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PUBLIC PROSECUTOR v. DATUK HAJI HARUN BIN HAJI IDRIS & ORS
HIGH COURT, KUALA LUMPUR
ABDOOLCADER J (OCJ)
FEDERAL TERRITORY CRIMINAL TRIAL NOS. 40, 41 & 43
24 JANUARY 1977

CRIMINAL LAW AND PROCEDURE - Penal Code - Forgery - Criminal breach of Trust - Abetment of Criminal
breach of Trust - Document purporting to be minutes of Investment Committee of Co-operative Society -
Document used to secure letters of credit for another Company - Property disposed of in violation of
direction of law and in violation of legal Contract of service - Dishonest intent - Meaning of dishonesty - Penal
Code, ss 23, 24, 107, 405, 415, 463, 464, 468.

EVIDENCE - Minutes of Board meetings of Co-operative Society - Whether evidence can be given to contradict,
vary, add to or subtract from minutes - Minutes not exhaustive of proceedings at meetings - Whether matter
required by law to be reduced to form of document - Evidence Act, 1950, ss 91 and 92.

CO-OPERATIVE SOCIETY - Powers of - No authority to pledge - Board of Directors delegating power to

committee - No provision for quorum - Acts of committee must be done in presence of all members of
committee - Co-operative Societies Ordinance, 1948, ss 30, 33.

CORPORATION - Powers of - Prohibition where acts not expressly or impliedly authorised or permitted.

CRIMINAL LAW AND PROCEDURE - Failure of defence to call any particular witness or witnesses - Whether
court can take into account or comment on such failure in viewing whole of the material on which to decide
and determine question of reasonable doubt.

CRIMINAL LAW AND PROCEDURE - Sentence - Conviction for Forgery and Criminal breach of Trust - Principles
applicable in sentencing.

Case(s) referred to:

AJEC Caspersz v. The King [1949] PC AIR 22 Ashbury Railway Carriage & Iron Co. Ltd. v. Riche [1875] 7 LR HL
653 Attorney General v. Great Eastern Railway Co. [1880] 5 AC 473, 481 Daulat Rai v. Emperor [1915] 16 Cr LJ
473 Dr Vimla v. The Delhi Administration [1963] SC AIR 1572 Emperor v. Abdul Hamid [1945] 46 Cr LR 342
Faguna Kanta Nath v. State of Assam [1959] SC AIR 673 Jaswantrai Manilal Akhaney v. State of Bombay
[1956] SC AIR 575 Krishnan Kumar v. Union of India [1959] SC AIR 1390 Laiq Singh v. State of UP [1970] SC
AIR 658, 659 Mak Sik Kwong v. Minister for Home Affairs, Malaysia (No 2) [1975] 2 MLJ 175, 182 Mangal Sen
v. Emperor [1930] AIR Lahore 57 NN Burjorjee v. Emperor [1935] AIR Rangoon 453 National Coal Board v.
Gamble [1959] 1 QB 11
Public Prosecutor V. Lim Kuan Hock [1967] 1 LNS 130
Public Textiles Berhad V. Lembaga Letrik Negara [1976] 1 LNS 120
Ragunath Das v. Emperor [1920] 21 Cr LJ 213 Re Liverpool Household Stores Association (Ltd.) [1890] 59 LJ
(NS) 616 Regina v. Gallagher [1974] 1 WLR 1204 Sargeant v. Regina [1975] 60 Cr App 74, 76, 77
Seet Soon Guan V. Public Prosecutor [1955] 1 LNS 143
Tay Choo Wah V. Public Prosecutor [1976] 1 LNS 156
Young v. Ladies Imperial Club Ltd.[1977]
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2 KB 523
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Counsel: 92
For the Public Prosecutor - Tan Sri Datuk Mohamed Salleh bin Abas,Solicitor- General, Abu Talib bin Othman,
DPP, and Datuk Haji Abdullah bin Ngah, DPP,; RRChelliah Bros.
For the first accused - RR Chelliah, Sri Ram, Haji Suhaimi and P Vajandran;(Sri Ram,Chan & Chia
For the second accused - Edgar Joseph Jr R Rahasooria and Abdul Kadirbin Kassim;Adlan & Suhaimi
For the third accused - Jag-Jit Singh and Dulip Singh; Joseph & son; Kadir Kassim & Co.(Jag-Jit Singh & Co.

JUDGMENT
Abdoolcader J:
1 Preliminary.
Bank Kerjasama Rakyat Malaysia Berhad ('the Bank') is a Co-operative Society registered under the
provisions of the Co-operative Societies Ordinance, 1948, primarily to provide financial and other facilities to
its members in accordance with co-operative principles, and at all material times Datuk Haji Harun bin Haji
ldris (the first accused), Datuk Abu Mansor bin Mohamed Basir (the second accused) and Ismail bin Din (the
third accused) were respectively its President or Chairman, Managing Director and General
Manager/Secretary.
This case involves the joint trial of the three accused firstly on a charge preferred against all three of them
for jointly committing forgery for the purpose of cheating under s. 468 of the Penal Code, and secondly on a
charge against the second accused for criminal breach of trust unders. 406 of the Penal Code and a joint
charge against the first and third accused under ss. 109 and 406 of the Penal Code for abetment of the
criminal breach of trust charge against the second accused.
The charges read:
1. As against all three accused,
That you jointly on or about 5 May 1975 at Bank Kerjasama Rakyat Malaysia Berhad at No. 140 Jalan
Ipoh, Kuala Lumpur, in the Federal Territory of Kuala Lumpur forged a certain document, to wit,
Minutes of Investment Committee of Bank Kerjasama Rakyat Malaysia Berhad resolving that (a) three
ordinary shares of Dunlop Estates Berhad, and (b) M$1m Debenture Stocks of Kuala Lumpur Kepong
Berhad be lodged at the First National City Bank, Jalan Ampang, Kuala Lumpur for the purpose of
securing Letters of Credit requirements of Tinju Dunia Sdn. Bhd. for amounts not exceeding M$6.5m,
intending that it shall be used for the purpose of cheating and that you thereby committed an offence
punishable under s. 468 of the Penal Code. "
2. As against the second accused,
That you on or about 5 May 1975, at Kuala Lumpur in the Federal Territory, being entrusted with
dominion over certain property,to wit, three ordinary shares of Dunlop Estates Berhad and M$1m
Debenture Stocks of Kuala Lumpur Kepong Berhad belonging to the Bank Kerjasama Rakyat Malaysia
Berhad committed criminal breach of trust and that you thereby committed an offence punishable
under s. 406 of the Penal Code."
3. As against the first and third accused,
That you jointly on or about 5 May 1975, at Kuala Lumpur in the Federal Territory, abetted the
commission of the offence of criminal breach of trust of certain property, to wit, three ordinary shares
of Dunlop Estates Berhad and M$1m Debenture Stocks of Kuala Lumpur Kepong Berhad belonging to
Bank Kerjasama Rakyat Malaysia Berhad by one Datuk Abu Mansor bin Mohd Basir which offence was
 committed in consequence [1977]
of yourCLJU
abetment and that you thereby committed an offence punishable
under ss. 109 and 406 of the Penal Code."
