SOS: Banks should be responsible

06/09/2000 The Star Penang

Banks that release funds indiscriminately to developers should be responsible for seeing to the completion of stalled projects, said SOS (Save Ourselves) secretary Ong Boon Keong.

He called on the state government to adopt a "responsibility system'' under which the main bank in each case should be required to wind up the developer's company quickly and tender the project to another developer.

"Should the bank fail to meet its responsibility, then the Government will have to step in to finish the project.

"In this way, citizens who put their hard-earned cash into purchasing government-recommended low-cost housing will never have to feel betrayed when a developer fails to deliver,'' he said in a statement on Monday.

Ong said a forum on the draft Penang Municipal Council Structure Plan held by the group on Sunday was alarmed by the scale of stalled projects in the state.

"If left untackled, this will be more than enough to defeat efforts to meet low-cost housing targets for years to come--perhaps for the entire structure plan period (up to 2010),'' he said.

According to him, the forum refuted the convenient excuse that the economic crisis led to the developers' failure.

In fact, Ong noted, developers were the largest borrowers from banks and the "reckless overbuilding of high-end housing and office space'' was unsustainable.

The responsibility system, he said, should be upheld so that helpless citizens were not "played out'' by the big players.

"Developers should be made to face the music for misusing the funds entrusted to them as it is well known that funds diversion is often the 'cancer cells' that 'eat up' a project,'' he said.

Ong said banks were in the best position to see to the completion of stalled projects as the land involved had been pledged to them.

Banks, he said, should initiate action to wind up the companies involved regardless of who was among their directors.

"The state government should at no time be seen to be soft on developers since they are usually not soft on buyers who pay late,'' he added.

Ong also said the architects and engineers whose approval were relied upon by banks for the release of funds should be prosecuted instead of being left in the hands of their professional bodies.