MAY 14 '92 19:29 CLIFFORD CHANCE HK 852 8104708
P.10
THE LOAN OF USS30 MILLION
37.
38.
9
Notwithstanding the existing dangers of exposure of BMFL to this single borrower and the irregular nature of the exposure, in contravention of all established banking practice and procedure, BMFL made this further advance to George Tan.
loan
Again as for the US$97 million loan there was neither any documentation nor any security provided and the funds were paid out essentially to the same borrower and in the same manner. Again, there was no written application or approval for the advance. The advance was again misreported to the parent bank as a money market placement with financial institutions.
39.
SUMMARY OF DISHONEST CONTRAVENTION OF PRUDENT BANKING
It follows from the circumstances of the above five loan transactions that when viewed in their totality the methods used to make the five advances demonstrated that almost 80% of BMFL's total loan portfolio was extended to one single borrower. Furthermore, in an inadequately documented and unsecured fashion all loans were granted without evaluation of their purpose or in fact the borrower.
40.
It also appears that to disguise this unsatisfactory exposure, at least initially, there were attempts to create loan and security documentation in an attempt to falsely reflect a regular customer/client relationship. However, as the lending increased, less regard was paid to these matters so that the practice of BMFL and its directors rapidly deteriorated to an extent that the funds were eventually advanced without any loan documentation and security, contrary to all rules of established banking practice. At the same time Saniman and his fellow directors received, from George Tan, substantial corrupt financial reward for their engaging in this way in these fraudulent practices.
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