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The supreme authority over the affairs
[1977]of1 the
LNSBank vests in its General Meeting specified in By-law 25 of the
By-laws of the Bank (P4) but the management
92 of its affairs is entrusted by virtue of By-law 42 to a Board of
Directors which includes the Registrar of Co-operative Societies or his representative and a representative
each from the Treasury and the Ministry responsible for cooperative movements, who were perhaps aptly
referred to in this trial as the Government watchdogs. The Board is empowered to appoint an Executive
Committee of the Board to which specific powers of management may be delegated (By-law 51(i)(25) and
also sub-committees or experts to assist it (Bylaw 51(i)(10) in the discharge of its management funtions and
responsibilities.
The function of the President who is also referred to as the Chairman in the By-laws is to preside at all
General and Board meetings and sign the minutes of meetings on confirmation thereof and supervise
generally and be responsible for the proper functioning of the Bank (By-law 54). To assist the Board and the
President or Chairman in the management of the Bank there are two other officers of importance, namely,
the Managing Director and the General Manager (By-laws 55 and 56). There is also provision for the
appointment of a Secretary (By-law 57) and at all material times the third accused officiated as General
Manager and Secretary.
Such then is the general executive and administrative set-up of the Bank in relation to the positions
assumed by the three accused. I would add that the powers, duties and functions of the Bank and its
officers are circumscribed by and exercisable only within the ambit of the Cooperative Societies Ordinance,
1948, the Co-operative Societies Rules, 1949, and the By-laws of the Bank. No statutory provision is
necessary for this obvious proposition but perhaps ex abundanti cautela By-law 76 specifically prescribes to
this effect.
There is abundant evidence to establish, and this is in no way disputed, that the Bank was at all material
times and still is the beneficial owner of three ordinary shares in Dunlop Estates Berhad covered by 3,000
share certificates of 1,000 shares each (P9) and M$1m Mortgage Debenture Stock of Kuala Lumpur Kepong
Berhad covered by 10 certificates of M$100,000 each (P10), which are the subject-matter of the charges in
this case. For brevity I shall refer to these as 'the shares and stock'.
This case revolves around and is directly connected with and is in fact the aftermath of the staging of a
sporting event which aroused nation-wide interest - the heavyweight boxing championship fight between
Muhammad Ali and Joe Bugner on 1 July 1975, in Kuala Lumpur. Muhammad Ali was of course the main
attraction and indeed when during the course of this trial he announced his intention to retire from the
boxing arena, I had occasion to bemoan the fact that this had unfortunately come some 18 months too late
to render a non est the concatenation of events culminating in this lengthy and somewhat protracted trial.
The brief background to this matter is that the Executive Council of the Youth Movement of the United
Malays National Organisation, the major ruling political party in the country, at a meeting on 31 March 1975,
after a briefing by two persons, Mike Ong and Bosco, decided in principle to stage the Ali-Bugner fight in
Kuala Lumpur subject to the first accused who was also then the President of UMNO Youth Malaysia
obtaining from the then Prime Minister, Tun Haji Abdul Razak bin Dato Hussein (who has since ascended to
a celestial abode), Govermment approval and backing therefor. The second accused who was the Managing
Director of the Bank got involved in this affair at the behest of the first accused after he had apparently
obtained what is referred to as the green light from Tun Razak. The second accused arranged for
negotiations for the fight to be carried out in the United States of America and also arranged for certain
preliminary payments for this purpose to be made through United Manufacturers Sdn. Bhd, a subsidiary of
the Bank.
A company known as Tinju Dunia Sdn. Bhd. was then formed for the purpose of staging the fight and as a
result of an urgent requirement for Letters of Credit to be issued on behalf of Tinju Dunia to meet a
deadline on 5 May 1975, the second accused made a request to the First National City Bank of New York in
Kuala Lumpur ('FNCB') to issue Letters of Credit on account of Tinju Dunia to the extent of some M$6m odd
on the security of the shares and stock
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the Bank which were pledged with FNCB for this purpose. To effect
this transaction a document purporting to be the Minutes of the Investment Committee of the Bank dated 5
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May 1975, was made and signed by the three accused setting out a resolution purportedly of that
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Committee authorising the pledging of the shares and stock for the purpose indicated. This document is the
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subject-matter of the forgery charge and has been put in as exh. P12 which would easily qualify for an
academy award for court exhibits if there was one on the basis of the renown and publicity it has received.
The charges for the criminal breach of trust and abetment thereof would appear to be the direct
consequence of the pledge so effected.
Before I turn to the case for the prosecution, it would perhaps not be amiss for me to make some general
observations, deal with certain preliminary matters and dispose of one or two points which have arisen for
consideration in the course of these proceedings.
It would appear from the evidence adduced that as the triumvir of its principal officers, the first and second
and perhaps to a lesser extent the third accused, in the fashion of Cerberus, the mythological three-headed
hound guarding the gates of Hell, virtually guided and controlled the destinies of the Bank and held its
fortunes in their hands. The analogy is perhaps not in appropriate in view of the canine element injected
into these proceedings, what with references to watchdog, toothless, barkless, spineless, chained and all,
Government or otherwise, and not forgetting the Press hounds.
For the better part of a period of some 59 days in the course of this trial I have sat virtually combining the
functions of a pathologist performing an autopsy, a coroner holding an inquest, an inspector in respect of a
declared company and a commission of inquiry in relation to the affairs and running of the Bank. The
activities and workings of the Bank unfolded to view as a result have disclosed a deplorable, sordid and
scandalous state of affairs and a blatant and outrageous disregard for the Ordinance, Rules and By-laws,
with virtual carte blanche to the first and second accused as Chairman and Managing Director, not unaided
by the apathy and acquiescence of the directors, including the Government watchdogs or official sentinels
or whatever and not excluding even the Registrar of Co-operative Societies himself or his representatives
and with even policy and other decisions of the Board and the Executive Committee not infrequently flouted
and honoured more by breach than compliance - all suggestive of and presenting a grotesque picture of
passive connivance on the part of the directors in all these irregular and indeed unlawful activities and
practices which no doubt occasioned lapses of memory, qualifications as to the ability to recollect and
reliance on assumptions and presumptions in certain aspects of the testimony of such of them as testified
and who were also not beyond putting dubious interpretations on the minutes of meetings and the Bylaws
which they had probably never previously seriously scrutinised or considered or even perhaps seen, as is
evident from the fact that they seemed on occasions to have resiled time and again from the stand
previously taken through the various stages in the process of examination, cross-examination and re-
examination. There is, for instance, the incredible scandal of the 1972 and 1973-74 annual accounts of the
Bank, which were not only not approved by the Registrar of Co-operative Societies as required by law but
also then subject to query by him, being allowed to be presented to and passed by the Annual General
Meeting with that functionary's representative present and without any protest or complaint registered by
him.
