands, more than RM300,000 in cash, 17 luxury watches estimated to be worth RM11.1 million, and five branded handbags valued at over RM430,000.
Among the vehicles seized were a Ferrari F8 Spider, a Mercedes-Benz GLC43 and a Lexus RC300.
How did the syndicate operate?
The bank officials would identify the “clients” — civil servants with bad debts — and refer these to a financial consulting firm that offered assistance with a “multiple loan” scheme.
The consulting firm was believed to have provided forged and falsified documents to several financial institutions that were used to secure loans. The firm was also found to have advanced money to the borrowers to settle their old debts.
The firm would receive payment amounting to 1 per cent of the approved loan value.
Once the loan is approved, the borrower would repay the advance (from the financial consulting firm) and the remaining loan amount would be deposited in an investment scheme.
Azam explained that the company was also exploiting the turnaround time during the loan approval process by banks, which takes four to five days.
“During this period, the syndicate fabricates fraudulent cancellation letters, purportedly issued by the initial lending bank, and submits them to other financial institutions processing concurrent applications. This tactic ensures simultaneous approval of multiple loan applications from various banks.
“The syndicate also coaches borrowers to cooperate, ensuring the loan application process proceeds smoothly,” he said.
How did the syndicate spread?
The firm was also found to have offered finders’ fees to its clients to induce them to introduce other clients.
The company would ask individuals who used their financial “services” to post on their personal social media channels to attract their friends to sign up.
The company leveraged several public figures, including artists and celebrities, as official ambassadors to promote their “services”.
They advertised their offerings on Facebook, TikTok, and Instagram as well as conducted surveys and roadshows at schools, hospitals, and clinics targeting schoolteachers and other public sector employees.
“The company also actively promoted their services through organisations such as foundations, by organising CSR (corporate social responsibility) and welfare programmes for government agencies and civil servants,” Azam said.
Media reports indicate that RM700 million in bank loans had been approved for borrowers who were later deceived by the syndicate, which took at least 35 per cent of the loan amount under the pretext of offering financial assistance.
What has been done?
The MACC has seized over 4,000 documents in its investigation and frozen 98 company and individual accounts containing over RM22 million as part of its investigation into the syndicate.
It has also confiscated nine vehicles of various brands, more than RM300,000 in cash, 17 luxury watches estimated to be worth RM11.1 million, and five luxury handbags valued at over RM430,000.
To date, a total of 27 individuals have been arrested, including 18 bank officers, eight employees of the financial consultancy firm, and all have been released on MACC bail.
Who are celebrities implicated?
Last week, Azam revealed that based on statements and financial reviews obtained, celebrities involved received payments ranging from RM150,000 to RM400,000 over a period of one to two years as ambassadors of the firm fronting the syndicate.
It also detected payments made for concert sponsorships and the composition of special songs for the syndicate.
Among the celebrities implicated in Op Sky are veteran actor Datuk Jalaluddin Hassan, astronaut Datuk Dr Sheikh Muszaphar Shukor, and singer Ziana Zain.
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