In Malaysia, it is very ambiguous about how large the shadow banking system is as they are not captured in any formal banking statistics. However, it makes some estimates put it easily several hundred billions the amount of money loaned out (Kaur, 2013). Public-listed Malaysia Building Society Bhd (MBSB) and Government-owned Bank Rakyat Malaysia Bhd (Bank Rakyat) are the lender among the more prominent shadow banks.
MBSB facing bled losses from 1998 to 2004. A previous opposition politician has report that the non-performing loans (NPL) of MBSB reached a high of RM4.45 billion in 2002 which occupied NPL ratio of 62%. It is in contrast while comparing with the banking average which is 7.4% in 2002. In 2012, the total reserves of MBSB only positive for the first time since 2001. The previous opposition lawmaker Tony Pua has said that MBSB is notorious due to giving huge loans to the failed Perwaja Steel which is the politically-connected company. The achievement of the current management seem to be cloud because of MBSB not only chequered in the past, but also due to the rampant allegation of mismanagement.
Tony Pua said that since the EPF board has no proven the track record speak of, it is worth nothing in recruiting the best candidates to operate its own subsidiaries. The reason why the EPF makes poor investment returns because of bad loans given out by MBSB and EPF involvement in questionable projects. Because of giving huge loans to politically-connected companies, it makes MBSB become notorious (Barrock, 2013). In this case, we know that MBSB is involving in such unethical practice which is giving huge loan to the politically-connected company and cause MBSB become notorious.
Futhermore, the net profit of MBSB dropped from RM193.73 million a year earlier to RM124.31 million for its first quarter ended March 31, 2015. The reason is because significantly higher bad loan allowance as Islamic banking net income fell (Edgeprop, 2015). These lenders are non-bank financial institutions (NBFIs) and development financial institutions (DFIs) which include MBSB, Bank Rakyat and Bank Simpanan Nasional Berhad (BSN) (The Edge Markets, 2017). A report by a banking analyst that respond by Zaini who stated that MBSB’s “surprise” impairment programme lacked transparency. The group’s earnings would be affected for the next two years. The group’s impairment plan was a surprise had been reported by analyst to client as it had actually stated in the fourth quarter Dec 31, 2014. However, it was only revealed in a most recent meeting.
Besides that, a former Malaysian Building Society Berhad senior officer was charged in the Sessions Court with deceiving a local bank into releasing loan payment of RM38mil to a carpet company. In this case, the senior officer of MBSB was committed to unethical practices which try to deceive something in order to give loan to a company. Raja Shahrulzaman Raja Shariff claimed that he try to sending a false bank guarantee that purportedly issued by the HSBS Bank Bukit Bintang branch to the Eon Bank branch. His intention is make the bank to accept the bank guarantee as genuine and release a RM38mil loan payment to Syarikat Korale Carpet Industry Sdn Bhd. According to The Star Online (2003), he allegedly committed the offence at the 9th Floor, Wisma MBSB in Jalan Dungun, Damansara Heights, on Nov 10, at 12.45pm. In this case, the senior officer of MBSB involve in situation of unethical practice.
Furthermore, the corporate social responsibility of MBSB also contains problem. In Kuantan, there is yet to be a solution for the water woes affecting residents of four blocks of flats here in Alor Akar despite the endorsement of the area’s assemblyman (The Star Online, 2009). Teruntum assemblyman’s special assistants David Lee and Mohd Amir Moshin had led a team of officials to visit the water tanks recently. Officials from the state water concessionaire, developer Malaysia Building Society Berhad (MBSB) and National Water Services Commission were also at hand during the field trip.
A total of 169 residents in the flats had lodged numerous complaints to the authorities pertaining to the irregular supply of water and frequent water disruption. “I will bring the matter up to my boss Chang Hong Seong when he returns from an overseas working trip. “In the meantime, I hope residents will bear with the inconvenience until a solution is found,” he said. A resident said both the MBSB and JBA had been passing the buck to each other each time they lodged a complaint. “It’s about time they stop pointing fingers and just get the work done so that we can enjoy uninterrupted water supply,” he said. This kind of pointing fingers to each other case can be said that company might not take good care of social responsibility. It might be conflict with the corporate social responsibility program.
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