When all this surfaced in the course of these proceedings, I immediately thought in relation to this farcical
sort of situation of the appropriateness of the words of Gilbert & Sullivan in referring in another context to
another body 'which did nothing in particular and did it very well'. In these circumstances the strictures
made by the Solicitor General on the directors both elected and appointed are certainly not without
justification, and I can only put a charitable gloss on those aspects of their evidence where the activities and
practices indulged in reflect on their own inertia by saying, perhaps they loved the truth so well, they used it
sparingly. This does not of course necessarily mean that their evidence in all respects is to be disbelieved or
looked at askance.
It would also appear that in the course of this trial political undertones and overtones seem to have
infiltrated but I must make it abundantly clear that I have only allowed such matter as is strictly and
properly relevant to the case and particularly that for the defence. In determining this matter I am not
concerned with any of the political matters
[1977] introduced in evidence except in so far as they are pertinent to
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or have a bearing upon the case presented before me. I am of course in this trial moved by no
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considerations other than that of determining whether or not on the evidence adduced and in law the
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charges preferred are strictly sustainable within the confines of the Penal Code.
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It is necessary to refer to certain exhibits which have been put in in the course of these proceedings for
identification but have not in fact been proved as they should have been and are accordingly not exhibits in
the strict sense and cannot therefore form part of the record in this case, namely, D41 and D43 which were
both put in for identification only and which are the audited accounts and annual report of the Bank for the
years 1973-74 and 1972 respectively. As these two exhibits have not been proved and properly admitted as
such, they must in the ultimate analysis be discounted and I shall accordingly disregard references to them
and also all oral testimony as well adduced in relation thereto. I would mention in passing that the Minute
Book of United Manufacturers which was put in as an exh. (D23) at the behest of counsel for the second
accused has not been referred to at all throughout the case.
I should also at this stage refer to the submission of counsel for the second accused that no evidence which
would in any way contradict, vary, add to or subtract from the minutes of the Board meetings of the Bank is
admissible by virtue of the provisions of ss. 91 and 92 of the Evidence Act, 1950, notwithstanding profuse
examination and cross-examination on the minutes throughout these proceedings. This submission on a
point of law should perhaps be considered and disposed of before I come to deal with the evidence and is,
as I understand it, premised on the provisions of By-law 50 which prescribes that all matters deliberated or
decided upon at a Board and General meeting shall be recorded in a minute book and signed by the
Secretary and the Chairman on confirmation of the minutes. Counsel for the second accused argues that
this is therefore a matter required by law to be reduced to the form of a document and accordingly comes
within the provisions of ss. 91 and 92 of the Evidence Act. I cannot accept that contention for two reasons.
Firstly, it is clear from the terms of By-law 50 that what should be recorded in the minute book are only all
matters deliberated or decided upon, and the minutes cannot therefore be fully exhaustive of everything
that transpires at such meetings. And secondly, in the context of the wording in s. 92 of the Evidence
Act, the clause 'any matter required by law to be reduced to the form of a document' would appear to refer
to bilateral instruments and dispositive documents only, such as contracts, grants or other disposition of
property which the law requires to be reduced to writing, and not to every and all matters which the law
requires to be reduced into a document, as, for instance, the depositions of witnesses which, though
required by law to be reduced to the form of a document, would not come within this section and oral
evidence is therefore admissible to contradict such depositions.
There is evidence adduced that since 1972 the first and second accused have between them without the
prior approval of the Board or the Executive Committee and also of the Registrar of Co-operative Societies
decided on and implemented the acquisition and formation of subsidiaries, investment of moneys therein
and advances of capital thereto in many cases and that these were only subsequently brought to the notice
of the Board or the Executive Committee, quite often without any explanation. This state of affairs although
not legalising the position might of course affect and have a bearing upon the intention of the accused, and
the defence therefore places considerable reliance on this aspect in regard to the formation of Tinju Dunia,
and accordingly this case in effect centres on the position of Tinju Dunia in relation to and its connection
with the Bank. I will presently have to deal in some detail with this question of Tinju Dunia in which the first
accused is Adviser and the second accused is Chairman, Managing or Executive Director and a shareholder,
but for now would only observe that the defence while claiming a relationship between Tinju Dunia and the
Bank was not able at least in the initial stages of this trial to specify the exact nature of such relationship.
Counsel for the second accused, in seeking to have certain exhibits admitted in the course of cross-
examining the Investigating Officer in this case (PW1), said that the defence would attempt to show that
Tinju Dunia is a subsidiary of United Manufacturers. In the course of the trial however it became clear that
the defence contends that Tinju Dunia is in fact a subsidiary of Rakyat Corp Sdn. Bhd, another subsidiary of
the Bank. But in the course of submissions of no case to answer at the close of the case for the prosecution
when I gave leave to counsel for the defence to reply to, the submission of the prosecution in connection
with the effect of the transactions[1977]
disclosed in certain exhs (D24 and D25) relating to the repayment of some
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M$6m by the Bank to FNCB through United Manufacturers in October 1975, counsel for the second accused
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said that this payment only goes to show and emphasise the fact that Tinju Dunia is a subsidiary of the Bank
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because the Bank was the financial source of Tinju Dunia. It would appear therefore that the defence has
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had some difficulty in specifically placing Tinju Dunia's domicile within the Bank's group or at least in finding
its proper place in the family tree, so to speak, and it will be necessary to examine the evidence to ascertain
the true position in this regard.
There appears to be hardly any dispute regarding the actus reus in this case but there is a substantial
conflict as to the mens rea of the accused, and I think I neatly and aptly summarised the case for the
defence and the prosecution at the close of submissions of no case to answer at the conclusion of the case
for the prosecution when I said that the effect of the submissions seems to be that the defence maintains
everything was straight, with the prosecution however contending to the contrary that everything was only
just about as straight as the figure 8.
There is abundant evidence that the accused made, signed or executed P12. Indeed the defence concedes
that there is no doubt the prosecution has proved this and they do not in fact challenge this aspect. A
number of witnesses have identified the signatures of the three accused, and the first accused when shown
P3 (a copy of P12) by the Investigating Officer (PW1) acknowledged his own signature therein and those of
the second and third accused as well. With regard to the criminal breach of trust charge against the second
accused, there is ample evidence adduced by the prosecution, and this his counsel concedes, that the
second accused was entrusted with the shares and stock and with dominion over them.
2. Case for the Prosecution.
I now turn to a consideration of the evidence adduced in the case for the prosecution, dealing with the
events as they occur in chronological sequence in this drama of a pugilistic promotion.
The curtain unfolds with the meeting of the UMNO Youth Executive Council on 31 March 1975 at which the
decision I have referred to was made. On this aspect Abdullah Ismail (PW5) testified that Mike Ong in his
briefing to the meeting produced facts and figures in support of the estimates he gave and indicated an
estimated cost for staging the fight of some M$10-12 and an estimated profit in the region of a few dollars.
