Tangled up in Bumi: Disgraced Former Malaysian Banker Linked to Irish Premier’s Fall

Related Article: A Onetime Political Star Returns to Malaysia’s Stage

The abrupt resignation in Dublin Wednesday of Irish Prime Minister Bertie Ahern over allegations of corruption in land planning in the 1990s brings back to the stage the name of Lorrain Esme Osman, the central figure in what 25 years ago was the world’s biggest banking scandal involving the Malaysian state-owned Bank Bumiputra Malaysia*.

Lorrain now is the subject of an inquiry into a rezoning scheme worth £7.75 million over one of Ireland’s most storied pieces of property, the site of the Battle of the Boyne, fought between Protestants and Catholics in 1690 in a vain attempt, backed by the French, to restore the Catholic King James to the throne. It has ever since been the focus of a rivalry of an Ireland dominated by religion.

Ahern has been battling allegations for months that he secretly received massive amounts of cash from businessmen in the mid 1990s. He resigned suddenly after an Irish Times report that said a tribunal looking into his affairs was going over accounts controlled by himself, his daughters, a former girlfriend and his local political party office from 1988 through 1997. The accounts were said to total as much as 452,000 Irish pounds (US$897,845 in today’s dollars). He has denied the allegations.

Some of the crucial evidence, sources say, includes two bank drafts from a client account of the law firm of JYP Chia in Singapore. Ravi Govindran, a lawyer with the firm, at the time represented Lorrain, according to a 1998 letter to an Irish reporter. One of the drafts was for £32,000, paid to a 34-year-old farm laborer in County Louth, Ireland. The Mahon Tribunal, an inquiry established in 1997 to investigate allegations of payments to politicians, believes the draft ended up in the hands of an associate of Ahern who shared a joint account with the former Irish premier. According to the Irish Daily Mail in an April 3 story, the tribunal found an additional 150 documents that include references to two companies, Flexbay and Shaderoe Ltd., both of which are Singapore-registered and of which Lorrain is the beneficial owner.

The Mahon tribunal believes the bank draft, dated Jan. 17, 1995, was in payment to arrange for a rezoning of the Battle of the Boyne property into a historic site and purchase by the Irish government, which would have cleared the way for a development project. A second bank draft, for £50,000, was cashed in London some weeks later and taken to Standsted airport in London, where it was intercepted by customs officials who first thought it was IRA or drugs money.

The 78-year-old Lorrain, the onetime executive chairman of the Hong Kong-subsidiary Bumiputra Malaysia Finance, which in 1981 ended up with US$1 billion in liabilities, is said to now split his time between Singapore, Malaysia and the UK. Attempts to reach him at his home by telephone in the exclusive St. John’s Wood section of London failed. A woman who refused to give her name told Asia Sentinel he would have no comment, and requested to be left alone.

Asia Sentinel has been told that Lorrain allegedly approached potential investors claiming to be a retired Far Eastern banker and an agent for unnamed investors in Singapore and Hong Kong after his release from prison in 1993 to propose a £30 million hotel and apartment complex on the Battle of the Boyne site near Drogheda, an historic town north of Dublin.

However, after Lorrain made a £2.5 million offer in cash and shares to take over Oldbridge Estate Ltd, the company which owned the land, he discovered it would be almost impossible to develop it. The property is surrounded on three sides by the Boyne River, and only two bridges, one just wide enough for a bullock and cart – provide access. Because of the bridge’s historical significance, it couldn’t be torn down and replaced.

In 1994, according to reports in Irish newspapers, Lorrain enlisted the help of Liam Lawlor, a member of the Irish Parliament from the largest political party Fianna Fail, of which Ahern is also a member. Lawlor told Lorrain that he could persuade a future Fianna Fail government to buy the property for the government, law enforcement sources say.

Lorrain’s ambitions for the site, despite his payments to Lawlor or those connected to the prime minister, do not appear to have worked out. After a High Court dispute between Lorrain and other members of the proposed development consortium ended in October 1997, the property was sold to a firm called Deepriver. The 1999 annual report of Deepriver by auditors KPMG valued the 503-acre property at £2.5 million.

Deepriver then sold the property to the government for £7.75 million, a profit of more than £5 million, after Ahern announced in 2000 that the government intended to acquire it as a gesture of reconciliation to the protestant Unionist tradition.

Ravi Govindran, formerly Lorrain’s lawyer with JYP Chia in Singapore, told Asia Sentinel that he hadn’t been in touch with Lorrain for several years, and that the onetime BMF chairman was bankrupt, although Lorrain was still able to dispose of a property in County Meath in Ireland in December 2007 for £400,000, according to records in Ireland. Govindran said he was unaware of any investigations involving either himself or Lorrain in Ireland.

Lorrain, a close associate of former finance minister Tengku Razaleigh Hamzah – who himself has returned to prominence in recent weeks due to the political turmoil in Malaysia – gained notoriety after the Carrian Investment scandal in the early 1980s in which most of Bumiputra Finance’s money was loaned to Carrian, a conglomerate that turned into a house of cards, revealing a tale of murder, suicide, corruption, false accounting, and illusory profits stretching from Hong Kong to Malaysia and involving leading Malaysian political figures, bankers, accountants and lawyers.

Accused of 39 counts of fraud and theft from the Hong Kong branch of the bank, Lorrain decamped for England, where he was ultimately arrested and in 1985 began what would be the longest fight against extradition in British history. After seven years, called the longest incarceration without trial in the UK since the 17th century, he was returned to Hong Kong where he served two months in jail, leaving the territory without settling legal costs of £1 million due to the government.

*An earlier version said the bank had collapsed. It had to be recapitalized to keep it from collapsing.