Shafie denies NPL write-off allegation
KOTA KINABALU: Datuk Seri Mohd Shafie Apdal strongly denied allegations that he was involved in the write-off of RM178mil in non-performing loans (NPLs) during his tenure as Sabah chief minister and Sabah Development Bank (SDB) Board of Directors' chairman.
The opposition Parti Warisan president described the allegations published by an online portal as 'malicious and baseless', asserting that not a single NPL was written off under his watch.
'These accusations are outright lies, manufactured with the intent to deceive the public and destroy my credibility,' he said in a statement on Thursday (June 19).
Shafie clarified that as chief minister, he had no involvement in the day-to-day operations or specific loan arrangements at the bank.
'Public institutions must be governed by professional processes, not political interference. I respected those boundaries and expected the bank's management to uphold their fiduciary duty to the people of Sabah,' he said.
He slammed what he called 'calculated distortions' designed to smear him ahead of the looming state election, adding that the claim he wrote off loans to a politically connected firm, CASH Bhd, was entirely untrue.
'In fact, during my administration, I took every step necessary to recover problematic loans, not cover them up. Writing off NPLs recklessly would have been irresponsible and a betrayal of public trust,' he said.
Shafie also questioned why the current Gabungan Rakyat Sabah (GRS) government, which has been in power for nearly five years, failed to launch a forensic audit or lodge reports with the Malaysian Anti-Corruption Commission (MACC) in 2021, when the issue supposedly occurred.
'If wrongdoing really occurred, why wait until now to bring it up? This is not about justice, but about politics. This is a desperate attempt to shift blame and distract from their failures,' he stressed.
Shafie warned that he will not hesitate to take legal action to protect his name and integrity.
'I welcome any impartial investigation. But I will not remain silent while lies are repeated and recycled for political convenience,' he said.
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The Star
6 hours ago
- The Star
Shafie denies NPL write-off allegation
KOTA KINABALU: Datuk Seri Mohd Shafie Apdal strongly denied allegations that he was involved in the write-off of RM178mil in non-performing loans (NPLs) during his tenure as Sabah chief minister and Sabah Development Bank (SDB) Board of Directors' chairman. The opposition Parti Warisan president described the allegations published by an online portal as 'malicious and baseless', asserting that not a single NPL was written off under his watch. 'These accusations are outright lies, manufactured with the intent to deceive the public and destroy my credibility,' he said in a statement on Thursday (June 19). Shafie clarified that as chief minister, he had no involvement in the day-to-day operations or specific loan arrangements at the bank. 'Public institutions must be governed by professional processes, not political interference. I respected those boundaries and expected the bank's management to uphold their fiduciary duty to the people of Sabah,' he said. He slammed what he called 'calculated distortions' designed to smear him ahead of the looming state election, adding that the claim he wrote off loans to a politically connected firm, CASH Bhd, was entirely untrue. 'In fact, during my administration, I took every step necessary to recover problematic loans, not cover them up. Writing off NPLs recklessly would have been irresponsible and a betrayal of public trust,' he said. Shafie also questioned why the current Gabungan Rakyat Sabah (GRS) government, which has been in power for nearly five years, failed to launch a forensic audit or lodge reports with the Malaysian Anti-Corruption Commission (MACC) in 2021, when the issue supposedly occurred. 'If wrongdoing really occurred, why wait until now to bring it up? This is not about justice, but about politics. This is a desperate attempt to shift blame and distract from their failures,' he stressed. Shafie warned that he will not hesitate to take legal action to protect his name and integrity. 'I welcome any impartial investigation. But I will not remain silent while lies are repeated and recycled for political convenience,' he said.
Focus Malaysia
6 hours ago
- Focus Malaysia
Sabah's GRS gov't steps up accountability with RM1.97b lawsuit against global audit giant EY
THE Sabah state government under Gabungan Rakyat Sabah (GRS) is continuing to signal a firmer commitment towards transparency and accountability in managing state institutions. Towards this end, the Sabah Development Bank (SDB), one of the state's most important financial institutions, has filed a RM1.97 bil lawsuit against global audit giant Ernst & Young (EY), alleging negligence in its audit work between 2017 to 2022, sources told FocusM. According to court documents sighted by FocusM, EY is accused of failing to detect serious financial irregularities during its audits, contributing to the accumulation of more than RM2.2 bil in non-performing loans (NPLs) and substantial losses for SDB. Initiated after an internal review under the Sabah leadership, the lawsuit marks a decisive step by the GRS administration to address long-standing financial problems at the bank. The case also represents a broader effort to safeguard public funds and reinforce integrity across government-linked institutions. In its statement of claim, SDB outlined 17 key points of alleged audit negligence by EY, including: Failure to detect over RM2.2 bil in NPLs Weak internal controls and failure to identify credit risks Reliance on outdated collateral valuation reports which lead to asset misstatements Audits conducted without professional scepticism Use of 'creative accounting' to mask financial weaknesses through loan 'evergreening' practices EY is also accused of having been aware of the true extent of asset impairments since 2017 but failing to advise SDB to make appropriate provisions, allegedly to maintain a positive financial image for the bank in order to support its bond and market borrowings. Clamping down on mismanagement On July 10 last year, State Finance Minister Datuk Masidi Manjun disclosed in the State Legislative Assembly that as of May 2023, a staggering 75% of SDB's RM6.6 bil loan portfolio had turned non-performing or impaired. He revealed that the former management had engaged in 'creative accounting' whereby new loans were issued to delinquent borrowers to repay old debts, thus masking the true extent of the NPL problem. Between 2017 and 2022 alone, the previous leadership allegedly 'fabricated' RM580 mil in book profits by recycling credit and recording unpaid interest as paper gains. Worse, many loans were approved without proper due diligence, allowing unqualified borrowers to tap into public funds. The bank's bond-driven funding model also worsened its liabilities as repayments fell short of bond maturities, thus forcing SDB to borrow further just to stay afloat. While financial mismanagement of this scale would once have been quietly buried, the present administration has chosen transparency. 