He said that the question of finance was not discussed at that meeting. He went on to say that UMNO Youth
did not put up any money for the fight, that he knew, as he had been told by the first accused, that the
source of finance for Tinju Dunia to stage the fight was the Bank and this was arranged by the second
accused, and added that the first accused was present at some of the discussions in connection with
arranging the finance. He added that UMNO Youth was planning to build a sports complex and hoped to get
some profits from the fight to put up this sports complex for which a site had already been chosen.
The next event occurs at the Subang airport the next day when the first accused was leaving for Kuwait. At
the airport the first accused told PW5, the second accused and some other UMNO Youth Executive Council
members who were present that he had seen Tun Razak and got the green light from him. The first accused
was away for three to four weeks and during his absence there were a few discussions about the fight
between the second accused and some members of the UMNO Youth Executive Council. As a result of these
discussions it was decided to send Mike Ong and a Jack Rennie to the United States to bring about the fight
in Kuala Lumpur, and soon after Ismail Kamat (PW12), the Managing Director of United Manufacturers, was
also sent by the second accused to the United States to negotiate the staging of the fight. PW12 was given a
letter of authority dated 8 April 1975, (D38) by Dato Mohamed Rahmat, the Deputy President of UMNO
Youth Malaysia, as a credential to negotiate contracts in connection with the proposed fight. D38 clearly
shows by the terms of its first paragraph that PW12 was sent as an authorised representative of UMNO
Youth, and the third paragraph states that for the purposes of negotiations PW12 had authority to confirm
any terms of contract with the promoters of Muhammad Ali.
PW12 left for the United States on 17th April and returned on 30 April 1975, and during that period he
signed seven Agreements (P17) pertaining to the fight (six in the United States and the last one pertaining to
Joe Bugner in London) on behalf of the second accused and Tinju Dunia although Tinju Dunia had not then
been formally incorporated. These Agreements
[1977] CLJU were signed by PW12 after communication with the second
accused by telephone and telex for instructions and after obtaining his consent, and monetarily involved
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substantially heavy commitments including a purse of US$2.3m for Muhammad Ali and US$500,000 for Joe
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Bugner in respect of which there were stipulations for the opening of Letters of Credit which will become
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material when I deal with the events of 5 May 1975.
The first accused on his return from Kuwait was admitted into the General Hospital, Kuala Lumpur, for a
check-up and PW5, the second accused, Dato Mohamed Rahmat and some other UMNO Youth Executive
Council members went to see him there in connection with the fight. Before that, however, PW12 who was
then still in the United States had made an urgent request for the purposes of the negotiations he was
involved in for the remittance of a deposit of some US$350,000, intimating that in default there was a
danger of losing the bid for the fight in Kuala Lumpur as other countries were also interested to stage the
fight. According to PW5, at the hospital the first accused asked around for ideas and every one present
looked at each other and then the first accused told the second accused to find a way of sending this money,
saying that probably the Bank's resources could be used for this purpose. PW5 said the second accused in
reply stated that this was a possibility which would be considered and in re-examina tion added that he only
assumed and inferred that it was to be considered by the Bank. It would appear that at least at this stage
there was no clear idea as to how or where the moneys required as deposit for the purposes of the
negotiations were to be obtained. I might perhaps interpose at this point to say that PW12 who is a director
of Tinju Dunia said in evidence that the source of finance for Tinju Dunia was from the proceeds of sale of
tickets for the fight. This sum of US$350,000 was duly sent to PW12 in the United States by United
Manufacturers on the instructions of the second accused.
PW5 stated that at the hospital meeting with the first accused many things were decided and one of them
was the formation of Tinju Dunia and he, Saidin Tamby and Zakariah Yahaya were to be the representatives
of UMNO Youth in Tinju Dunia. He could not recollect any decision on that occasion as to the appointment
of representatives of the Bank in Tinju Dunia but he said that Tinju Dunia was formed jointly by UMNO
Youth and the Bank and that this joint venture was decided as far as he could recollect at that meeting at the
hospital. This now brings me to the matter of the formation and position of Tinju Dunia and its relationship
with the Bank.
Tinju Dunia is a private company limited by shares and was incorporated on 3 May 1975, with its registered
office at 140 Jalan Ipoh, Kuala Lumpur, which are the premises of the present head office of the Bank. The
authorised capital of this company is $25,000 divided into 25,000 shares of $1 each, the issued capital is
$10,000 and the paid-up capital only $2 being the two subscribers' shares of $1 each. The second accused
and PW5 are its subscribing shareholders and initial directors. In early May 1975, three other directors were
appointed, namely, PW12, Jalaluddin bin Abdul Jalil (PW29) and Khairuddin bin Haji Musa, all employees of
the Bank. Then by a Circular Resolution dated 29 May 1975, (D26(A1) two others, Saidin bin Tamby and
Zakariah bin Haji Yahaya who are members of UMNO Youth, were appointed additional directors making a
total of seven directors in all.
The accused claim that Tinju Dunia is a subsidiary of Rakyat Corp and therefore a sub-subsidiary of the Bank
by virtue of an allotment of 9-998 shares in Tinju Dunia to Rakyat Corp effected by the same Circular
Resolution dated 29 May 1975, (D26(A1). That Circular Resolution although bearing the names of the five
directors as at that date was only signed by three of them; the second accused and PW29 failed to sign it. It
would appear from Article 91 of the Articles of Association of Tinju Dunia (P27) that that resolution is invalid
in view of the requirement therein for such a resolution to be in writing and signed by all the directors for
the time being entitled to receive notice of a meeting of directors in order to be as valid and effectual as if it
had been passed at a meeting of the directors duly convened and held.
In any event there is no contract of allotment, no application for allotment by Rakyat Corp nor any letter of
allotment to it or payment for the shares either. According to PW29 the suggestion for the allotment was
made by the second accused who was then the Managing Director of Rakyat Corp, and PW12 corroborates
him on this. PW12 and PW29 both said that the 9-998 shares allotted were not taken up by Rakyat Corp and
therefore only the two subscribers' shares were in fact issued. PW29 said there was positively no application
for the shares by Rakyat Corp and[1977]
no correspondence
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and he had no knowledge if Rakyat Corp was informed of the allotment. This was echoed by Nik Mohd
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Dziauddin (PW23), the Secretary of Tinju Dunia, who said that he was not aware of any application for the
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shares by Rakyat Corp, and that these shares had not in fact been taken up until the time he resigned as
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Secretary of the company in March, 1976.
