Nazir takes leave of absence saying ‘Reputation of the bank my priority’

CIMB Group Holdings Bhd chairman Datuk Seri Nazir Tun Razak(right) and (left) group CEO Tengku Datuk Seri Zafrul Aziz at the press conference after CIMB's 59th Annual General Meeting. - Rickay Lai/The Star

KUALA LUMPUR: The outcome of what was supposed to have been a normal shareholders’ meeting of CIMB Group Holdings Bhd caught everybody by surprise.

By mid-morning, the buzz was that chairman Datuk Seri Nazir Razak was taking leave of absence to facilitate the review of the bank’s anti-money laundering processes.

This came about after Nazir was earlier this month identified as one of the persons whom his brother, Datuk Seri Najib Tun Razak, had assigned the task of disbursing US$7mil (RM27.2mil) in the run-up to the 2013 general election.

The news report had been a hot topic for the past two weeks and questions were raised if Nazir had violated banking laws, especially the anti-money laundering regulations.

The bank’s board decided to initiate a review of its anti-money laundering processes on April 5, after news of Nazir’s involvement broke out on March 31.

Group chief executive officer Tengku Datuk Seri Zafrul Aziz told a packed press conference that during the board meeting (on April 5), Nazir had explained what he had done, after which he excused himself.

“After a briefing by CIMB’s internal compliance officers, the board decided it was in its best interest to conduct a review,” he said. “The decision was taken voluntarily by Nazir and the board respects and accepts his decision, and the members have always been convinced that Nazir upholds the highest standards of corporate governance,” said Tengku Zafrul at a briefing after the company’s AGM yesterday.

Nazir, who was also present, said his leave of absence as chairman of the group was to ensure the reputation of the bank remains intact.

“I’ve spent the entire 26 years of my banking career helping build CIMB group into one of the most respected banking institutions in this region. The reputation and well-being of this group has always been my utmost priority,” he said.

Nazir felt that unless he was completely absent from the company during the review period, the institution would not be practising the highest standards of corporate governance that CIMB wanted to stand for.

Earlier this month, Nazir confirmed a Wall Street Journal (WSJ) report that he had received US$7mil in funds that were transferred to his personal bank account from his brother, Umno president and Prime Minister Datuk Seri Najib Tun Razak before the country’s 2013 general election.

After the report emerged, Nazir had clarified that it was a normal banking transaction that any high-net-worth client was entitled to and that he did not use the bank’s machinery to disburse the money.

He said that his brother had given him a cheque for US$7mil and that the funds were to be given out to some people. Nazir said that he knew his brother was receiving donations and had no reason to suspect anything amiss.

According to a banker, under the Anti-Money Laundering Act, bank officers are supposed to question the source of funds for any deposits that exceed RM50,000.

Nazir said he regreted going through with the transaction given all the controversies.

“I would never put my or by extension CIMB’s reputation at such risk knowingly,” he said.

Tengku Zafrul clarified that the board was conducting a review, and not an investigation, on the matter. The board of directors also engaged independent external audit firm Ernst & Young to assist in the review.

The review is expected to be complete in a few weeks, by which time the board of directors will deliberate on the outcome of the review and then decide whether Nazir will maintain his positions in the group.

Notably, at the company’s AGM yesterday, Nazir’s chairmanship was put up for review, in which shareholders voted in favour of his re-election.

“I am very clear that what I did was legal and did not compromise my position in any way, so I did not see any reason for me to make any statement. But since it has appeared in WSJ, therefore I was happy to be transparent and confirm that it was true,” he said referring to the article.

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