'Cleaning up the dirt' The move comes as part of a wider approach under Chief Minister Datuk Seri Hajiji Noor's leadership. Based on new report, several individuals, including GRS assemblymen, are expected to be charged in court soon over alleged misconduct involving state-issued mining licenses. Throughout that investigation, the Sabah state government has publicly committed to giving full cooperation to the Malaysian Anti-Corruption Commission (MACC) with no political interference. The MACC has since clarified that the Chief Minister was not among those under investigation, and enforcement officials acknowledged the state's openness during the probe. Together, these developments point to a shift in Sabah's political and administrative culture that prioritises public accountability over political convenience. In SDB's case, EY was continuously appointed as external auditor by the previous state governments. However, it was only after the GRS government took over the state administration and new management was appointed at SDB that the true scale of the losses was uncovered. Since assuming oversight of SDB in mid-2023, the GRS administration has taken steps to overhaul the bank's governance. The bank was formally placed under the Chief Minister's Incorporation and the State Treasury with the new board launching sweeping reforms. These include a full internal audit, re-classification of loans in line with Bank Negara Malaysia (BNM) standards and legal action against 43 NPL borrowers. Professional recovery agencies have been engaged with the board targeting the recovery of RM1 bil in NPLs annually over three years. In the first year alone, SDB recovered RM1.9 bil in legacy loans from government-linked companies (GLCs) while reducing the bank's bond obligations from RM5 bill to RM3.3 bil. In early 2024, SDB rejected RM1.5 bil worth of new loan applications after stricter credit reviews, signalling a renewed focus on financial discipline. Very broadly, this lawsuit sends a clear message that even large corporate players will be held accountable if public interests are harmed. It also underscores the expectation that auditors, banks and other state-linked entities must meet higher governance standards going forward. Looking ahead, the GRS-led government is expected to pursue further improvements to financial oversight across state agencies and government-linked companies. The ultimate aim is to prevent a repeat of past failings, ensure stronger protections for public funds and build public confidence in Sabah's key institutions. As the state continues to focus on economic development, job creation and investor confidence, this latest move shows that governance reforms remain a key part of the agenda. – June 19, 2025 Main image credit: Sabah Development Bank's website
Borneo Post
8 hours ago
- Borneo Post
Shafie denies RM178 million loan write-off allegation, slams political smear campaign
Shafie KOTA KINABALU (June 19): Warisan president Datuk Seri Panglima Mohd Shafie Apdal has categorically denied what he described as malicious and baseless allegations linking him to the supposed write-off of non-performing loans (NPLs) during his tenure as Chief Minister of Sabah and chairman of the Board of Sabah Development Bank (SDB). 'These accusations are outright lies, manufactured to deceive the public and destroy my credibility,' said Shafie in a statement on Thursday. He asserted that not a single NPL was written off under his watch and stressed that all financial decisions were made through the bank's internal processes and credit evaluation protocols. 'As Chief Minister, I was not involved in the bank's day-to-day operations or specific loan arrangements. Public institutions must be governed by professional processes, not political interference. I respected those boundaries and expected the bank's management to uphold their fiduciary duty to the people of Sabah,' he said. Shafie also rejected claims that he protected cronies or extended special treatment to politically connected borrowers, calling the allegation a 'blatant lie.' 'The claim that I 'wrote off RM178 million in loans to CASH Bhd' is a calculated distortion,' he said, adding that his administration had instead taken all necessary steps to recover problematic loans, not conceal them. 'Writing off NPLs recklessly would have been irresponsible and a betrayal of public trust,' he said. He accused those behind the allegations of being individuals who previously benefited from politically connected loans and who now seek to distort the truth for personal gain. 'These individuals were never interested in recovery or reform. Their only concern has always been protecting their own pockets and avoiding public scrutiny,' he added. Shafie questioned why the Gabungan Rakyat Sabah (GRS) government, despite being in power for nearly five years, had not acted if wrongdoing had truly occurred. 'Why was there no forensic audit in 2021? Why was no report made to the MACC back then? Why is this issue suddenly being raised now when public trust in the government is collapsing?' he asked. 'It is clear that this is not about justice, but about politics. This is a deliberate smear campaign timed to distract the public as the current government struggles,' Shafie said, alleging the government feared accountability ahead of the coming election. 'In order to create a villain, they have conveniently chosen me,' he said. 'Let the people of Sabah see this for what it is: a desperate attempt to shift blame and divert attention from their own failures.' Shafie concluded by stating he welcomes any impartial investigation and will not hesitate to take legal action to defend his name and integrity. 'The people of Sabah are tired of watching another 'wayang kulit'. They want the truth and honest leadership that puts the people first,' he said.