Raja Adnan bin Raja Abdullah (PW17) who was then the Chairman of Rakyat Corp was not aware of any
application by Rakyat Corp or of any allotment to it of the shares in question in Tinju Dunia. He testified that
as Chairman he would have known if Rakyat Corp had applied or paid for the shares. He said that as far as
he would remember this question of application for shares in Tinju Dunia was never raised at any time by
Rakyat Corp, that the sole authority in that company to purchase equity in another company was its Board
of Directors and that this power had not been delegated to the second accused or any director or officer of
Rakyat Corp. In these circumstances, it would appear that the second accused had no authority to act in the
matter of the allotment on behalf of Rakyat Corp and the form of Return of Allotment (D53) lodged with the
Registrar of Companies under s. 54(1) of the Companies Act, 1965, which is no more than a formal
notification required by law, can have no effect in substantiating or validating an otherwise ineffectual
transaction.
I have already referred to the evidence of PW5 on the question of UMNO Youth hoping to get profits from
the fight to put up a sports complex. All payments for and on behalf of Tinju Dunia were in fact made
through United Manufacturers and not Rakyat Corp. PW12's expenses for his trip to the United States and
London and also Mike Ong's and Jack Rennie's travelling expenses were also paid by United Manufacturers. I
have already touched on the remittance of US$350,000 to PW12 in the United States, and after his return
four further sums totalling some US$400,000 due under the Agreements (P17) were also paid by or through
United Manufacturers, and these four sums were transferred into Tinju Dunia's bank account on the
authority and instructions of the second accused. All this is clear from the evidence of PW12 who said that
as Managing Director of United Manufacturers he questioned the second accused who was the Chairman of
that company as to why all these payments were made from United Manufacturers to which the second
accused replied "Just pay it first and then we will resolve the matter later." He said he was instructed by the
second accused to make the payments which were charged to Tinju Dunia's Debtor's Account opened with
United Manufacturers.
There is then evidence of a repayment of some M$6m to FNCB sometime in October 1975, made by way of
two payment vouchers, a debit note and a debit advice contained in the accounting records of United
Manufacturers relating to Tinju Dunia (D24) and the accounting records of the Bank (D25) which show that
first United Manufacturers received the money from the Bank on 11 October 1975, then on 15th October
the United Asian Bank paid the money to FNCB and on 2first October on receipt of a debit advice dated 15th
October United Manufacturers paid the United Asian Bank M$6m and later on 27th November debited Tinju
Dunia whose paid-up capital was then only $2 with M$6m. That this was a highly devious and circuitous
method of repayment is self-apparent even if Tinju Dunia were a subsidiary of United Manufacturers, and
how much more so then if, as the defence contends, it is indeed a subsidiary of Rakyat Corp. And if the
whole affair was truly impeccable and guileless, why could the Bank not make a direct repayment to FNCB
and be done with it?
The whole position becomes confounded and even more complicated on a scrutiny of the Statement of
Assets and Liabilities of Tinju Dunia as at 31 December 1975, (D26C(1) which was prepared by PW29 and
signed and certified by him as correct and a copy given to the second accused. In that statement under
Liabilities there are items relating to 'Advances payable (United Manufacturers)' in the sum of $8m odd and
also to a bank loan from FNCB in the sum of $147,000 odd and a bank loan from the Bank for some
$318,000 odd, and then under Sundry Creditors the Bank again appears as a creditor in the sum of some
$2,500 odd. It therefore appears that moneys had in fact been paid to and on behalf of Tinju Dunia not only
through United Manufacturers but also directly by the Bank.
There is evidence of denials by the second accused at the Board meetings of the Bank on 29th August and 5
November 1975, regarding the Bank's involvement with Tinju Dunia which I shall deal with presently and the
fact that neither the Board nor the[1977]
Executive
CLJUCommittee were ever informed of the formation of Tinju Dunia
or its connection with the Bank at the Board meetings I have referred to, nor was the Executive Committee
92
meeting on 27 November 1975, when Tun Razak's complaints regarding the Bank's activities were discussed,
[1977] 1 LNS
and neither was the Annual General Meeting of the Bank which was held on 6 September 1975.
92
PW23, the Secretary of Tinju Dunia, said that Tinju Dunia is not a subsidiary of any company to his
knowledge and up to the time he resigned in March 1976, no other shares were issued in Tinju Dunia apart
from the two subscribers' shares. The matter of the formation of Tinju Dunia and the application of the
Bank's moneys therein were never referred to the Registrar of Co-operative Societies nor was his approval
obtained. This was stated by Dato Abdul Aziz bin Hussain (PW21), the Registrar-General of Co-operative
Societies, and Abdul Aziz bin Ibrahim (PW27), the Acting Deputy Director- General of the Co-operative
Department. PW29 said that at meetings called for by the second accused of officers of the Bank and Rakyat
Corp in connection with Tinju Dunia, the second accused did not mention the involvement of the Bank in
Tinju Dunia but only of the staff of the Bank and Rakyat Corp.
With regard to the employees of the Bank and Rakyat Corp working in the Tinju Dunia Secretariat at the
Holiday Inn and generally in connection with the fight, this was done, according to the evidence, on the
instructions of second accused, a reasonable inference being that this was motivated by reasons of
convenience and expedience, and the fact that he instructed his subordinate officers to so work and to serve
on the Board of Tinju Dunia does not necessarily mean that these officers were officially representing the
Bank, in view of the absence of any sanction or even subsequent ratification by the Board of the Bank for
the formation of Tinju Dunia or the Bank's participation therein or the appointment of the Bank's employees
as its directors. And it does not necessarily follow that the Bank's employees in working for Tinju Dunia were
doing work for the Bank because the second accused apparently instructed them to this effect on his own
authority and without that of the Board of the Bank.
The three employees of the Bank other than the second accused on the Board of Tinju Dunia were
appointed directors by the second accused. PW29 said this and added that there was no specific capacity in
which he had been named a director of Tinju Dunia. And it does not therefore necessarily follow that they
were appointed in fact by virtue of their employment to represent the Bank, and it is significant that
although PW29 has since resigned from the Bank on 1 July 1976, he still remains a director of Tinju Dunia
and has not been removed as such. The fact that the second accused, PW12 and PW29, all employees of the
Bank were, as directors of Tinju Dunia, the authorised signatories for operating the bank account of that
company is neither here nor there, as they were not doing so in respect of cheques drawn on the bank
account of the Bank or any of its subsidiaries, and is perhaps also understandable on the basis of
covenience as the other two would be easily accessible and available to the second accused for that
purpose. PW29 moreover on his evidence would appear to still continue as an authorised signatory despite
his resignation from the Bank. No elected or appointed director of the Bank was appointed to the Board of
Tinju Dunia.
There is evidence by PW29 that Rakyat Corp has rendered certain services to Tinju Dunia in connection with
the fight and has billed Tinju Dunia for over $40,000 for the work done and he added that Rakyat Corp
expected payment in cash for the amount due.
The pledging of the shares and stock was effected on 5 May 1975, but the purported allotment of shares to
Rakyat Corp in Tinju Dunia was made by the Circular Resolution (D26(A1) some 24 days later on 29th May.
Another matter of some relevance and significance appears in the general ledger of Tinju Dunia (D26(B) and
in particular in the entries made therein in respect of the issued and paid-up capital of Tinju Dunia (D26(B1).
