Too Pathetic Hanipa Pours Water On Zafrul S Genting Explanations

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Sepang MP Mohamed Hanipa Maidin has rejected the explanation offered by Finance Minister Tengku Zafrul Abdul Aziz on why three government-linked banks provided RM2.51 billion in unsecured loans to Genting Hong Kong Ltd.
"Having duly considered his aforementioned statements, I must say that, with due respect, his reasons are too pathetic.
"In fact, they are devoid of any merit. Period,” said Hanipa.
He claimed that the minister's justification of such banking practices was hard to believe given Zafrul’s considerable experiences in the banking industry.
Two days ago, Zafrul hit back at PKR president Anwar Ibrahim after the latter questioned how the minister allowed Maybank, CIMB, and RHB to provide unsecured loans to Genting Hong Kong. 
In his response, the finance minister claimed that unsecured loans were not unusual and banks had the freedom to grant them based on their risk appetite.
In the case of Genting Hong Kong, Zafrul said the loans were approved prior to the Covid-19 pandemic – which gravely hurt the cruise operator's business and was "not an expected" risk.

He said other banks also gave loans to Genting Hong Kong.
Additionally, Zafrul stressed that neither the Finance Ministry nor the government companies who are shareholders in the banks are involved in the operations of the financial institutions.
Countering this, Hanipa said that while Covid-19 may be categorised as an unexpected or unpredicted risk, additional security measures are insisted on by financial institutions for such reasons.
“Yes, Covid-19 may be categorised as an unexpected or unpredicted risk. The legal fraternity calls it a fortuitous event.
“No doubt about it. That is the very reason why any prudent financial institution would insist on having extra securities such as mortgages or letters of guarantees from the borrower before it decides to approve any loan facility.
“To put it in simple terms, the underlying philosophy of having securities in banking practices is due to the very nature of the loan transaction itself – it is a risky transaction. Hence banks badly need extra protection via enforceable securities," he said. 
“It goes without saying that the secured creditors are relatively more protected than the unsecured ones especially during bankruptcy,” he added. 
Numerous unpredicted risks
Hanipa claimed that attempts to confine any fortuitous risk into being pandemic related are “absurd”, given that unpredicted risks in banking practices are numerous.
“In banking practices the unpredicted risks are numerous. More often than not, they are encapsulated in the following legal terms namely 'the act of God' and 'the force majeure'.
“These two terms are normally incorporated in any loan agreement,” he said.
Genting Hong Kong filed for bankruptcy on Jan 19.
According to Singapore's Straits Times, three banks – Malayan Banking Bhd (Maybank), CIMB Group Bhd, and RHB Bank Bhd – had a combined exposure of US$600 million (RM2.5 billion) in Genting Hong Kong.
The government has stakes in these banks through Permodalan Nasional Berhad (PNB), Khazanah Nasional Bhd, and the Employees Provident Fund (EPF). - Mkini

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