Syndicate nets millions from cheque scam

KUALA LUMPUR, April 5 — A local bank has reportedly lost more than RM100 million over the past few years to cheque fraud believed to have involved government agencies and bank insiders.

A financial industry source told The Malaysian Insider that account holders from private firms and government agencies are involved in cashing third party’s cheques, disclosing several cases included agencies that handle large amount of money such as the Royal Customs Department and the Immigration Department.

The National Union of Bank Employees (NUBE) said that they detected the cases after one of its members was charged for cheque fraud recently.

“It has been happening for a very long time, so the loss is estimated to be more than RM100 million,” NUBE secretary-general J. Solomon told The Malaysian Insider.

He added that NUBE was made to understand that senior bank officers were also involved in the cheque fraud.

“We understand that there are four bank officers have been suspended for cheque fraud,” he said.

The Malaysian Insider understands that the case involving the NUBE member was not a major one, compared to dozens of similar fraud detected since 2003. The bank, run along Islamic lines, has acknowledged the cases and it is understood it is taking action with the cooperation from the police and the central bank.

In the case, the Islamic bank where it detected losses of almost RM12 million after a breach of banking procedure when it cashed a third party cheque belonging to a public agency to an account for a law firm in northern peninsula Malaysia.

In one transaction, the cheque had a face amount of RM1.6 million.

The cases apparently occurred between Oct 2007 to Dec 2009. The clerk involved has been suspended pending internal investigation.

“We also received unconfirmed reports that the amount may reach RM100 million and we understand that the bank is still conducting internal investigation,” Solomon said in a statement put on the NUBE website.

“The clerks who handled the transaction under the head service centre have faced disciplinary action,” he added.

The statement was made in response to the bank’s move to transfer six clerical staff to other branches without strong justification.

It also complained about the bank management’s reluctance to pay laundry allowance of RM55 per month but at the same losing millions to cheque fraud.