PW29 testified that the entries in question were made under his supervision and that he is in charge of the
general administration of Tinju Dunia which includes the accounts. In D26(B1) there is an entry dated 25
April 1975, of $2 as the issued and paid-up capital of Tinju Dunia. On the same day there is an entry of
$9,998, as issued and paid-up capital. Both entries purportedly refer to cash payments and there is no
indication of the identity of the payor of the sum of $9,998, which is significant, as the $2 would obviously
refer to the two subscribers' shares held by the second accused and PW5. Then on 27 January 1976, the
second entry of $9,998 made on 25 April 1975, was reversed, leaving a total issued and paid-up capital of
only $2. This witness stated in re-examination
[1977] CLJU that the reversal entry was made on the instructions of the
directors of Tinju Dunia including the second accused.
92
Another aspect in relation to these ledger
[1977] entries is that although the company was incorporated on 3 May
1 LNS
1975, and the allotment of shares 92to Rakyat Corp was purportedly effected on 29 May 1975, the entry in
respect of $9,998 in the ledger was made on 25 April 1975. PW29 said in evidence that the entries pertaining
to the $2 and $9,998 were based on the subscribers' shares and the Circular Resolution (D26(A1). But
considering the relevant dates of the entries and the allotment, it would appear that the allotment was only
made subsequently to regularise ex post facto the initial entry in respect of the $9,998, without any thought
perhaps on 25 April 1975, when the entry was made as to who the allottee would be.
In the light of all this evidence and the representations to FNCB as to how Tinju Dunia expected to discharge
the credit facilities granted which I shall advert to a little later, I am constrained to conclude, in language
veiled in allegory, that Tinju Dunia, which apparently was conceived at the General Hospital in Kuala
Lumpur, developed as a floating foetus bereft of any umbilical cord and was delivered by design as an
orphan of undetermined lineage and uncertain heritage, maturing into a waif of no fixed abode and
destined to be shuttled ex post facto into such parentage as the whims and fancies of its progenitors would
dictate in the wake of shifting circumstances - certainly not a picture of a veritable midwife's delight as she
would not know from whom to collect her fees. On the basis of the several aspects of this matter I have
adumbrated, it can hardly be said that Tinju Dunia is a subsidiary of the Bank or United Manufacturers or
Rakyat Corp as the defence contends. The moral of all this is that the legitimate offspring of normal nativity
does not have to look at his birth certificate to discover who his father is.
There is then evidence by PW12 of the receipt of a telex through the United Manufacturers' telex machine
on 2 May 1975. This telex message (D29) which was received by him and passed to the second accused was
from Don King, apparently a boxing promoter in the United States connected with Muhammad Ali, and it
intimated that the fight would be called off if the Letters of Credit and the cash due were not sent
immediately. It was this message which precipitated the events on 5 May 1975, and the making of P12. On
this the pertinent evidence is that of Richard Kent Bird (PW13) who was then the resident Vice-President of
FNCB and Jeannie Lim (PW14), at the relevant time the Senior Assistant Manager in charge of the Personal
Banking Group in FNCB.
Briefly, PW13 said that on second or perhaps third May, the second accused telephoned him to enquire if
FNCB would be prepared to open Letters of Credit payable to the promoters of the Ali-Bugner fight and on
his enquiring what security would be available, the second accused replied that he would provide shares in
Dunlop Estates valued slightly in excess of the amount of the Letters of Credit. As a result of that
conversation PW13 dictated a memorandum (P8) to PW14. It is significant that P8 which is headed "Re: Tinju
Dunia Sdn. Bhd" states in its body that "Apparently the company does not have any paid in capital yet as the
local promoters will be raising the funds over the next three weeks" and goes on to state that "Presumably
the cash being raised by the promoters will be deposited in Tinju Dunia's account and can then be set up as
a 100No such file or directoryargin account on the LCs and the shares released at that time." P8 was passed
to PW14 on third May by PW13's secretary.
Now comes that fateful day, 5 May. On the evidence of PW29, Ghazirah binti Mohamed Ghazali (PW26) and
Abu Saffian bin Mohamed Tamin (PW30), the second accused dictated exhs P11, P12 and P13 that morning
and handed these duly signed together with 11 blank transfer forms (P16) also duly signed to PW29 who
then took them to the FNCB together with the certificates in respect of the shares and stock (P9 and P10),
three applications for Letters of Credit (P30) and a Continuing Commercial Credit Agreement (P31),
accompanied by PW30 and one Ahmad Khalid, and handed all these to PW14. PW14 had arranged to enlist
the help of Bobby Lee Kok Chan (PW6), then the officer in charge of the Import and Export Department of
FNCB for the purposes of opening the Leters of Credit and he was at that time present. The Letters of Credit
proper (copies of which are P32) were prepared on 6 May 1975, but PW6 on instructions from PW29 that the
Letters of Credit must be notified to the beneficiaries that very day i.e. 5th May, as it was very urgent, sent
cables notifying the beneficiaries accordingly. One of the Letters of Credit was subsequently amended as a
result of PW6 receiving a letter from Tinju Dunia dated 16 June 1975, (P33) and Muhammad Ali was
informed of this by cable. Payment has been
[1977] CLJUeffected to all the three beneficiaries under the three Letters of
Credit as is evident from the drafts drawn by the beneficiaries and the debit advice notes from FNCB, New
92
York (P34, P35 and P36).
[1977] 1 LNS
According to PW13 and PW14, the 92 Credit Committee of FNCB consisting of both of them and one Chong
Mun Kei by initialling P11 approved the credit facilities asked for by Tinju Dunia in the three applications for
Letters of Credit (P30) on the basis of the security lodged. There are two other documents connected with
this transaction which were handed by PW14 to PW29 for execution - a General Letter of Hypothecation by
Tinju Dunia (P14) and a Power of Attorney from the Bank (P15) in respect of the disposal of the Bank's three
ordinary shares in Dunlop Estates Berhad which was necessary because one blank transfer form (P16(1)
covered all these three shares.
P11 is a letter under the Bank's letter-head dated 5 May 1975, signed by the second accused as Managing
Director of the Bank and addressed to the Manager, FNCB under the heading "Tinju Dunia Sdn. Bhd", and
refers to the lodgment of the shares and stock to secure the facilities required and to an attached copy of
the Minute (sic) of the Investment Committee of the Bank authorising the Bank to lodge these securities in
respect of Tinju Dunia's account. The annexure is P12. P13 is a letter of the same date from Tinju Dunia
signed by its authorised signatories, the second accused and PW29, and addressed to the Manager, FNCB
under the heading "Tinju Dunia Sdn. Bhd's a/c", referring to the second accused's telephone conversation
with PW13 on Saturday third May with regard to the issue of Letters of Credit on account of Tinju Dunia, and
stating that as agreed the shares and stock were thereby forwarded as collateral and adding that the total
market value of the shares and stock was about $6.5m.
