KOTA KINABALU: There is no need for a White Paper on the management and financial fiasco of the state-owned Sabah Development Bank (SDBank), which chalked up RM5bil in non-performing loans (NPLs) from 2013 to 2018, says Datuk Seri Masidi Manjun.
The Sabah Finance Minister, in dismissing a call for a White Paper by Opposition leader Datuk Seri Mohd Shafie Apdal, said steps are being taken to fix the problems within the bank.
"The issue is quite straightforward and we want to fix the problems quickly. We should focus on fixing the problems, not on fault-finding," he said when contacted.
"If there are suspicious cases that warrant further investigation, we will refer them to the appropriate authorities," added Masidi, who earlier this week told the Sabah legislative assembly that creative accounting practices had put the bank's finances in the red.
Shafie told reporters earlier this week that the state government must issue a White Paper on the scandal, as Masidi had informed the assembly that the bank had hidden losses from non-performing loans through creative accounting methods.
"There must be a White Paper for the public to know why it went wrong," said Shafie, who is Parti Warisan president, after the Sabah assembly concluded its three-day sitting on Thursday (July 11).
The issue of SDBank's alleged losses and creative accounting took centre stage at the assembly, with Masidi and Shafie, the Senallang assemblyman, sparring over the issue, which has been in the public spotlight.
Shafie had questioned the government over its rationale for raising RM900mil Sukuk Wakala funds under SMJ Energy to salvage debts of Sabah International Petroleum Sdn Bhd (SIP) owed to SDBank. All three are state-owned.
On Friday (July 12), in a statement, Masidi clarified that RM5bil in NPLs were not losses but were still recoverable as the loans were mainly secured against land-based assets, and the bank was actively making a bid to recover them.
He said SDBank's NPLs were "secured and recoverable" after the new management took over the state-owned bank in mid-2023.
He assured that the loan exposure was reduced from RM2.2bil in July 2023 to RM700mil currently, and bond obligations from RM5bil to RM3.9bil.
The clarification came after Masidi told the assembly that there was a total management meltdown that led to RM5bil in NPLs from 2013 to 2018, as the management covered NPLs by issuing fresh loans to borrowers.
The bank, which has been posting profits for the last six years, is expected to post unprecedented losses for 2023 and 2024, he said at the assembly.
In his statement, Masidi said that the state government fully supports SDBank in times of need and will ensure the bank's bond obligations and repayments are kept whole under the new management's transformation plan.
It has also ordered other state GLCs (government-linked companies) to place excess cash as fixed deposits with SDBank, he said, adding that the state will convert deposits of RM660mil to Redeemable Preference Shares over the next few years to strengthen the bank’s capitalisation.
Masidi reassured that the new board is firmly in position to overcome the negative legacy issues.