It now becomes necessary to consider P12 which I have briefly referred to in stating the background to this
case. It is a document typed on the Bank's letterhead and dated 5 May 1975, under the heading "Minutes of
Investment Committe of Bank Kerjasama Rakyat (M) Berhad", setting out a resolution for the shares and
stock to be lodged at FNCB "for the purposes of securing Letters of Credit requirements of Tinju Dunia for
amounts not exceeding M$6.5m" and for the said securities to be placed as collateral for a period not
exceeding three months from the date thereof. The signatures of the three accused appear at the bottom of
the resolution above their respective designations of Chairman, Managing Director and Secretary. The
certificates in respect of the shares and stock (P9 and P10) were received and have since been kept in the
custody of FNCB as is evident from P20B and P40 until PW1 took possession of them for the purposes of this
case.
It is clear from the evidence of PW13 and PW14 that the three documents P11, P12 and P13 were all
necessary and important and that P12 was important because the shares and stock are registered in the
name of the Bank, and without these three documents and the shares and stock the FNCB would not have
opened the Letters of Credit on 5th May. PW14 designated P12, P11 and P13 in that order of importance
and said that if Tinju Dunia had applied for the Letters of Credit without the support of the Bank, FNCB
would not have granted the credit facilities requested. PW13 said that if he had any doubts about the
contents of P12 he and indeed the other members of the Credit Committee of FNCB as well would not have
considered the applications for the Letters of Credit. PW13 also said he did not check on the accuracy of the
contents of P12 because it was signed by the Chairman, Managing Director and Secretary, and he was
satisfied with that, and neither did PW14 check on the veracity of its contents because, as she said, she
accepted it in good faith. Both PW13 and PW14 said they would absolutely not have considered the
applications for Letters of Credit without P12.
It is accordingly abundantly clear that the whole transaction on 5th May centred on P12 which was of
absolutely vital importance and crucial for the purposes of obtaining the credit facilities required by Tinju
Dunia. I might add that PW13 said that the agreed date for the repayment of the loan was 30 August but
was later extended to 15 November 1975, and PW14 said that the second accused had told her at a party
before 5th May that the moneys for repayment of the loan to FNCB would be coming in from local gate
collections from the fight and overseas collections from television and cinema rights and that PW29
confirmed this to her after that date.
Before I deal with P12 as such, in [1977]
view ofCLJU
the reference in it to the Investment Committee of the Bank, it will
be necessary to refer to the Minutes of tbe Board meetings on 14 January 1972, and 26 March 1975,
92
(appearing in P7) at which an Investment Committee and an investment and Loan Committee were
[1977] 1 LNS
respectively constituted. At the Board meeting on 14 January 1972, under Agenda 9.4 in the Minutes, the
92
Board agreed to appoint an Investment Committee with powers to make immediate decisions relating to
investment up to a maximum of $200,000 and the members appointed to that Committee were the
Chairman or Vice-Chairman, the Managing Director, the Registrar, Yuhyi bin Mohamed Ismail (PW28), the
Treasury representative on the Board and Mustaffa bin Yunus (PW16).
As to the Board meeting on 26 March 1975 Agenda 12.1 and 12.2 in the Minutes relate to a consideration of
applications for loans by three persons for substantial sums and under Agenda 12.3 which is headed "Power
to approve loans", the Board agreed and decided, in view of the large number of applications for loans
exceeding $100,000 which required urgent consideration and approval and which could not wait for
submission to a meeting of the Board of Directors or the Executive Committee, that such applications be
referred for the consideration of an Investment and Loan Committee consisting of the President, Vice-
President, the Managing Director, the Registrar of Cooperative Societies and the representative of the
Treasury. This decision of the Board on 26 March 1975, would appear to implement the necessity, in view of
the frequency and urgency of such applications, to alter and revise the third and fourth heads of the
decision of the Executive Committee on 14 August 1974, (Agenda 5.1 in its Minutes in D22) with regard to
the power to approve loans to members and perhaps also that of the Executive Committee on 10
September 1974, (Agenda 2.4 in its Minutes in D22) in relation to loans to directors.
There is considerable argument as to the validity of P12, as to which Committee in fact resolved to effect the
pledging of the shares and stock, as to whether there was a valid meeting of that Committee with the proper
quorum and also whether it was within its powers to so resolve, and generally whether there is in fact any
power in the Bank to make the pledge effected by P12. It would appear to me that I am not concerned so
much with the validity or otherwise of the transaction as I would be in civil litigation for a declaration to that
effect as with the propriety thereof. As the determinant factor in this trial is the intention of the accused,
what really matters is not what was actually done but rather how it was done.
There is abundant evidence that there has in fact been no meetings called or convened either of the
Investment Committee of 1972 or the Investment and Loan Committee of 1975. PW16 was a member of the
1972 Committee but ceased to be a director of the Bank in 1973, and it is contended by the defence that the
1972 Committee should have been re-constituted or re-confirmed after the Annual General Meeting in 1972
and that as this was never done it is defunct and non-existent. The defence contends that P12 is a resolution
of the Investment and Loan Committee of 1975 and that this Committee has the power to make investments
as well as grant loans exceeding $100,000 although this is not so stated in the Minutes, and that any two
members of that Committee can form a quorum. I would have thought that the question of a quorum
necessary for a meeting only arises when there is in fact a meeting properly called and, as I have said, the
essence of the matter is not the validity of any such meeting but whether or not there was in fact a meeting
of the relevant Committee as such and the propriety of the circumstances in which the resolution in P12
came about for the purposes of considering the mens rea necessary to establish the charges in this case.
It is clear from the evidence adduced that there have never been any notices calling for meetings of the
1972 or 1975 Committees, and apart from the first and second accused, none of the members of those
Committees have ever received any such notices or attended any meetings of either of those two
Committees. I have already adverted to the question of the necessary quorum and would only observe that
if ex necessitate it became necessary for only two members to meet as that Committee, whichever one it
was, there should at least have been some steps taken immediately or as soon as possible thereafter to
inform the other members of that Committee and the Board or the Executive Committee and the Registrar
of Co-operative Societies of what had taken place and to seek ratification of any action taken by such two
members. If any two persons out of a committee of five can suo motu and unilaterally meet as that
committee without taking any prior or subsequent steps to inform the other members of that committee of
what they intend to do or have done, then this must necessarily in my view reflect on their state of mind and
intention. If any two can so meet[1977]
to theCLJU
exclusion of the others on a committee they could then act and
arrive at decisions to the detriment of that committee or its other members.
92
In any event, quite apart from the evidence
[1977] 1 LNSof the directors of the Bank who testified that the quorum for
the 1972 or 1975 Committee would 92 be a majority of its members based on the practice of the Executive
Committee, it has been held that where a board of directors delegate its powers to a committee without any
provision as to the committee acting by a quorum, all acts of the committee must be done in the presence
of all the members of the committee (Re Liverpool Household Stores Association (Ltd. [1890] 59 LJ (NS) 616).
In Young v. Ladies' lmperial Club, Ltd. [1920] 2 KB 523 the Court of Appeal in England held that where a
special meeting of a committee or any other body has to be specially convened for a particular purpose,
every member of that body ought to have notice of and a summons to the meeting, and accordingly the
omission to summon one member of a committee and the fact that the notice did not state the object of the
meeting with sufficient particularity vitiated the proceedings of that body. If therefore there was a meeting
of the 1972 or 1975 Committee for the purposes of P12 between the first and second accused only, there
was no proper quorum for a valid meeting, and this reinforces the importance of subsequent ratification I
have adverted to.
The next point that arises for consideration is whether or not the Bank has power to pledge. If it has none
then neither has any of the two Committees of 1972 and 1975. I can see no power provided for this in the
Ordinance, Rules and By-laws of the Bank but in the absence of any such power or in the event of any
doubts about its existence, then obviously it is the Board or the General Meeting of the Bank which must
deliberate and decide on an important issue such as this and not any of the two Committees in question,
and that too with the prior approval or at the worst if absolutely necessary in exceptional circumstances the
subsequent ratification of, or at least in any event some form of reference to, the Registrar of Co-operative
Societies.
If P12 is a resolution of the 1972 Committee then it is certainly outside the powers of that Committee which
is restricted to investments not exceeding $200,000 and this also raises the further question whether the
pledge effected is an investment. If P12 is a resolution of the 1975 Committee there again it will be outside
its powers as it would seem clear to me from the wording of the Minutes I have referred to that it was
established only to consider applications for loans exceeding $100,000. The heading in the relevant Minutes
with regard to the 1975 Committee is, I repeat, "Power to approve loans". PW28 whois a member of the
Investment and Loan Committee of 1975 said that when this Committee was set up he could not recollect
the question of investment being discussed. The loans referred to in the Minutes of that Board meeting,
according to PW17, PW21 and PW28, all members of that Committee, were only to members of the Bank
and PW21 said this is clearly so because loans can only be given to members of a co-operative society im
view of the provisions of s. 30(1) of the Ordinance as it then and at all material times stood until its
amendment which was effective only on 27 February 1976.
Again, it would appear to me that the pledging effected by P12 is neither a loan nor an investment and, in
any event, the matter was not at any time decided or ratified by the Board or approved by or referred to the
Registrar. And even if the pledging can be said to be an investment, s. 33(e) of the Ordinance requires the
approval of the Registrar, and according to PW27, the approval must be that of the Registrar personally and
in writing and must be preceded by an application therefor also in writing.
According to the evidence of the directors, Mohamed Yob bin Busu (PW15) who was the Registrar of Co-
operative Societies until early January 1975, and PW28, the Board has never delegated any power to any of
the accused to resolve as in P12, and to pledge the assets of the Bank. Counsel for the second accused
submits that on the authority of By-law 55 the second accused could himself acting alone exercise the
powers of the Board and pass a resolution as in P12. I can see no merit whatsoever in that contention as the
By-law in question simply empowers the Board to appoint a Managing Director and does not give any
powers to the Managing Director as such. The source of the powers of the second accused as Managing
Director is not to be found in By-law 55 but in any conferment upon or delegation to him made by the
Board. All this however appears to be irrelevant and academic as P12 clearly purports to be a resolution of
the Investment Committee and not a unilateral act of the second accused acting as Managing Director of the
Bank and the pledging of the shares and CLJU
[1977] stock was effected by virtue thereof. I would merely observe that if
the second accused as Managing Director purported to make the decision to effect the pledging of the
92
shares and stock then he would be clearly acting under a mistake of law which is no defence to the charges
[1977] 1 LNS
against him.
92
It would therefore appear to me that the first and second accused in purporting as members of the
Investment Committee of the Bank (whichever one it was) to resolve as in P12 acted unilaterally and without
authority, and if there was a meeting between them it was not a meeting of the 1972 Investment Committee
or the 1975 Investment and Loan Committee or any other authorised body of the Bank but only a meeting
of the two of them in their personal capacities although they purport to be described in P12 as the
Chairman and Managing Director and the third accused as Secretary. The three accused when signing P12
cannot have been unaware of the position in relation to the 1972 and 1975 Committees and all the other
circumstances I have discussed.
I must also draw attention to the fact that the heading in P12 refers to Minutes whereas the body purports
to be the resolution itself, and the Minutes referred to in that resolution are those of the Investment
Committee of the Bank whereas the defence seems to contend that the Committee in question is the
Investment and Loan Committee of 1975. It is also of some significance that the covering letter P11 from the
Bank signed by the second accused is headed "Tinju Dunia Sdn. Bhd" and this would of course require the
necessity of finding a connecting link between the Bank and Tinju Dunia for the purposes of the transaction
in question. The pledging of the shares and stock effected by virtue and as a result of P12 was never made
known at any time to the Board or the Executive Committee of the Bank or anyone else for that matter and
was only disclosed after and perhaps as a result of the arrest of the first and third accused on 12 March
1976.
I accordingly hold that the resolution purportedly made in P12 was ultra vires the Bank and beyond the
scope and authority of the 1972 and 1975 Committees and of each of the three accused and a unilateral and
unauthorised act on the part of all the three of them.
It might be convenient to observe at this stage that as a result of what I have just said the Power of Attorney
(P15) executed by the second and third accused on behalf of the Bank would appear to contain false
representations in the second and third recitals and the testimonium clause in so far as they relate and refer
to the request and agreement of the Bank and its causing the execution of that document as stated therein,
and they must in the circumstances have known this was so but signed it notwithstanding. According to
PW14 this Power of Attorney is a very important document for FNCB, in view of the amount of the Dunlop
Estates shares involved, for the purposes of a sale in the stock market should the need arise to recover the
credit facilities extended to Tinju Dunia in the event of non-repayment.
The reference in P8 to the local promoters raising funds over the next three weeks would appear to amount
to a representation by the second accused to PW13 that the funds to be raised by Tinju Dunia would not in
fact come from the Bank and it must have been in the contemplation of the second accused that the capital
required by Tinju Dunia would and could be raised in the span of some three weeks thereafter. The period
of three months mentioned in the last paragraph of P12 and the evidence of PW14 I have referred to as to
the second accused and PW29 expecting to make repayment of the loan from local gate and overseas
collections would appear to confirm this and suggest that if in fact this had materialised within the period
for the credit facilities asked for and granted by FNCB, the use of the shares and stock of the Bank as
security would not perhaps have come to light.
I now proceed to exh. P18 which comprises four articles in four issues of the Sunday Mail and Malay Mail
written by Francis Xavier Emmanuel (PW4), a reporter and sub-editor of the Malay Mail in charge of sports.
In none of these reports relating to the fight is there any mention of the Bank. Themost important one
appears to be P18(1) which is the Sunday Mail of 18 May 1975, under the heading "Ali-Bugner fight to cost
$12m" and which attributes
[1977] 1 LNS 92
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